Cantab seeks allies for drug tests

CANTAB Pharmaceuticals, the biotechnology firm developing a treatment for genital herpes, is seeking further partnerships with leading drug companies this year as it embarks on advanced testing of its products.

Cantab said it had made substantial progress last year with its treatments for genital warts and genital herpes. It had also begun clinical testing of its cervical cancer product.

The increased research and development spending of pounds 3.5m last year caused Cantab's losses to double to pounds 2.9m. The company still has pounds 20m, much of it raised in the flotation last autumn.

This year, Cantab expects to begin extensive testing of its most advanced product, LM-CD45, which combats rejection of kidneys used in transplant operations.

The cost of these 'phase III' tests will be borne by Baxter Healthcare, the large US group that accounted for all of Cantab's pounds 1m of revenue last year through licensing fees and other payments.

Alan Munro, Cantab's chief scientific officer, said he expected the phase III testing of LM-CD45 to take two years.

Duncan Moore, an analyst with Morgan Stanley, which yesterday published a report on Britain's nascent biotechnology sector, recommended that investors should favour biopharmaceutical companies - such as Cantab, Celltech and British Biotechnology - ahead of companies making diagnostic equipment.

Although they involve greater risks, he said, the potential returns are much better should they develop a successful product.