Market Report: British Biotech's fall from grace continues as shares hit low

British Biotech, once the heart-throb of the fledgling drug developers, continues to fade away. The shares, in brisk trading, fell a further 5p to 115p, lowest for two years.

The group is now capitalised at pounds 760m. In its halcyon days, with the shares riding at 326.5p, it just missed becoming a Footsie constituent.

The fall from grace started last year when its pounds 143m rights issue achieved only a 49 per cent take up. Then came the departure of the finance director, James Noble.

The stock market's growing nervousness over the biotech companies added to BriBio's discomfort and last week's setback over a potential arthritis drug further undermined sentiment.

Because of side effects the treatment, developed with industry giant Glaxo Wellcome, was abandoned. Although it is calculated the lost drug should be worth no more than 2p a share the price wilted because what could have been a lucrative relationship with Glaxo has been, at least for the time being, killed off.

BriBio's great white hope, of course, is Marimastat, a cancer drug which is said to represent 80p a share. But developing drugs is a tortuously slow process and, as is brutally clear, success can be an elusive commodity.

The rest of the market was under the spell of overseas influences. A slide in Hong Kong ensured a hesitant opening and a weak start in New York added to the gloom. Then the Dow Jones Average recovered some of its lost ground, prompting Footsie to reduce a 76.5 points loss to 35.2 at 5,263.7 by the close. The FTSE SmallCap index, however, edged to another peak.

Takeover yarns continue to prop up some stocks. BICC, the cable and construction group, was at one time 15p higher on speculation of a strike from Wassall or an Italian group. But the yarn was greeted with widespread scepticism and the shares ended with a 4p gain at 186.5p.

WH Smith fell 4.5p to 402p as the Tim Waterstone proposals appeared and Etam, the women's clothing chain, bounced 31p to 140.5p after it disclosed approaches which could lead to "a change in control".

Great Universal Stores fell 3.5p to 712.5p after another presentation to analysts, this time involving its mail order division.

Bass, with Goldman Sachs hanging a 940p target on the shares, fell 18.5p to 837.5p and BAT Industries wheezed 4p lower to 601p as Dresdner Kleinwort Benson alighted on a 650p suggested price and Salomon Brothers went to 700p. British Steel rose 3.75p to 186.5p with SBC Warburg signalling 220p.

Commercial Union lost a little of Tuesday's enthusiasm, firming 1p to 865p. Latest story is the insurer could appear as the white knight for French group AGF, facing a hostile Italian bid.

Merchant bank Hambros rose 12.5p to 246p on break-up suggestions and the Hong Kong setback pulled HSBC and Standard Chartered down.

Cable & Wireless was another under the Hong Kong market influence. It also had to contend with disappointment after it failed to come up with details of any significant progress in China. The shares fell 14p to 545.5p.

Worries about third-quarter figures lowered Imperial Chemical Industries a further 3.5p to 956p but Thames Water enjoyed share buyback hopes, up 11p at 894.5p.

Grand Metropolitan and Guinness celebrated the Brussels clearance with the shares fittingly in tandem at 625p, GrandMet up 16p and Guinness 17p.

Allied Domecq, on the theory the giant merger cocktail will force it into a spirits alliance, hardened 7p to 522.5p and little distiller Burn Stewart - its Scotch brands include Scottish Leader - put on 5.5p to 53p on continuing speculation of a reverse takeover by William Grant & Sons.

BNB Resources, a recruitment and training group, improved 7.5p to 142.5p. The company met institutional investors on Tuesday.

Profit warnings took their toll. Chemical Design crashed 100p to 110p and Ferguson International 31.5p to 118.5p.

Sidney C Banks held at 312.5p. Cargil, the US giant thought to be eyeing the grain group, is believed to be raising a big European loan.