IN a sector where investors must rely on the flow of news rather than profits, the uncertainty surrounding developments at British Biotech will do nothing to help the industry shake off the spectre of a disastrous 1997 stock market performance.

The man at British Biotech's helm for the last 12 years - its founder Keith McCullagh - has abandoned ship, and it is difficult to imagine that anyone would be eager to fill the void left by his departure.

The Oxford-based company also appears prepared to drop plans of becoming a fully-integrated drugs company with its own sales staff. It will instead cut its workforce by 14% and institute other savings designed to avoid a trip to the market for further external funding.

British Biotech will seek a US partner to help market cancer treatment Marimastat, and is toying with the idea of striking a similar deal for pancreatitis treatment Zacutex. Both drugs are in phase III trials, and so are the company's most advanced products.

If the UK's biotech flagship follows through with this plan, it can expect to collect only 10% to 20% of future Marimastat sales. And it could be at the lower end of this range, given the company's severely weakened negotiating position.

If the marketing of Zacutex is also farmed out, the royalties collected on its sales will similarly drop.

Of even more concern is the biotech firm's pipeline of research and development projects, which is feeble compared to those of stablemates such as Coretecs and Celltech.

British Biotech has no products in phase II trials, where half of all compounds fail because they are found to be ineffective, uneconomic or have serious unforeseen side-effects.

Although long-term value is where the bulk of all biotechnology and pharmaceutical worth resides, it would appear that British Biotech investors will have to be more patient than most. Whether or not this faltering by the UK's original biotech star portends another disastrous year for the sector remains to be seen.