AN OXFORDSHIRE company researching new treatments for cancer and wasting diseases has merged with a fellow biotech company in a deal described as a "complete success story".

Hybrid BioSystems, based at the Cherwell Innovation Centre at Upper Heyford, has merged with Myotec Therapeutics to form PsiOxus Therapeutics.

Its chief executive, John Beadle, said the merger was supported by £3.6m of investment which would mean expansion of the five-strong workforce at Heyford.

"It has been a very difficult time to raise money, but we have very good investors. It's a great achievement for the company to have raised money at a time like this.”

Hybrid Systems was founded in 2002 by Prof Len Seymour, chair of gene medicine at Oxford University, and Dr Kerry Fisher, also of Oxford University, to develop vaccines for flu and cancer, using viruses.

Part of the original company was spun out before the merger to form a separate company, Native Antigen, which will continue to operate from Heyford, running a screening service for anti-cancer drug compounds.

Dr Beadle said: “PsiOxus now has science from several different universities and our scientific founders are spread across Europe.”

All of the major investors from both of the merged companies contributed to the merger funding. Dr Beadle said the company's laboratory would be at Heyford, with the administrative centre in Cambridge. It is conducting clinical trials on a treatment of cachexia, a wasting disease that is the direct cause of death in 20 to 40 per cent of all cancer patients.

It is also developing a treatment for sarcopenia, the age related loss of muscle mass and strength that affects one in five people by age 60, which will be tested in 2011.

Dr Beadle said: “We are also developing ColoAd1, specifically bred using the evolutionary principle of natural selection to only grow in cancer cells and kill cancer cells.”

It will be tested on patients with bowel and liver cancer.

The company also has a technology which applies 'plastic coating' to viruses. “It's a way of hiding it from the immune system,” said Dr Beadle. “We are using a virus to create vaccines, but you don't want the virus to get into normal cells. The virus acts like a Trojan horse to get the vaccine to where we want it.”

Investors include Imperial Innovations, Invesco Perpetual, and the Mercia Fund, Cancer Research Technology and the University of Birmingham.

Chairman Michael Moore said: “Under the accomplished leadership of our chief executive John Beadle, we have brought together the key elements for a successful therapeutic development company, including talented teams with world-leading scientists, complementary technology platforms and experienced investors. As a combined entity, we have the clinical trials expertise among our scientific founders to develop promising new therapeutics to treat cancer and other serious diseases.”

Susan Searle, chief executive of Imperial Innovations, said: “PsiOxus Therapeutics represents a rare opportunity to combine extensive clinical trials experience, world-class science and emerging technologies under a single, unified management team.

“We are pleased to be able to provide the team with the support and finances needed.”