British Biotech, once the most promising biotechnology firm in Britain, won a chance to redeem itself yesterday in a deal with US pharmaceutical giant Schering-Plough on its cancer products.
Schering-Plough will develop and commercialise two products, marimastat and BB-3644, and help to market them in North America and Europe. British Biotech has a similar deal with Japan's Tanabe Seiyaku for the Japanese and south-eastern Asian markets.
News of the Schering-Plough deal improved British Biotech's shares which touched a session high of 45p sterling (68 cents) and were trading at 41 1/2p, 4 1/2p or 12 per cent up on the day.
Schering-Plough is known for its big presence in the cancer segment, led by Intron A, which treats cancers and has sales of more than $1 billion. It also has Eulexin, a prostrate cancer product.
Under the deal, British Biotech gets an upfront payment of $8 million (€7.5 million), including an upfront licence fee of $4 million with the balance as equity investment in the firm.
The research company will issue 4.5 million new shares at 55p each, representing a 0.7 per cent stake in the company. Schering-Plough's upfront and milestone payments, excluding royalties, could total $60 million, if all milestones including certain clinical and regulatory targets are met.
British Biotech did not specify the level of royalties it would receive but chief executive Dr Elliot Goldstein said: "I can certainly say it is in double digits."
Biotech companies typically receive a fixed percentage of a product's revenues as royalty income. It is normally 3 per cent or above with 10 per cent and higher considered to be quite good.
The choice of Schering-Plough as a partner came as a surprise to some analysts who were expecting British Biotech to sign a deal with Pharmacia & Upjohn, with which it has held talks last year, or Eli Lilly and Co.
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