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Medeva link-ups boost drug shares

Medeva, the pharmaceuticals group, yesterday prompted share price rises across the sector after unveiling collaborations with two biotechnology companies and an upbeat statement on its drugs pipeline.

Peptide Therapeutics saw its shares jump 47.5p to 289p after Medeva said it was spending pounds 3m taking a 2.5 per cent stake in the Cambridge- based group at 340p a share and transferring to it a portfolio of vaccines.

In a separate deal, Medeva is taking on the full clinical development of a "chiral" form of its methylphenidate behaviour modifying drug from Chiroscience, whose shares rose 9p to 327.5p. Medeva's shares ended 8.5p higher at 288p.

The positive news dragged up shares in British Biotech, the UK biotechnology industry's biggest group, by 21.5p to 230p, while Celsis also saw a 2p rise to 112p after announcing a new marketing alliance for its SystemSure hygiene monitoring system with Diversey, part of Unilever.

The Peptide deal will see Medeva hand over certain intellectual property rights to oral and nasal vaccine technology for a consideration of pounds 1m, with a further pounds 1m contingent on development work to be carried out by Medeva over the next two years.

One of the best short-term prospects relates to a vaccine against E coli, the bacteria which has killed 17 people in Scotland in one of the worst outbreaks ever. Clinical trials on that are likely to start next year, while phase one tests on a nasally administered flu vaccine and phase two trials of an oral typhoid vaccine are both due to begin later this year.

Medeva's chief executive, Bill Bogie, said it would retain the right to commercialise the products, giving a royalty to Peptide. The market for vaccines, which was worth pounds 2.1bn in 1995, is expected to double over the next few years.

Meanwhile, analysts welcomed the methylphenidate news as underwriting the future growth prospects for the drug, which in its normal form is Medeva's main product. Chiroscience said a phase one study involving 12 healthy adults had confirmed the tolerability of the new formulation and had demonstrated dosing advantages. Medeva will now take it into commercial development, leading to a regulatory filing expected in the second half of 1999 in both Europe and the US, and will also finance the scaling up of the manufacturing process.

The success of a chiral, or more chemically pure, form of methylphenidate would allow Medeva to patent what is currently just a generic form of Ciba's Ritilin, used in the control of unruly children. Some of the possible benefits of the new drug are that it could be used at half the dose, offer fewer side effects and be more reliably effective across a greater range of people, Mr Bogie said.

Medeva also reported an encouraging response to both the latest phase three trials of its Hepagene compound as a vaccine against hepatitis B and proof of principle tests for its efficacy as a treatment for the disease.

Mr Bogie said Medeva would apply for a licence to sell the vaccine in the US and Europe in 1998 to access a market of 500,000 doses a year. It would decide by mid-year whether to move to commercial development of Hepagene in its treatment form, he added.