Shire buys US drugs delivery firm for pounds 105m

Shire Pharmaceuticals, the small group floated a year ago, is to increase its size by more than two-thirds following a deal to pay up to $170m (pounds 105m) for Pharmavene, a US drugs delivery company based in Maryland.

The news came as Core Group, a company specialising in sustained release drug delivery products, announced that its pounds 73m stock market flotation had been "heavily oversubscribed" at 250p a share.

To part finance the Pharmavene deal and other acquisitions being contemplated, Shire is raising pounds 11.5m by way of a one-for-10 placing and offer at 214p a share. The group is also understood to be in negotiations for the purchase of an unnamed company in Europe and a product range in the UK for total of pounds 14m.

Despite the flood of new equity, the share price dropped just 3.5p to 234p yesterday as analysts welcomed the deal and news of lower-than-expected losses of pounds 105,000 in the latest six months. Dr Rolf Stahel, Shire's chief executive, said it had effectively achieved break-even in six months, rather than the 12 months forecast by the market.

Pharmavene gives Shire another 11 potential new products, taking the pipeline to 30. The US group has created a high-throughput method of screening how well particular drug formulations penetrate human cells in the laboratory. It is applying the results in 11 projects to develop technologies for the delivery and release of drugs more effectively into the body.

The lead product is Carbatrol, a controlled release form of carbamazepine, a drug used in the treatment of epilepsy. Carbatrol, which is licensed to Athena, part of the Irish drugs delivery group Elan, could be launched later this year. If successful, it would compete directly with Novartis' Tegretol drug, which had sales of $340m in 1994.

Another product under development is a more efficient version of Glaxo Wellcome's Zovirax anti-herpes drug. But the bigger potential could come from an oral form of Calcitonin, used for the treatment of brittle bones, which could attack a world market currently put at $5bn.

Separately, Oxford Molecular, a biotechnology group, announced that it was investing pounds 500,000 in Cambridge Combinatorial, a new drug research company run by Allan Marchington, the brother of Oxford's chief executive Tony Marchington.

Oxford will take a 20 per cent stake in Cambridge. The new company plans to use combinatorial chemistry to supply potential drug prospects to other drug and biotech groups. It claims it will have an edge on similar companies by providing a narrower range of compounds for screening as new drug prospects.