A second company dedicating to fighting cancer has been formed from Oxford University's pioneering tie-up with a merchant bank.

Pharminox aims to develop new cancer treatments which will not have the side-effects of current chemotherapy drugs.

Its work is based on research carried out by Prof Gordon Lowe of the university's chemistry department, which is building new laboratories in South Parks Road, thanks to a £20m deal with investment bank Beeson Gregory.

Under the 15-year agreement, the bank, through its subsidiary company IP2IO, is entitled to part of the shareholding due to the university in any spin-off firm that exploits ideas invented in the chemistry department.

As part of the deal, IP2IO has a 20.8 per cent shareholding in Pharminox, which has raised £750,000 to launch itself.

Chris Wright, chief executive, said: "We are delighted by the progress of our alliance with Oxford University."

Prof Lowe has patented new platinum-based cancer treatments. Current ones are widely used on cancers of the testes and ovary, previously resistant to treatment.

A report by the Oxford-based Cochrane Centre said they appeared to be more effective than non-platinum drugs.

But they have side-effects such as hair loss and cause tumour cells to become resistant to treatment.

Oxford University is at the forefront of the worldwide battle to come up with more effective platinum-based drugs.

Pharminox is the chemistry department's second spin-off company in the past month. Both firms were set up by Isis Innovation, the university's technology transfer company.

Managing director Tim Cook said: "On average, Isis Innovation spins out a new company based on university research every two months, so this joint venture with IP2IPO is proving extremely fruitful."

Earlier this month, Prof Graham Richards announced he had given his 25 per cent stake in a new company called Inhibox, potentially worth millions, to the US-based National Foundation for Cancer Research, which has funded much of his work since 1982.

The chemistry professor's first wife died of cancer and his second wife has had surgery for it.

Inhibox's software enables computers to hunt down molecules which inhibit cancer-causing proteins via a screensaver.