The long-term dispute between Australian biotech Biota, developer of the flu drug Relenza, and its marketing partner GSK is over, with the duo reaching an agreement following mediation ordered by the Victorian Supreme Court.

Biota will receive $20 million and both parties will pay their own court costs under the agreement.

In a statement, Biota said both companies had "agreed to normalise their relationship to pursue the best interests of Relenza, with senior executive liaison and co-operation between the companies to be restored and strengthened".

Biota announced in May 2004 it was launching court proceedings against GSK for failing to properly market the drug, sales of which have been outstripped worldwide by rival Tamiflu, marketed by Roche.

In July 2005, Biota's then CEO, Peter Molloy, estimated that its losses and damages against GSK were between $308 million and $430 million.

Mediation between the two had been attempted before, but had failed.

In today's statement, Biota's chairman, John Grant, said recent advice, following a further postponement of the scheduled trail date, indicated the time scale would be further stretched with a consequent escalation in costs.

"That advice required us to review rigorously all aspects of the litigation in a new light including the impact of current and further possible delays and the growing scale and complexity of the litigation," Grant said.