Xenova shares climb after drugs agreements

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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.