Synairgen announced positive results from its ongoing collaboration with Pharmaxis to develop a lysyl oxidase type 2 enzyme (LOXL2) inhibitor as a novel treatment for idiopathic pulmonary fibrosis (IPF).
IPF results from the build-up of scar tissue, or fibrosis, in the lungs, which prevents normal uptake of oxygen. There are more than 100,000 IPF sufferers in the US alone.
The results of the experiments showed that the Pharmaxis enzyme inhibitors, by inhibiting LOXL2, could reduce cross-linking of collagen fibres - which results in fibrosis.
Synairgen will now focus on the pharmacology of the inhibitors and expects to progress one of them to phase one clinical trials in 2017.
Chief executive Richard Marsden said: "We are very pleased with the progress made with this collaboration and are excited by these results.
"We look forward to updating the markets with further progress over the coming months."
Meanwhile, Synairgen announced losses from operations for the year to December 31 of £2.61mln against profits of £1.09mln a year ago.
The group said its current funds would support the ongoing search and identification of new potential molecule opportunities.
Chairman Simon Shaw said: "We are pleased with the progress made this year across our collaborations and in screening new opportunities.
"Our primary asset, AZD-9412, is being progressed through the clinic by AstraZeneca with results expected in 2017.
"Our strong balance sheet positions us well for progressing further collaborative programmes during the coming year."