A DRUG that could end the nightmare of long-term sleep deprivation is about to enter phase three trials.

Posidorm will begin final testing among 600 volunteers across Britain next month and, if successful, could unlock a market that is estimated to be worth €4 billion (£2.7 billion) a year from 2007 for the Chippenham-based biotech Alliance Pharmaceuticals. It is estimated that about 20 million people in Europe, including the elderly, shift-workers and the blind, suffer some form of long-term sleep deprivation.

Regulatory approval might also help the medicine to achieve cult status as a “lifestyle” treatment among travellers suffering jetlag and even among late-night revellers.

Posidorm is a synthetic replica of melatonin, a hormone produced in the pineal gland at the back of the eye. The body ramps up production of the chemical as darkness falls to help to induce drowsiness. Production stops around dawn.

The hormone is available in the United States as a dietary supplement, but regulators elsewhere believe that the treatment should be developed as a pharmaceutical so that it can be properly clinically tested.

It is unlikely that Alliance will be able to protect Posidorm with patents, although the company will file for regulatory approval under the orphan drug programme, which will give it exclusive marketing rights for ten years.

John Dawson, the Alliance founder, who with his wife owns 42 per cent of the business, plans to seek a licensing partner to help to sell the medicine.

“The sleep disorder market is almost completely unsatisfied,” he said. “If we can capture just 1 per cent of the potential for this treatment in Europe, we can bring in €40 million of sales a year.”

Doctors struggle to treat insomnia. They are reluctant to prescribe sedatives, partly because they are addictive and can be abused in large doses and partly because they lose their efficacy over time.

Posidorm will be formulated in a tablet so that patients get an initial, fast-acting dose to help to bring on sleep and a subsequent “top-up” that releases slowly throughout the rest of the night.

Alliance was founded in 1996 to exploit mature drug brands that “big pharma” no longer considered profitable. It struck its first deal in 1998, when it picked up 16 brands under a marketing and distribution deal with Novartis. It floated on AIM in 2003 and last year made two significant brand acquisitions: Periostat, a treatment for gum disease, and Forceval, a prescription drug containing 24 vitamins and minerals for use among people who are malnourished.

Alliance reported a pre-tax profit of £400,000 in the year to the end of February on sales of £11.8 million. 

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