Drugs group CeNeS Pharmaceuticals said it was ready to begin final clinical trials of its morphine-based painkiller after passing a key milestone.

Results from a phase II study on hip replacement patients showed M6G was as effective in post-operative pain relief as a standard dose of morphine.

M6G is produced from morphine but has been developed by CeNeS to reduce the nausea and vomiting associated with traditional morphine therapy.

CeNeS believes the potential market for the treatment could be as big as £300 million across Europe and hopes to launch the drug in 2005.

Chairman Alan Goodman said the positive results from phase two tests meant phase threetrials were now likely to begin early next year.

Phase three is the last stage of tests drugs must pass before the company can apply for regulatory approval.

Mr Goodman said: "We are feeling very confident we have a compound which is at least equivalent in effect as morphine.

"The reduced side effects are the icing on the cake as there's already a belief M6G is better and less risky than morphine."

CeNeS is working in partnership with Irish firm Elan on M6G but Mr Goodman said the group would now look to take on a greater share of the funding.

He said it was likely to licence the drug for sale outside of the UK when the treatment is launched but keep the rights for inside the UK.

CeNeS closed its research laboratory in Boston, USA, last year and cut staff numbers at its head office in Cambridge to save cash for its drug development work.

Mr Goodman said the group currently had funding in place to last till the end of next year.