LONDON _ Biotechnology stocks listed on the LondonStock Exchange (LSE) are showing unprecedented surgesin value. Many of the leading companies are trading atnear record levels as the market warms to encouragingproduct data and partnering news.
In the past month, biotech company shares in the LSE'spharmaceuticals sector advanced on average 23.5 percent,while all U.K. bioscience company share prices rose anaverage 26.3 percent, according to BioWorld Today'srecords. Since the start of the year, U.K. biotech stockshave risen on average by more than 80 percent.
Among the most prominent advances was that of BritishBiotech plc, of Oxford, which has seen its share(LSE:BBG) price soar nearly 40 percent in the pastmonth. Much of the surge has been in response to upbeatpreliminary data relating to its potential acute pancreatitisdrug, Lexipafant. At its half year results, British Biotechsaid a U.K. trial of Lexipafant showed a statisticallysignificant reduction in organ failure compared withtreatment with a placebo, or sugar pill. There is nocurrently approved therapy in either the U.S. or Britain.The company now has clearance to begin a parallel U.S.trial involving 200 patients at 25 hospitals.
News relating to deals boosted many of the prominentstocks. Cantab Pharmaceuticals plc, of Cambridge,surged dramatically (LSE:CTB) on the word that it signeda strategic alliance with Pfizer Inc., of New York, relatingto animal health applications of its Disc Virus vaccinetechnology. The alliance is said to be potentially worthmore than $10 million in licensing fees, milestonepayments and equity investment. The up-front paymentfrom Pfizer is $4 million, comprising initial license feesand an equity investment of 800,000 shares at 2.50,giving the U.S. major an 8 percent stake in the Britishfirm.
Paul Haycock, Cantab CEO, told BioWorld Today thatthe animal health application of the technology had notpreviously been factored into the value of the companyand that this deal reinforced the idea that Disc Virus is aplatform technology. Cantab is in discussions withpharma companies about other applications of thetechnology. Cantab stock shot up 113 pence on the newsto end the day at 2.78, recovering much of the ground itlost when a leading product it was developing incollaboration with Baxter International Inc. was pulledback in March.
One stock that has been creeping up gradually in recentweeks in anticipation of signing a deal with a strategicpartner is Chiroscience Group plc, of Cambridge(LSE:CRO). The share price made a final spike upwardwhen the British chiral firm unveiled Swedish pharmamajor Pharmacia Biotech AB, of Uppsala, as its partnerfor the long-acting local anesthetic, levobupivacaine. Inthe past month, Chiroscience has seen its stock move up42.9 percent.
A series of deals, including the most recent agreementwith Perkin-Elmer Corp., of Norwalk, Conn., hasunderpinned a fairly strong stock performance at OxfordMolecular, of Oxford. The integrated molecular designcompany has seen its share price rise by 72 percent in thepast four weeks.
A strong full year performance from Middlesex-basedCortecs International Ltd. _ turnover was up 55 percentto 7.5 million and losses curbed by 23 percent to 4.15million _ has underpinned a strong performance in thestock (LSE:COR) price, rising 23.9 percent since the startof the month. London- based Barings Securities analystAndrew Clark issued a buy recommendation on the stockas he said the company will turn from loss to profit on amonth-to-month basis by the end of next year.
"If up-front payments are made to Cortecs as a result ofany of the licensing deals currently under discussion,break-even will be sooner," the analyst notes.
Although up 6.5 percent on the month, Scotia Holdings,of Guilford, has crashed by 12.5 percent in the past weekbecause of some concerns over its potential diabetes drugEF4. At the half year results, Scotia executives revealedthat a full therapeutic dose of the drug may requirepatients taking as many as 60 pills a day and analystswere concerned that such a regime would not achievepatient compliance. The follow-up, which uses a singlepure compound and would only require four to sixcapsules a day, is not expected to be on the market foranother three to five years.
Market watchers have been attempting to find reasonswhy the U.K. sector has been performing strongly.Positive news flow has clearly helped in some cases,while it is possible that some of the increases may also bean echo of the strong U.S. performances.
One other suggestion is that the recent merger andacquisition activity among British pharmaceuticalcompanies may have released investment funds which arenow being plowed into biotech stocks. n
-- Mike Ward Special To BioWorld Today
(c) 1997 American Health Consultants. All rights reserved.