Superbug group shares soar to high on hope of drugs success

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Neutec Pharma, an offshoot from the University of Manchester which is trialling a treatment for the hospital superbug, is to raise up to £25m to set up a sales force for its new products.

Neutec Pharma, an offshoot from the University of Manchester which is trialling a treatment for the hospital superbug, is to raise up to £25m to set up a sales force for its new products.

The AIM-listed company launched the fund raising yesterday, after the publication of promising data on its other advanced drug, Mycograb, for the treatment of life-threatening fungal infections.

NeuTec shares leapt 135p to 495p, valuing the company at more than £100m for the first time. It floated in early 2002 with a market capitalisation of £35m and has surged in recent months amid growing concern about the human and financial cost of the superbug, MRSA, which claims 5,000 lives in the UK alone and has prompted a Government crackdown over hospital hygiene.

James Burnie, professor of medical microbiology at the University of Manchester and chief executive of NeuTec said: "The hype is absolutely justified. In fact, I think we are underestimating the problem. It needs money spent on it to create new therapies. The Government's plans for containment may have some effect but they are not going to make the problem go away."

NeuTec said in May that it was starting a third and final phase of trials of its MRSA treatment, Aurograb, with results due by the end of 2005. The latest trial results on Mycograb will be used to apply for approval to launch it in Europe next year.

NeuTec lost £3.1m in the year to June, with its cash reserves falling to £8m. Professor Burnie said the £25m placing and open offer, to be launched in the next few weeks, will pay for a small sales force, initially to sell Mycograb in Europe. Although NeuTec's products will be licensed to a bigger company for marketing in the US and Japan - normal procedure for cash-strapped biotechs - the company hopes that keeping control in Europe will prove more lucrative and less risky for shareholders.

Professor Burnie said: "When you look over the sorts of licensing deals that the biotech sector has done, each time the partner has misbehaved later, either by deciding they can't be bothered to sell it or deciding to dwindle your royalties. We don't want to be known as being dependent on the deal with 'x'."

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