The Investment Column: Chiroscience still seeking a partner

In these jittery times in the UK biotech sector where share prices plunge on a whiff of bad news, no one wants to disappoint. So Chiroscience was treading carefully yesterday, following the announcement of its interim results. The market has been impatient for it to announce a marketing partner for its lead product, levobupivacaine, a local, long-acting anaesthetic.

With the drug largely through critical final-stage trials and demonstrably safer than alternatives, it will be filed for approval in Europe by the year-end and in the US next April. So where is the high profile tie-up? Though Dr John Padfield, Chiroscience's chief executive, says he is talking to a variety of potential partners, he hinted yesterday that the final deal might be lower key than people expect.

Rather than a marketing alliance, Chiroscience is considering developing levobupivacaine jointly with a pain management specialist who would also be responsible for marketing. Though a deal with a major drug group would give Chiroscience a useful royalty stream, it might in the end extract less value. With cures for cancer and HIV the holy grails of research, pain control is low priority for many drug majors. Levobupivacaine, with estimated peak sales of pounds 200m, might be too small for them to bother with.

Meanwhile, Chiroscience needs to think about its funding needs. With cash burn running at some pounds 2m a month, the group's cash pile won't last long. Though its attractive drug pipeline could attract more alliances, the fastest way to boost cash reserves would be demerging or selling its profitable ChiroTech business, which solves chemical problems for the fragrances and flavourings industry. The shares, down 4p to 273.5p are fair value.