OXFORD pharmaceuticals firm Circassia saw shares jump by a third after drugs giant Astra Zeneca announced it is taking a £40m stake in the company.

Under the deal, Circassia will pay about £185m plus royalties for the rights to drugs developed by the British/Swedish-owned corporation.

These include two treatments for chronic lung diseases such as emphysema and chronic bronchitis.

Astra Zeneca will own about 14 per cent of the company.

Circassia, which specialises in treatments for respiratory disease and allergies, is based on Oxford Science Park.

It raised £200m when it floated on the London Stock Exchange in 2014.

The new deal with Astra Zeneca is a major bounce-back for the firm, which experienced a dip in the value of shares last summer, after it stopped trials for a cat allergy treatment.

Circassia chief executive Steve Harris said: "This proposed transaction is an ideal fit with Circassia’s strategy and respiratory focus.

"It represents a transformational opportunity for the company, doubling the number of marketed products in our portfolio, with the potential to triple the current number within two years."

Mr Harris also revealed plans to expand Circassia’s salesforce on the other side of the Atlantic, taking it up to 200 by the end of June.

He added: "Through an initial commercial collaboration with AstraZeneca, we plan to double our US sales force to promote Tudorza as our priority, as well as our existing products, transforming Circassia into a world-class respiratory business positioned for future in-licensing and mergers and acquisitions."