Shares in Renovo Group, the London-listed biopharmaceutical company, rose steeply after Shire said it had agreed to pay the group up to $825 million (£414 million) for exclusive development and commercialisation rights to its scar prevention drug, Juvista.

Shire will pay $75 million upfront and will take a $50 million equity stake in Renovo.

The rest of the cash will be paid as milestone payments dependent on the drug, which was originally developed from studies of wound healing in alligator embryos, winning licensing approval and hitting sales targets. The development partnership covers all countries outside the European Union.

Shire and Renovo claim that the total market for Juvista could be worth as much as $4 billion in the US alone, where 42 million people undergo surgery every year.

The drug, which is due to enter final-stage Phase III trials next year, is designed to be used after surgery, for burns victims, cosmetic surgery or for acne scars.

It could be launched in 2011, according to Mark Ferguson, Renovo’s chief executive officer.

He added that it was discovered by observing the unique healing properties of embryos, which do not scar, and replicating them in a protein-based injectable drug.

Shares in Renovo were up 24p to 211p by midday.

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