Metabolic Pharmaceuticals, an Australian biotech group announced Monday that its new weight-loss drug, known as AOD9604 appears to help overweight people to burn fat and does not have any apparent side effects. Most drugs currently on the market work by curbing a person's appetite or limit caloric intake. The drug still faces additional testing and will most likely not be released to the public until 2008.

The news of the company's success had an immediate ripple effect, causing shares of Metabolic to jump 28 percent, although the stock did level out shortly thereafter.

The trials were conducted over the course of 12 weeks. 300 patients were studied. Those who took the Metabolic drug lost an average of a little over six pounds, while those who were give a placebo lost only 1.7 pounds. Additionally, those who were given AOD9604 maintained their weight loss over the 12-week period, and also showed lower levels of cholesterol and better glucose tolerance. Phase 3 of these trials will being in mid-2005.

21 percent of Metabolic is owned by Circadian Technologies, 10 percent by Monash University and 2.7 percent by Frank Ng. Ng discovered the connection between a small part of a human growth hormone protein and fat metabolism. AOD9604 is actually a synthesized version of that human growth hormone molecule.