BioWorld International Correspondent

SYDNEY, Australia - The share price of Amrad Ltd. surged 40 percent after the company announced a licensing deal with pharmaceutical giant Merck & Co. Inc., of Whitehouse Station, N.J.

Neither company would say just what the deal involved, but from information on the company's website the deal likely involves Melbourne-based Amrad's work on an inhibitor for the cytokine receptor interleukin-13 alpha-1, which has been identified as playing a role in the development of asthma. Another cytokine, IL-4, has also been identified as playing a key role in asthma.

The deal involves an up-front payment of US$5 million, but if a product gets through to the market the milestone payments would total US$112 million, a total that made Amrad (and the Australian media) trumpet the deal as one of the largest collaborative deals to be signed by an Australian company.

Amrad could also receive royalty payments

Amrad Research Director Andrew Nash said that those milestone payments are likely to come "sooner rather than later" and that before Merck became involved Amrad had been planning on clinical trials within two years.

The statement said that Amrad and Merck will "work together to investigate drug candidates, with Merck being solely responsible for all clinical development and marketing."

News of the deal last week boosted Amrad's share price from A$0.47 to A$0.66 initially. By the end of the week it had fallen back to A$0.58.