TROUBLED drug discovery firm British Biotech hopes to have a new chief executive in place by August.

The move comes after the decision by Keith McCullagh to quit after 12 years at the helm of the Oxford-based company.

He said he was stepping down because he wanted to put an end to "unfounded allegations" which have rocked the company.

More than 40 jobs are to go at the company.

The trouble blew up after Dr McCullagh fired the firm's head of clinical trials, Andrew Millar, for sharing with investors his concerns about the progress of drug trials.

His disclosures led to accusations that the company had deliberately misled shareholders with over-optimistic statements on the trials, which are crucial to commercial success.

But John Raisman, chairman of British Biotech, said Dr McCullagh, who will step down in September, had the company's full backing.

He said: "He has done nothing dishonourable; he judges it in the best interests of the shareholders."

The company said it would be cutting costs by making 42 staff redundant and introducing a hiring freeze.

The company also announced it was seeking a "strategic alliance" with a major US pharmaceuticals company to sell its anti-cancer drug marimastat, which is still at the trial stage, in the US market.

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