It has also increased the number of products under development to nine and the firm's chief operating officer John Lynch said that "this could be expected to grow". However, Lynch said the firm had no plans to seek more investment.

"Last year alone, we raised 14m in the Irish market and that money will keep us going for a while, " he said.

The news comes in the same week in which Elan, which sold the oral technology in 2004 as part of its recovery plan, announced that its annual losses had fallen to 203m, compared to 292m the previous year.

Lynch said clinical trials of MER 103 had found that it lacked the sideeffects of the current market leader in osteoporosis treatment, Merck's Fosamax. The quantity of the active ingredient absorbed was also greater and the dosage requirements were less stringent.

"We're actually using the same base compound, which is about to become generic, to produce a whole new and different product, which has fewer side effects, " Lynch said.

He added, however, that Merrion, as a research company, believed it lacked the resources to market the product and was seeking a larger partner before entering into the final trials that lead to licensing.

Besides working on its own drugs, Merrion also works with multinational pharmaceutical giants to produce tablet forms of drugs that can currently only be injected.

According to recently filed accounts, the firm lost 1.5m in the year to the end of last March. However, Lynch said this was to be expected.

"It's part of our business model.

You have to invest money to recoup it later."