The company said it had isolated a gene that regulates the body's immune response to a number of viruses. Controlling the gene, which was discovered in mice, would enable scientists to boost the body's defenses against a number of diseases, the company added.
Robert Jackson, director of research at Chiroscience, said: "This gene is a virtual off/on switch for the immune system and, depending on the disease, there are times when we need to turn the system off and times when we need to turn it on."
Turning the immune system on would help to fight AIDS and cancer, where the body is too weak to defeat viruses. Switching it off would boost the body's defenses against diseases such as rheumatoid arthritis and diabetes, where the condition is exacerbated by a strong immune response.
Chiroscience, one of the UK's largest drug development groups, is starting to design drugs based on the genes and expects to start trials on humans in about three years' time.
Researchers at the company's US subsidiary have also identified a gene that could increase bone density in patients suffering from osteopororis - a painful bone-eating disease that affects millions of women.
John Padfield, the company's chief executive, said the scientists were "three months away" from isolating the gene. The discovery could lead to the development of a drug that reverses the bone wasting caused by osteoporosis. "There is nothing on the market that increases bone-density," Mr Padfield said.
Chiroscience also announced progress on a needle-free anaesthetic being jointly developed with fellow biotech firm Powderject Pharmaceutics.
The announcements pushed the shares up 16.5p to 264p. They have lost almost a quarter of their value since April, as investors fled biotechnology stocks following allegations of malpractice at British Biotech, the sector's flagship.