THE UK's biotech bellwether announced yesterday that it would part ways with its founder following mounting pressure from institutional shareholders and an extended public row which has undermined investor confidence.
British Biotech chief executive Keith McCullagh will step down after the company's annual meeting in September, having held that position for 12 years.
His resignation - described as ''voluntary'' by the company - comes amid allegations that some British Biotech executives have attempted to control the flow of news from clinical trials.
The allegations, which have received extensive coverage in certain sections of the media, were refuted by British Biotech in a 30-page document issued to shareholders yesterday. In addition, the board of directors said it was fully satisfied McCullagh had ''acted honourably throughout his leadership''.
The accusations of news manipulation have been espoused mainly by Andrew Millar, British Biotech's former head of clinical research. He was sacked last month for discussing confidential company information with certain institutional investors.
Although pressure for McCullagh's resignation had reportedly been mounting, sector analysts said the company was likely to have a difficult time recruiting a replacement.
''Having forced out the chief executive, they are now leaderless and rudderless,'' one trader said. ''They have done it from a position of weakness, not strength.''
The company said it would consider internal and external candidates. Most speculation yesterday centred on commercial director Pam Kirby, who joined from Swedish pharmaceutical company Astra in 1996.
Industry observers believe that locating an outside candidate to take British Biotech through the next 18 months would be nearly impossible. This crucial period is when final trial results of the company's lead products will be known.
''It would be a high-risk jump for someone coming from outside at a somewhat uncertain point for the company,'' Greig Middleton's John Savin said.
Another analyst observed that any outside replacement ''could be out of a job'' within the next 12 to 18 months.
The company has also announced plans to shed up to 42 of its employees, and will initiate other cost-cutting measures in an effort to avoid ''recourse to external funding''. The firm had a ''comfortable'' #132m in the bank at the end of April, but still wants to reduce its monthly cash burn.
British Biotech will also seek a US marketing partner for cancer treatment Marimastat, while a similar strategy is being considered for acute pancreatitis treatment Zacutex. Analysts welcomed the move, although some wanted the company to go even further.
''If the potential of Marimastat is what they believe, a large partner will give them a lot of credibility, as well as gaining them more sales than on their own,'' analyst Steve Lang of Credit Lyonnais Laing said.
Mercury Asset Management, British Biotech's biggest share-holder with an almost 10% stake, was said to have ''confirmed its support for the company's strategy''. However, second-largest shareholder Perpetual maintained a studied silence.
In 1992, British Biotech became the first biotechnology company to list in London. It enjoyed an extended honeymoon as the darling of the stock market, which culminated two years ago when upbeat news on Marimastat drove the share price well above 300p.
However, the Oxford-based company's shares have more than halved in the past 12 weeks following Millar's dismissal and delays in regulatory approval for Zacutex. The stock closed 3p lower at 59p yesterday.
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