Chief executive John Devane is the first to admit that at first glance a company which develops treatments for gastrointestinal diseases and disorders such as irritable bowel syndrome and functional diarrhoea can be a bit of a turn-off.

?We've become social pariahs, nobody wants to have after dinner conversation with us any more, " he said prior to announcing the company's full year results for 2005. The figures were AGI's first as a public company, following its listing on London's Alternative Investment Market (AIM) and Dublin's IEX in February. The company's executives may not be such a big hit on the social scene but they have had little trouble attracting investors.

AGI's management team includes a number of former Elan executives. For several, including Devane, the AGI adventure follows a successful foray into drug development with Athpharma. Under their guidance Athpharma developed four cardiovascular drugs which were later sold to Biovail for 42.5m.

AGI shares are up 19%, to 150 cent, since its flotation.

The shares were unchanged after last week's results which, as expected, boiled down to a pre-tax loss of 5.2m.

AGI currently has six drugs in Phase II clinical trials, the penultimate phase of trials before it seeks approval from regulatory authorities in the US and Europe to bring the drugs to market.

That is assuming the treatments come through the trials successfully. In the pharmaceutical industry there can be many a slip between cup and lip, as Elan shareholders know too well. They will shudder at the thought of their holdings plummeting in value following setbacks with Elan's Alzheimer's programme and, more recently, its multiple sclerosis treatment Tysabri.

Thus far AGI has suffered no such misfortunes. Its initial public offering (IPO) in February raised 42.5m which the company will use to fund its ongoing research and development costs and fund the search for other potential drugs which can be used to treat gastrointestinal disorders.

AGI appears to have spent its money prudently. It only has five full-time staff and contracts out all its laboratory work and clinical trials, operating as what Devane calls a virtual company." AGI expects to spend the last of a 9.5m funding round led by ACT Venture Capital in 2004 by the end of this year. ?If we were a larger company there is no way we could have gotten six products into Phase II on 9.5m, " said Devane.

The company's core competence is in what is known in the pharmaceutical industry as re-purposing or re-profiling.

AGI explores new uses for existing chemical compounds which are already used in treating other disorders.

The company currently has six research programmes running in parallel, with a seventh just coming on stream. The treatments are capable of generating substantial sales if successfully brought to market, according to Devane. ?They are very large markets. People project irritable bowel syndrome, for example, to be a multi-billion dollar addressable market. We would think that, without going crazy, an individual product should be able to garner $300m to $500m [in annual sales]."

At the same time prospective investors should be aware of the many obstacles which can lie between clinical trials and a successful launch. AGI, after all, has backed six horses because it is aware of the risks that one or more may well fall before the final fence.

We felt it was important in this sector to give yourself as many options as possible, " Devane said.

The company is expecting the data from its six ongoing Phase II clinical trial programmes to be completed over the course of the year. Devane said AGI will then have an important strategic decision to make.

It will choose one of those treatments to develop internally and develop the others in partnership with larger pharmaceutical companies, again assuming that one or more of the trials are successful.

AGI is in discussions with several large pharmaceutical companies which specialise in gastrointestinal drugs. Devane said he was bound by non-disclosure agreements from mentioning specific names but confirmed that many are among the 'top ten' pharmaceutical companies in the world.

So what are the prospects for investors if AGI can deliver? In a research note on the company, Davy stockbrokers' analyst Jack Gorman presents an encouraging scenario.

Based on anticipated licensing revenues and milestone payments if the Phase II trial data hits the right note and AGI can bring joint-venture partners on board, the company could be worth as much as 185m, he says. That translates to a share price of 275 cent per share, implying an upside of over 80%.

If the company can deliver that kind of return for shareholders, its executives will find themselves much more welcome at dinner parties.