Xenova shares climb after drugs agreements

Xenova, the biotech tiddler that bought rival Cantab Pharmaceuticals last month, saw its shares climb 20.25 per cent yesterday after unveiling alliances with two North American counterparts to develop anti-cancer and anti-viral drugs.

The Slough-based company could receive up to £42.7m from the Canadian drugmaker QLT in a partnership to develop a compound that reduces cancer cells' drug resistance.

QLT is paying $10m (£7.1m) for the US rights to the compound and investing $45m in trials. Xenova will receive royalties of up to 15 per cent on sales, and $50m on meeting development targets. Late-stage trial data is expected in 2003.

David Oxlade, Xenova's chief executive, said pharmaceuticals giants had been interested in a deal, but QLT offered better terms. "You can expect us to sign more partnerships in the second half," he added.

Genencor, a Californian biotech, signed a deal to develop the Phogen anti-viral technology Xenova obtained in acquiring Cantab. Genencor, which aims to develop drugs against hepatitis, is paying £1.2m up front, plus a potential further £13.8m.

Xenova posted interim pre-tax losses of £7.4m. At the end of June, cash balances were £18.1m. The shares closed up 8p at 47.5p.