Drug doubt led biotech boss to quit

The managing director of biotech company Stanford Rook resigned from its board and refused to sign its prospectus because he believed it could not back up claims that it had a drug for treating tuberculosis.

Dr Wilson Carswell said he resigned his directorship as a matter of principle - giving up 100,000 share options that would today be worth almost pounds 500,000. "They just wanted me to go along with it, but I wasn't signing what I thought was an unhelpful prospectus," he said. "I contacted an epidemiologist and showed him the data and he was equivocal. He said it could all end in tears."

Sixteen hundred shareholders have invested in the company on hopes that its treatment could prove a miracle cure. The share price has rocketed almost 10-fold in a year and the company is now valued at pounds 90m, making it the fourth largest on the Alternative Investment Market.

Other experts have confirmed that doubts exist in the scientific community about the effectiveness of the drug, called M. vaccae, especially as it was discov- ered in Africa by Dr John Stanford 25 years ago.

"Normally speaking, the story would not have gone on so long," said Dr Paul Nunn, chief of research at the World Health Organisation's global TB programme in Geneva. "To my knowledge, it has never been submitted to a random controlled blind trial."

"There are some real questions, and people are right to be careful," said Dr Keith McAdam, a TB expert at the London School of Tropical Medicine who is now working in the Gambia. "If it proves to be right, Stanford is going to be a hero, but so far all their studies don't quite achieve significance statistically."

Since its discovery, several companies have waived chances to develop M. vaccae under licence, the latest being generic drugs giant Medeva, which in 1991 dropped an option to test it for use on rheumatoid arthritis.

Stanford Rook also aborted an attempt to list on a small Canadian market for emerging companies. The Alberta Stock Exchange said a report on M. vaccae by a provincial government research council was "not enthusiastic about the process".

Confidence in the eventual listing on London's Rule 4.2 market was not helped by the closure of the company's sponsoring broker, Cresvale, due to the collapse of its French parent, shortly after the float.

Since the initial offer last year, which raised pounds 1.76m, the company has moved to the Alternative Investment Market, where it raised another pounds 1.76m, and issued new shares to Morgan Grenfell Asset Management for pounds 4.65m.

Dr Carswell said he took his concerns about the prospectus to University College London, which continued to back the company through its flotation, although it recently sold half its 10 per cent stake.

The revelation is embarrassing for the UK biotechnology sector, where shares have soared over the past year. It expects a significant boost when the industry leader British Biotech reveals the results of Phase II trials on its cancer-fighting drug marimastat on Tuesday. But some observers say the entire sector is over-hyped and heading for a serious correction.

Company chairman and chief executive Eric Boyle dismissed Dr Carswell's claims and suggested the surgeon resigned because he was not invited to sit on the board of the new holding company.

But Professor John Pattison, dean of UCL's medical school and non-executive director of the company, admitted he had discussed Dr Carswell's concerns with him on several occasions.

Professor Pattison also agreed that there was no proof that the drug was effective against TB, although numerous small trials around the world have suggested it may be. A Phase III trial under way in South Africa is expected to decide the question when its results are announced in the autumn.

"It isn't proven, and the prospectus didn't say it was," said Professor Pattison. "Wilson and I had a lot of discussions about his concerns, so I read the prospectus very carefully. I thought his assessment was incorrect. The prospectus was a balanced account."

The document claims that "it has been shown that an injection of killed M. vaccae early in the course of chemotherapy results in ... fewer deaths during the course of treatment and more rapid clinical and radiological improvement."

Dr Carswell's successor as managing director, Dr David Kenard, admitted that some of the Phase I and II trials had been informal, but said others had been submitted to the US Food and Drug Administration and Britain's Medicines Control Agency, which approved further tests. The most significant results were still commercially confidential.