Biotech investors await crucial results for cancer 'blockbuster'

Investors in Britain's fledgling biotechnology face another roller- coaster ride this week with British Biotech, the nearest the industry gets to a blue-chip stock, expected to announce the results of crucial trials of its potentially blockbusting anti-cancer drug, Marimastat.

It was the euphoria surrounding the early results of these tests which, back in November, transformed the sector almost overnight from a group of loss-making companies which few took seriously into one now valued at a staggering pounds 4bn.

British Biotech's shares, worth pounds 10.43 before November's announcement, have since soared to pounds 28.45, up 45p on Friday, valuing the company at around pounds 1.6bn and putting it within striking distance of a place in the leading FT-SE100 index.

Marimastat is potentially one of the holy grails of pharmaceutical research. The technology, which blocks the enzymes crucial to the growth and spread of cancers, is seen as a key breakthrough. Early test results appeared to show that, as well as slowing the rate of growth of cancers, it operates across a broad range of types of the disease, which affects 2.9m new patients annually.

This is in contrast to existing treatments such as Carboplatin and Taxol, marketed by Bristol Myers Squibb of the US, which cover two or, at best, three cancer areas. Success with Marimastat would open up a market estimated at around pounds 7bn a year.

The November results were encouraging about four cancers: colorectal; prostate; pancreatic; and ovarian. One-third of the sample showed a fall or at least no rise in cancer antigens, protein markers in the blood which reveal the presence and strength of the disease. A further 26 per cent showed a reduction in the rate of increase in antigens.

The number of patients involved in these so-called phase II trials have since been increased from over 200 to closer to 500. More importantly, the 94 guinea pigs for whom reasonable data was available will by now have increased significantly, although the company will not say to what level.

The main update on Tuesday will cover the US studies being conducted on Marimastat's effectiveness against pancreatic and ovarian cancers. A general briefing in London will coincide with presentations on the two US trials at the meeting of the American Society of Clinical Oncology in Philadelphia, the biggest annual gathering of specialist cancer doctors and researchers in the US.

As well as confirming the earlier results, analysts will be seeking reassurance that the anti-cancer activity of the drug is maintained at the lower doses required to reduce side-effects. The early tests showed that very high levels of the drug had been absorbed into the bloodstream, but four patients suffered pains in the shoulder and hands. It is hoped that reducing the dose to eliminate these pains will not affect the drug's efficacy.

What will happen to shares in the wake of the test results is anyone's guess. Bill Blair of Greig Middleton, one of the bulls of the stock, reckoned Tuesday's data could justify a share price of pounds 38. But Steve Plag at the brokers Barclays de Zoete Wedd counters "an awful lot has to be right to justify the current share price".

If Marimastat achieves its minimum expectations, the shares may not move much or even drift back a little. Much will depend on anecdotal evidence accompanying the strict scientific data, he suggests, but "this stock is being driven by sheer market lust, by greed and fear".

Whatever happens, this drug remains a very long way from the market. As Mr Plag said, phase I and phase II drugs trials "are all about the company convincing itself that the drug is worth continuing with and phase III is all about convincing the regulators, who can be a much tougher proposition."