BioWorld International Correspondent

LONDON - British Biotech plc is no more.

The one-time flagship of the UK sector last week changed its name to Vernalis plc, announced a restructuring that will see it bow out of four clinical programs and reiterated its commitment to secure further mergers and acquisitions.

The name change came as British Biotech, founded in 1986, completed its £48 million (US$79.8 million) all-share merger with Vernalis Group plc, of Guildford, UK, announced in July. Three months earlier British Biotech took over RiboTargets Holdings plc in a deal that valued the privately held company at £24 million at the time.

Simon Sturge, CEO, told BioWorld International: "We are going to focus down. Obviously, you have to be brutal; we have got the financial resources to progress the remaining programs faster."

And he promised there would be further merger and acquisition activity.

"We have embarked on a strategy of serial M&A," he said. "There are lots of subcritical [sized] companies with jewels in their pipelines." He added that discussions are in hand with several companies.

The programs to be dropped are:

• BB-10901, an antibody directed cytotoxin being developed in collaboration with ImmunoGen Inc., of Cambridge, Mass., in the treatment of small-cell-lung cancer.

• MG98, an antisense compound, which is being developed in collaboration with MethylGene Inc., of Montreal.

• An antibiotics program based on peptide deformylase inhibitors discovered by British Biotech, which is partnered with GeneSoft Inc., of South San Francisco.

• VML 670 to treat sexual dysfunction that occurs as a side effect of treatment with selective serotonin reuptake inhibitor antidepressants, partnered with Eli Lilly and Co., of Indianapolis.

Sturge said the peptide deformylase inhibitor program has been completely outlicensed to GeneSoft. Of MG98 and BB-10901 he said, "We have legal obligations and are in discussions with these partners. The aim is to reduce our financial commitment."

VML 670 met some secondary endpoints but failed to meet its primary endpoint in a recently completed Phase IIa trial. The data have been passed to Lilly, but Vernalis will not do any additional development.

The restructuring leaves four clinical programs, the most advanced being a Phase IIIb study to extend the label of Vernalis's migraine drug, frovatriptan, to include menstrually associated migraine.

The others programs include BB-10153, a form of human plasminogen engineered to be activated to plasmin at the site of newly formed blood clots, which is currently in a U.S. Phase IIa study in heart attack patients. It is also working with R140, a GABA_A agonist discovered by RiboTargets, which has just entered Phase I in cancer pain, and VR2006, which will go into Phase I in Parkinson's disease in December.

The integration of British Biotech, RiboTargets and Vernalis will see the combined headcount reduced to 135 from 271, once the restructuring is complete. That should save £13 million annually, it said. At last count there was gross cash of £58 million, of which £7 million is due to F. Hoffmann-La Roche Ltd., of Basel, Switzerland, as repayment of a convertible loan made to Vernalis in May 2002.

Sturge said the money gives the new Vernalis a three-year cash life, adding, "It is hard to be entirely clear, because we are in the fortunate position of having a revenue stream [from frovatriptan]."

Apart from ongoing royalties on sales, Vernalis expects to receive $30 million in milestone payments on frovatriptan around the third quarter of 2005. It also owns the freehold on British Biotech's facilities in Oxford, which are to be sold.