A major consolidation may be underway in the UK biotech sector. According to a report in London's Financial Times, several
embattled companies specializing in cancer medicines are talking about a possible merger. Xenova, British Biotech, Antisoma,
KS Biomedics, and Oxford GlycoSciences are believed to be in the early stages of discussions about merging to create a much
The need for vast cash investments to fund the development of novel medicines makes biotech an expensive business, and the
UK's biotech sector has been operating almost exclusively at a loss. Furthermore, following several high-profile biotech failures-of
both companies and products-much of the venture capital available in the past few years has dried up. The only companies making
a profit are Powderject and Celltech, which have mainstream revenue-generating products, such as those in Powderject's vaccine
Otherwise, UK companies are wholly reliant on investment capital. And it only takes one bad report on an investigational drug
to plunge a company's share price into free-fall. British Biotech, the one-time darling of biotech investors, is a case in
point, with a series of high-profile lead-product failures. Its cash supply of $70 million is unlikely to last more than 18
Other companies have suffered similar downturns. Oxford GlycoSciences had its metabolic therapy Vevesca (miglustat) rejected
by FDA in June, and its share price plummeted by almost a quarter as a result. The European Agency for the Evaluation of Medicinal
Products has since given a positive opinion on it (the last step before approval), but OGS has admitted that a merger may
be the only way to ensure the company's long-term survival.
Antisoma is also suffering from cash problems, thanks, ironically, to the success of its lead drug for ovarian cancer. Phase
III trials of the monoclonal antibody pemtumomab are likely to take a year longer than expected because patients given the
drug are surviving longer than expected. The problem is based on the target end-point: when a set number of trial patients
given a combination of pemtumomab and Taxol have died. So the good news for patients is short-term bad news for the company,
which had secured funding only until the end of 2003, believing that would allow sufficient time to complete the trial.
KS Biomedix, too, has money troubles. Its shares hit a record low in August, after losing 96 percent of their value within
a year. Its brain cancer medicine TransMID is set to begin Phase III trials by the end of the year, and the company has another
cancer therapy ready to enter Phase I/II trials for pancreatic and colorectal cancers. But its current cash pile is sufficient
to fund research for only 18 months.
Even the largest UK-based biotech specializing in oncology, Xenova, is small by US standards. Its CEO, David Oxlade, believes
that a merger between companies in the anti-cancer field "has merit fundamentally." Xenova acquired the vaccine company Cantab
in February, and Oxlade clearly believes that further consolidation would be in his company's best interests.
The history of the UK biotech sector is awash with attempted two-party mergers that never materialized. Of course, there is
no guarantee that a multi-company merger will be any more successful, but if it is, it may well secure the sector's long-term