MALVERN'S pSiMedica has just changed hands in a multi-million dollar deal.

The company was founded in 2000 by QinetiQ and Australian firm pSivida to exploit a novel form of medical technology.

It was the first example of a joint venture between QinetiQ and the public sector and one of the first firms to move to the Malvern Hills Science Park. It employs about 20 people.

The firm has developed Biosilicon, a new form of the substance used as the basis for computer chips, and is now worth £40 million.

Biosilicon has a broad range of medical application, including cancer treatment, controlled drug delivery and orthopaedics. Trials using the substance began last month on patients with inoperable liver cancer at Singapore General Hospital.

QinetiQ has now agreed to exchange its stake in pSiMedica for shares in pSivida.

Under the agreement, QinetiQ will receive Aus$4.32 million in cash and 35.7 million pSivida shares at Aus$1.09 per share, equivalent to a 17.6 per cent stake in the company.

QinetiQ's investment director Stephen Leake will become a non-executive director of pSivida.

He said: "Thanks to the investment from both QinetiQ and pSivida, pSiMedica is in a strong position to make a very real difference in healthcare through the development of BioSilicon. I look forward to continuing to support this important work through my place on the pSivida board."

Sir John Chisholm, QinetiQ's chief executive, said: "This agreement exemplifies our policy of unlocking the value of QinetiQ's technology base by fast-tracking hot technologies in a programme that includes joint ventures and spin-outs.

"Our transaction with pSivida - the first to arise from this programme - allows us to realise immediate value from our pSiMedica investment, while we continue to hold a major stake in the future success of pSivida's BioSilicon platform."