CHEMICAL software company Oxford Molecular is investing £2.5m in a new company being set up by a university professor, writes Maggie Hartford.

Professor Jeffery Errington aims to find new antibiotics - urgently needed because bacteria continually develop resistance to treatment.

His company, Microgenics, will offer pharmaceutical companies a screening service, suggesting potentially useful drugs. He works at the Sir William Dunn School of Pathology, where the first antibiotic, penicillin, was developed 50 years ago.

Oxford Molecular chief executive Tony Marchington said: "New antibiotics are urgently required and Microgenics will reduce the time to market significantly."

It is the third company to be spun off by Oxford University since March. The others are Opsys, aiming to develop technology for flat-screen TVs, and Synaptica, a virtual company funding research to find drugs to treat Alzheimer's, Parkinson's and motor-neurone disease. Dr Tim Cook, managing director of Isis Innovation, which masterminds the spin-offs, said: "I am very pleased that Oxford Molecular Group, itself an Isis spin-out in 1989, is helping Prof. Errington to start to build his company."

The £2.5m will pay for labs to be set up and for up to four years of research, with about 20 staff. Prof Errington said: "We are already looking for premises."

In return for its investment, Oxford Molecular will have a 20 per cent share in the company. The university will own 32.5 per cent, and Prof Errington and his staff will own the rest.

Oxford Molecular, which now employs several hundred people with an annual £15m turnover, started in 1989 in a shed at the university science labs.

Last year Oxford Molecular put £4m into two Cambridge drug discovery companies.

Oxford University spin-off companies now employ several thousand people and a recent study showed that Oxfordshire is now catching up with Cambridgeshire as a honeypot for high-tech industry.

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