Melbourne drug developer Biota Holdings (ASX:BTA) has soared more than 20 per cent on reports its Japanese partner has been given the go-ahead to sell an influenza drug.

The Australian company engaged in anti-infective drug discovery and development, said today Daiichi Sankyo has received approval to manufacture and market in Japan the long-acting neuraminidase inhibitors (LANIs) influenza drug Inavir, or laninamivir octanoate.

Biota shares climbed 21 per cent or 19 cents to $1.08 in early trade before cooling to $1.03. The benchmark S&P/ASX 200 index was 1 per cent higher.

Discussions are continuing with a number of other companies for the licensing of laninamivir elsewhere, Biota said.

The company said laninamivir, an antiviral that provides treatment of an established influenza infection or for the prevention of influenza prior to exposure, was effective for seasonal flu, bird flu and swine flu.

Taken via inhalation, laninamivir differed from other flu drugs in that it required just one dose to treat flu and a once-weekly dose to prevent flu.

Biota, which merged its LANI program with Daiichi Sankyo's in 2003, will earn royalties on sales of the inhaled treatment and be eligible for milestone payments.