SYDNEY, Australia ¿ News that the anti-flu drug Relenza was approved for sale in Europe last week helped the stock price of Biota Holdings Ltd. make up some of the ground lost when the FDA unexpectedly rejected it earlier this year.

During the week, after the announcement that Relenza had been approved for sale in Europe, Biota¿s stock price had increased A$0.79 to A$6.14 (US$3.93) by Friday¿s close.

Biota developed the neuraminidase-inhibiting technology used in Relenza and gains a royalty of 7 percent on net sales made by partner Glaxo Wellcome, which developed the drug.

Friday¿s closing price is certainly better than the stock¿s recent low of A$4, but still well short of the record price of A$9.40 it reached just before an FDA committee decided against recommending Glaxo¿s initial application for marketing approval, deciding that the U.S. trials did not demonstrate sufficient efficacy.

Australian analysts also note that the initial rejection of Relenza has taken some shine off Biota¿s financial prospects.

Michael Carmody, a biotech analyst in the Sydney office of Burdett Buckeridge & Young, noted that Relenza now faces a competitor ¿ a similar product called GS4104 discovered by Gilead Sciences Inc., of Foster City, Calif., and licensed to Hoffmann-La Roche.

He said that product had been submitted to the FDA and might be approved for the U.S. market before Relenza.

Relenza has now been effectively approved for sale in Europe ¿ initially in Sweden in February, and then in the other states in the European Union under the European Commission¿s mutual recognition process.

But the major market still is the U.S. ¿ Biota estimated the EU accounts for 25 percent of global pharmaceutical sales ¿ and there might not be much difference between the two drugs once they are on the market.

Carmody said that, judging from the publicly available information, Glaxo¿s Relenza might be more effective, but the Roche product might be easier to use. However, those differences are unlikely to mean much once the marketing departments of both companies start working on the products.

As a result, as the Roche product might be approved first, it would eat into the likely market share of Relenza. Instead of 60 percent of the market, Glaxo¿s product was likely to obtain only 40 percent to 50 percent, so there would be a correspondingly lower cash flow to Biota, Carmody said.

If approval is gained from the FDA, Carmody believes Biota shares will be valued at A$5.80 (US$3.71).

Both Biota and Glaxo said they are working with the FDA to resolve clinical issues raised by the FDA¿s advisory committee.