Zealand Pharma (NASDAQ:ZEAL) of Denmark has acquired Encycle Therapeutics, a closely-held biotech company in Toronto, exploiting a unique platform technology that enables the rapid synthesis of macrocyclic peptides exhibiting enhanced drug-like properties.
The acquisition is focused on a preclinical lead asset that complements Zealand’s focus on developing next-generation peptide therapeutics for gastrointestinal diseases. The lead asset, ET3764, is being developed as an orally-delivered peptide drug to target integrin alpha-4-beta-7, which is involved in the pathogenesis of inflammatory bowel disease.
The cost of the acquisition could potentially reach $80-million in one-time contingent value rights, or earn-outs, of which $10-million in earn-outs could be payable after a successful Phase 2 study of ET3764. All earn-outs are linked certain future successful development, regulatory, and commercial-related milestones. There is also a potential mid-single digit royalty on global net sales from the lead asset.
“Encycle has been working on proprietary peptide macrocycles for several years, and our research shows that they have enormous potential to target protein-protein interactions, which are largely intractable to small molecule and biologic modulation,” said Dr. Jeffrey Coull, president and CEO of Encycle, said in a statement.
