Vaccine boost for Powderject

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POWDERJECT Pharmaceuticals, the drug company behind the needle- less syringe, yesterday revealed a major breakthrough in the fight against Hepatitis B.

The Anglo-US group has become the first company in the world to complete a successful trial of a DNA-based vaccine for Hepatitis B - a potentially fatal liver disease that affects 350m people worldwide.

The success of phase one trials triggered a pounds 1m payment to Powderject from the pharmaceutical giant Glaxo Wellcome, its partner in the vaccine venture. It also put the biotechnology group in a leading position in the $1bn a year market for Hepatitis B vaccines.

DNA vaccines are considered safer than traditional treatments because they carry a lower risk of causing the disease.

News of the successful trial sent Powderject shares up 14p to 509p. Shares in Powderject, which yesterday reported a near two-fold increase in its interim pre-tax loss to pounds 4.8m, have risen almost four-fold since the beginning of the year.

Investors have perceived the company as lower-risk than other biotechnology groups because it does not develop its own drugs. The company's reliance on existing drugs reduces the risk of a failure in the development programme and ensures a steadier earnings stream.

However, Powderject still needs to go through clinical trials as all its drugs have to be tested for use with its needle-less syringes.

The syringe, which uses a supersonic burst of helium instead of a needle to deliver the compound, is being tested on three main products: the Hepatitis B vaccine, a local anaesthetic Lidocaine and the anti-impotence drug Alprostadil. The company plans to launch Lidocaine on the market at the end of 2000, with Alprostadil coming on stream a year later.

Sally Bennett, a pharmaceutical analyst with broker Sutherlands, said that Powdeject's strategy cushioned it against the uncertainties experienced by other drug development companies.

"It's clear that its technology works. The difficulty is that it has to reformulate existing drugs into forms that can be injected in the syringe," she said.

She added that with pounds 26.7m of cash in the bank and a number of agreements with major pharmaceutical partners, the yearly cash-burn of around pounds 10m would not be a problem.

However, other analysts said that Powderject shares were now fully priced. "The problem is that they are much better valued than other biotech companies and their lower risk status is already in the price," one industry expert said.