Australian judge orders Biota mediation with Glaxo

SYDNEY, Dec 17 (Reuters) - Biota Holdings Ltd (BTA.AX) said on Monday a judge had ordered it to enter mediation with GlaxoSmithKline Plc (GSK.L) over Biota's claim that Europe's biggest drugmaker failed to promote flu drug Relenza properly.

Melbourne-based Biota said in a statement the Supreme Court of Victoria state had ordered the mediation to be completed by May 16, 2008, and that it was likely it would be conducted in early May. In July, Biota increased its damages claim against Glaxo to as much as A$704 million ($606 million), taking into account the recent boom in demand for flu drugs, which are being stockpiled by governments around the world in case of a pandemic that may be triggered by bird flu.

Relenza, known generically as zanamivir, was developed by Biota and licensed to Glaxo in 2000, which then brought it to market. But it never became a big seller, lagging well behind Roche Holding AG's (ROG.VX) more convenient Tamiflu tablet.

Biota started its litigation in May 2004. Glaxo rejects Biota's allegations and argues it has met its obligations to the Australian company.

Shares in Biota were down 0.8 percent at A$1.26 by 0327 GMT in a wider market down 2.7 percent. ($1=1.16) (Reporting by Ben Wilson; Editing by James Thornhill)