By Maggie Hartford

Business Editor THE merger of drug discovery company Oxford Asymmetry International with German firm Evotec has boosted sales by 440 per cent to £7m.

Pre-tax losses rose to nearly £4m, from £2.6m. The merged company, Evotec OAI, which has kept its research laboratories and pilot production plant at Milton Park, near Abingdon, has £31m in the bank.

The drug discovery tools and technologies business generated revenue of £500,000. A key part of this was due to Pfizer's technology transfer ser- vices.

The services and products business made £6.5m. Disregarding the merger, revenue in the service business in- creased by 24 per cent through new partnerships in chemical research, and the pilot plant.

The merged company has won a deal with MediGene to investigate heart drugs by combining OAI's chemical expertise and compound library with Evotec's screening technology.

In addition to the basic contract, the agreement contains an option for processing up to four additional targets. Evotec OAI has also won deals with Swiss company Serono and US firms Celltech and Eli Lilly.

The company said: "This increased loss corresponds to our forecasts and mainly reflects our increased commitment in the area of research and development." The strong cash position meant further fundraising was not needed.

It added: "We concluded a number of trend-setting contracts with prominent com- panies during the first quarter.

"We are also making good progress in further implementing our financial strategy.

"This combines short-term revenue and cash generation while still participating in the longer-term success of our partners' drug discovery programmes through milestones and royalties."