The new drug known as laninamivir has shown positive results in late-stage trials in Asia. The trails involving 1,000 patients showed that new drug can treat symptoms and kill fever in patients with influenza A and B, the most common seasonal flu strains.

Biota managing director Peter Cook said the class of drugs to which laninamivir belonged - neuraminidase inhibitors - affected the mechanism whereby the virus, having replicated in the lung cell, releases itself from that cell.

He said: "All influenza viruses use this same mechanism and these drugs all block that occurring, so effectively creating a `still birth' of the new virus."

The one inhaled dose of the new drug is as effective as the ten doses of Tamiflu, the leading drug used against H1N1 and H5N1.

The company is now planning to pursue clinical trials in western markets and seek licensing partners to help get the drug to market in North America and Europe.

Daiichi Sankyo (4568. T), Japan's third-largest drug company co-owns laninamivir with Biota. It funded the Japanese trails. It also has the rights to make and market laninamivir in Japan.

Biota said Daiichi Sankyo now was seeking approval from the Japanese regulatory authority to market laninamivir in Japan, with submission anticipated by March 2010.