PowderJect shares soar on R&D deal with Glaxo for high-speed 'injection s'

Shares in PowderJect, the biotechnology group, leapt by one-third to 418.5p as the group announced Europe's largest ever pharmaceutical research and development deal. It has teamed up with Glaxo Wellcome, one of the biggest drugs groups in the world, to develop a revolutionary system of driving drugs through the skin at high speed which could eventually replace injections.

The deal promises to transform the financial fortunes of PowderJect which only floated on the stock market last year and has yet to make a profit. Glaxo is paying $24m (pounds 15m) up front for world-wide rights to market and develop a total of 11 new treatments. It could end up paying more than pounds 180m if these treatments progress through clinical trials. Those trials are likely to take a number of years, but if the process are successful analysts believe that they could open up a new market worth hundreds of millions, and perhaps billions, of pounds. If that happens PowderJect will also receive royalties, over and above Glaxo's substantial milestone payments.

Paul Drayson, chairman and chief executive of PowderJect, said yesterday: "We are pleased that Glaxo Wellcome have realised our potential. They can use their research powerhouse to develop these remedies."

"So far trial results [from the new system] have exceeded our expectations and this is just a small part of our potential market," he added.

Allan Baxter, group research director at Glaxo, said: "We are particularly excited about this novel technology which offers Glaxo Wellcome a unique and competitive opportunity to build on our established strength in anti- virals and our emerging portfolio in cancer."

The partners will work to develop a range of more effective vaccines using DNA to create a greater resistance to diseases. As well as vaccines for Hepatitis B, HIV and cancer, Glaxo will look to work on a portfolio of other remedies for contagious diseases.

Glaxo demonstrated its confidence in the new system by taking a 7.7 per cent stake in PowderJect at a cost of pounds 12.1m. It has pledged not to buy or sell any of these shares for the next two years.

PowderJect is working on a wide range of other applications for its new process, and has also signed agreements with Chiroscience and Roche to develop other treatments.

The group was founded in 1993 in Oxford to exploit the University's research in the field of drug vaccine delivery.