Biota Holdings Ltd. (BTA.AU), an Australian biotechnology company, said Thursday that licensee GlaxoSmithKline (GSK) plans to more than treble its annual output capacity of its influenza antiviral drug, Relenza, in response to the H1N1 influenza pandemic.

GSK, the U.K.'s largest drugmaker, plans to boost its capacity to 190 million courses by the end of the calendar year, from 60 million courses, Biota said in a statement.

Biota receives a 7%-10% royalty on global sales of Relenza by GSK and expects significant government orders of the drug placed after the global swine flu outbreak in April will help swell future sales.

Since 2003, many governments have started or extended their stockpiles of Relenza and rival treatment Tamiflu, which is licensed to Roche Holdings AG (ROG.VX), in preparation for a possible influenza pandemic.

Relenza is inhaled and is capable of treating or preventing infection from the influenza virus by inhibiting its multiplication and spread.

In a separate statement, Biota said that its royalties from Relenza in the three months ended June 30 were A$8.9 million, bringing its annual total to A$45.0 million, more than double the A$20.5 million it received in fiscal year 2008.

GSK's annual sales of Relenza rose to A$638.7 million last fiscal year, up from A$304.4 million a year earlier, it said.

GSK Chief Executive Andrew Witty said Wednesday that the company expected to generate GBP600 million (A$1.21 billion) from Relenza this year as it fulfilled orders, U.K. newspapers reported.

London-based GSK will boost production capacity of Relenza in its standard "diskhaler" format to 90 million courses from 60 million, and a further 100 million courses of extra capacity will be available as Relenza "rotacaps/rotahaler", Biota said.

Both devices use a dried form of the drug for inhalation but the rotacap is smaller and is currently used for other inhaled GSK treatments and can be rapidly adapted for Relenza use, a company spokeswoman said.

Biota said GSK's expansion plans were based on increasing its manufacturing capacity, not orders or sales.

The alternative treatment was recently granted temporary approval by Swedish regulators, and hence within the European Union, for distribution during a pandemic, Biota said.

GSK, which has contracts to supply Relenza to more than 60 countries, is in talks with a number of global regulators to secure further approvals, the company said.

However, the expansion and any increase in royalty payments won't affect Biota's cash position until June 2010 at the earliest, it said.

Biota licensed Relenza to GSK exclusively in 1990 and the treatment was launched globally in 1999.

At 0030 GMT, Biota shares were up 9.6% to A$1.775, compared with the broader market's 0.2% decline.

 
   -By Andrew Harrison, Dow Jones Newswires; 61-3-9292-2095; andrew.harrison@dowjones.com
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