Investment: PowderJect soars after Swiss deal

POWDERJECT, the maker of the "needleless syringe", yesterday underlined its status as one of the UK's most successful biotechnology companies with an $100m deal with the Swiss drug group Ares Serono.

The agreement was accompanied by a pounds 52m share placing to finance the development of six vaccines for use in PowderJect's revolutionary device. The two announcements sent PowderJect's shares soaring as analysts moved to upgrade their share price targets.

The stock closed up 23 per cent to an all-time high of 870p, adding more than pounds 100m to the group's market value.

Under the Ares deal, the Swiss group, a world leader in infertility treatment, will pay $90m over at least three years and take a $10m equity stake for the rights to adapt five of its drugs to PowderJect's pain-free syringe. The device uses a burst of high-pressure helium instead of a needle.

The two companies declined to specify which Ares drugs were involved in the deal, but analysts indicated that Gonal-F, Ares' best-selling infertility treatment, was likely to be among them. They added that if the trials were successful, the new Ares products could be on the market within three years.

The agreement with Ares, a well-respected pharmaceutical group with sales of around $1bn and a market value of over $6bn, is a further endorsement of PowderJect's technology. The list of the company's other partners, including Glaxo Wellcome, Roche and Pfizer, suggests that major drug groups believe in the syringe's potential. The market is also pleased with PowderJect's determination to develop its own drugs.

Yesterday's 670p per share placing will be used to adapt to the syringe a number of existing vaccines, including influenza, hepatitis B and tetanus boosters.

Paul Drayson, chief executive, said the company's strategy of looking for a partner at the end of the second phase of clinical trial would enable it to reap royalties of around 40 per cent instead of the usual 6-12 per cent.

The City believes in PowderJect and shares have soared almost fourfold since the 1997 float. With no product until the millennium and the first profit due in 2002, they might look expensive. But the technology has potential and more deals are in the pipeline. As one analyst said: " You don't sell PowderJect, the story is just too good".