Announced they have a blockbuster drug on their hands and signed a I/2 BILLION pound deal with SHIRE:

Shire is to pay up to $825m (414m) to Renovo for the exclusive development and commercialisation rights to the biopharmaceutical company's groundbreaking scar-prevention drug.

Shares in Renovo jumped 14 per cent, up 27p to 214p, as the City welcomed the significantly higher-than-expected deal for the drug. Juvista was developed after experiments that started 20 years ago revealed that alligator embryos displayed exceptional wound-healing qualities.

Shire will pay $75m cash upfront and will also take a $50m stake in the AIM-listed company, equivalent to about 7 per cent of the equity. Further payments will be triggered as specific milestones are reached, such as FDA approval and sales targets being met. Shares in Shire were off a penny at 1220p.

Owing to the wide range of scars the drug could treat, from serious medical conditions such as burns through to routine surgery and cosmetic surgery, analysts say Juvista has blockbuster potential with peak sales estimated at $1.2bn.

The potential market for preventative scar treatment in the US alone is believed to be about $4bn with 42 million people undergoing surgery each year, according to Renovo. Some 90 per cent of surgeons would use a preventative drug if it were on the market, according to research, while the majority of patients say they would be prepared to pay for anti-scar treatment. At present there is nothing in development that is promising the same kind of treatment as Juvista.

Renovo's chief executive, Mark Ferguson, said the company has completed trials on more than 1,500 people. Results have been "very positive", he said. Juvista is moving into final stage trials in the middle of next year and the drug could be launched by 2011.

Samir Devani, an analyst at Nomura Code, said the terms of the deal were "outstanding". "Critically, Renovo has retained European marketing rights and we expect the company to now develop its own sales and marketing structure," he added.

The deal marks a departure for Shire, the UK's third biggest drug-maker, which is focused on therapeutic medicines such as its best-selling attention deficit hyperactivity disorder drug, Adderall XR. Analysts said it fitted the company's speciality niche focus, while Goldman Sachs pointed out that Shire has the opportunity to build a franchise in cosmetic and general surgery application with Juvista in a similar way to how Allergan grew its franchise with Botox.