LONDON - British Biotech plc has dismissed its head of clinical research, Andrew Millar, claiming he discussed confidential company information with third parties.

Millar is understood to have disagreed with the company's commercialization strategy of going it alone to market rather than seeking pharmaceutical partners. And he apparently discussed this concern with two of the company's largest shareholders, Perpetual Asset Management and Mercury Asset Management.

He also discussed details of a U.S. Securities and Exchange Commission (SEC) enquiry into British Biotech, which was reported in August 1997, and share sales by CEO Keith McCullagh and former chairman Brian Richards in January 1995.

British Biotech, of Oxford, U.K., disclosed last month Millar was “suspended from all duties“ on the suspicion that he “might have discussed confidential information relating to the company with third parties.“

Monday British Biotech reported, “It is now clear that Millar did discuss such information and that he did so without authority.“

The company made this statement following an independent investigation “into matters raised by Millar“ at the time he was suspended. The investigation was commissioned by the British Biotech board and carried out by the law firm Cameron McKenna.

In the statement, British Biotech said, “Based on the board's own review, together with the findings of the investigation, the board is satisfied that these matters either had no substance or reflected purely personal opinions held by Millar. Accordingly, it does not consider there to have been any justification for Millar's action.“

Katie Arber, head of corporate communications, told BioWorld International, “The issue is that, as with every employer, there are levels of authority. He [Millar] exceeded his authority. The matters he raised in external discussions either exceeded his authority, or had no substance, or reflected his personal opinion.“

While Millar is entitled to his opinions, Arber observed, he should not use them to “raise doubts in people's minds. He [Millar] raised matters which it was felt should be investigated. It is now clear that he did discuss [confidential information] without authority. Until that was clarified - that he had done what we believe he had, we couldn't take the matter forward.“

Arber confirmed the independent investigation by Cameron McKenna looked at the SEC enquiry and at share sales by directors in January 1995, shortly before British Biotech dropped its anticancer compound, batimastat.

She pointed out that the SEC does not detail the grounds of its enquiries, which can only be inferred from the questions it asks. The company said the SEC investigation, which is ongoing, relates to press releases about Phase II clinical trials of the oral anticancer drug marimastat, published in 1995 and 1996.

In the Phase II trials, British Biotech used levels of cancer antigens as a surrogate marker of the effect of marimastat on tumor progression, and the company said the SEC is questioning the validity of this measure.

However, Arber said that in the view of British Biotech's U.S. lawyers, “There is no basis for the SEC's investigation.“

Marimastat Phase II results did have a strong impact on share price. For example, on May 21, 1996, the stock rose £2.85 to £33.15 in response to a release of Phase II data. A year earlier the shares stood at less than £5.

On the share sales by McCullagh and Richards, Arber said, “This matter was investigated by the London Stock Exchange in 1995, and the share sales were said to meet the requirements.“

The Millar affair has had a drastic effect on British Biotech's share price.

In the two days following announcement of his suspension March 12, the stock dropped 22 percent, wiping more than £100 million off the valuation.

Monday, when the company first confirmed Millar had discussed confidential information with third parties and later in the day disclosed he had been fired, the share price fell 9 pence to 50 pence, then recovered to close at 56.5 pence. This time last year the shares were at £2.90.

The sharp drop in stock price at the loss of the head of clinical affairs reflects the critical stage of British Biotech's lead programs, Zacutex for acute pancreatitis and marimastat, which are both in Phase III trials.

The registration of Zacutex depends on the U.S. trial, which has mortality as the clinical endpoint. Greig Middleton & Co., of London, said last month in a report on investing in U.K. biotechnology companies that the Zacutex study is “high risk,“ adding, “there is a significant possibility of Zacutex never being marketed.“

Although marimastat is in Phase III in a number of cancers and is potentially a very important product, the company has a weak pipeline otherwise, with only two Phase I products.

In Monday's statement, the company pointed out that while Millar was responsible for the clinical research department, he reported to Peder Jensen, development director and chief medical officer, who holds overall responsibility for all aspects of clinical trials. “British Biotech's clinical trials continue as planned,“ the company said. *

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