Pharmaceutical company AGI Therapeutics has been given the green light by the US Food and Drug Administration (FDA) to conduct phase-three trials of its gastro-intestinal drug, Arverapamil, it announced yesterday.

But the IEX-listed company also reported a higher than expected operating loss of €5.2 million for 2006, up from €4.6 million the previous year.

AGI made a net loss of €4.3 million, compared to a net loss of €5.2 million in 2005. The loss per share was 6.9 cent.

Positive phase-two data for arverapamil, which is used in the treatment of irritable bowel syndrome (IBS), was included in the company's operating highlights.

AGI chief executive Dr John Devane said yesterday that the company was delighted with the outcome of its initial discussions with the FDA on arverapamil.

"We are now in a position to immediately progress from our phase-two clinical trial directly into phase three," he said.

AGI will start enrolling patients for the drug trial in the second half of 2007.

Davy stockbrokers analyst Jack Gorman said full-year results were less relevant at this stage of AGI's development.

Davy had forecast an operating loss of €4.4 million for last year, which was below the reported €5.2 million loss.

However, Davy noted that operating costs were also lower than forecast.

Research and development costs of €3.5 million were lower than Davy's €6 million forecast, but these costs will flow into 2007.

AGI successfully completed its listing on the London's Alternative Investment Market and on the Irish Stock Exchange's IEX market in February 2006, raising gross proceeds of €42.5 million.

Dr Devane said those proceeds gave it the financial resources it needed to advance its programmes to the next stage.