The company's operating loss was reduced by 79% to £1.1m from £5.3m.

Underlying cash burn fell £2.7m from £8.2m.

Vernalis said rigorous attention to cost control had reduced its underlying operating cost base by 18% to £7.8m.

It had a strong balance sheet with £33.8m of cash resources and was debt-free.

The group regained 100% of the Menarini frovatriptan royalty stream from January 1. Underlying Menarini sales were up 9% compared with H1 2009.

Novartis initiated a Phase II study on AUY922, triggering a $3m milestone receipt.

CEO Ian Garland said, 'Vernalis ended the first half of 2010 in a strong financial position having successfully completed an equity financing and regaining all rights to the growing Menarini royalty stream.

'The key medium- term priority is to leverage this financial strength to expand the pipeline through in-licensing or acquisition.'