SYDNEY - British pharmaceutical firm SmithKline Beecham plc has signed an option agreement with Amrad Corp. Ltd. for a license to a rotavirus vaccine now undergoing Phase IIa clinical trials.

In an announcement to the Australian Stock Exchange last week, the managing director of Melbourne-based Amrad, John Grace, said SmithKline has taken an option to license the vaccine after the completion of current trials at the Royal Children's Research Institution, in Melbourne.

Those trials, involving 60 children, are expected to be completed in the fourth quarter of 1998. The treatment requires a series of injections and there are no preliminary indications of the results.

A full license agreement would involve milestone payments and royalties on sales to a market estimated to be worth more than US$250 million a year, but Grace declined to reveal any of the details of the agreement with London-based SmithKline.

News of the option agreement immediately pushed Amrad shares up by A$0.12, to A$2.39.

Rotavirus, which causes acute gastroenteritis in children, was first isolated 25 years ago by Ruth Bishop and Ian Holes at the Royal Children's Hospital and the University of Melbourne. Bishop also later identified the vaccine candidate on which the Amrad vaccine, referred to as AM94, is based.

Amrad is a pharmaceutical and biotechnology company with a portfolio of development products. Another product under development is AM424, a treatment for motor neuron disease now undergoing Phase I trials.

The firm has other operations, including ICT Diagnostics Ltd., an Australian company that specializes in manufacturing rapid diagnostic kits for a range of diseases. Amrad acquired ICT for A$50 million in cash and shares in February. *

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