GASTRO-INTESTINAL drugs development company AGI Therapeutics lost €14.1 million last year, but claimed progress on bringing its Rezular drug to market.

The company said it had received guidance from the US Food and Drug Administration over further studies on the use of the drug to treat forms of irritable bowel syndrome.

A Phase III study of the drug has been under way since October. Phase III - or human trials - are the last hurdle to be crossed before a drug is considered for final approval.

AGI said it had also made progress on Phase II studies of other drugs arbaclofen (AGI-006), 4-ASA (AGI-022) and mecamylamine CR (AGI-004) for treating gastroparesis, ulcerative colitis and chemotherapy-induced diarrhoea.

The increased losses - up from €5.2 million last year - were attributed to an acceleration in research and development spending from €3.5 million to €13.2 million.

Cash and short-term deposits at the end of the year were €30.9 million, compared to €40 million last year.

The loss per ordinary share was of 20.9 cent (2006: 6.9 cent).

The company's broker, Davy, said the shares, at 132 cent, were oversold as they only reflected a 20 per cent chance of Rezular being approved.