After years developing a peptide to treat short bowel syndrome (SBS), Zealand Pharma is joining the hunt for the white whale of the gastrointestinal track: inflammatory bowel disease.
The Danish biotech is buying out Toronto-based Encycle Therapeutics for up to $80 million to acquire their lead peptide, ET3764, along with a bank of approximately 5,000 unique peptide macrocycles. The preclinical drug has the same mechanism as Entyvio (vedolizumab), Takeda’s blockbuster ulcerative colitis and Crohn’s disease treatment – both forms of IBD. The big pitch is that Encycle’s drug is oral, as opposed to the Entyvio infusion.
The deal will pay Encycle up to $80 million in earnouts, with $10 million payable when a Phase II study is completed. Zealand can choose whether to pay the earnouts, which are based only on the lead drug and not the rest of the acquired library, in cash or equity. The smaller biotech may also earn a mid-single digit royalty on net global sales.
Zealand has long billed itself as a company focused on gastrointestinal diseases as a key area, even as its only big development in that subfield was a peptide for SBS, now in Phase III testing. The buyout will see the mid-sized company, which also develops drugs for hypoglycemia and obesity and diabetes, enter one of gastroenterology’s biggest and most crowded markets.
Like Entyvio, ET3764 works by cutting off the inflammed gut tissue from white blood cells. It does so by inhibiting the alpha-4-beta-7 integrin protein from interacting with the a proten in the GI tract called intestinal mucosal addressin cell adhesion molecule 1.
The acqusition comes as Zealand restructures its C-suite and moves into new headquarters. In March, they poached Alnylam’s Emmanuel Dulac as CEO. In August, they hired Matthew Dallas as CFO and in September they began moving into new offices in Søborg.
Although peptide therapies are at least as old as the first insulin treatments for diabetes in the 1920s, they’ve recently grown in popularity, with Roche and J&J, among others, betting on the class. Part of that has to do with advancements in chemistry and manufacturing: In the 1980s, most peptides were fewer than 10 amino acids long, and the average length has increased in each subsequent decades. Trendy and potentially transformative therapies such as B class GPCRs are dependent on these more complex chains.
Believers say they offer the stability of small molecule drugs with the selectivity of antibodies.
Peptide macrocycles — so named because they’re formed from a ring of at least 12 atoms — have held particular interest over the last decade amid advancements in designing and synthesizing the structures. Cyclosporine, the fungus-derived immunosuppresant for organ transplant recipients, is a naturally occuring macrocycle.
Encycle Therapeutics – and presumably the peptide bank Zealand acquired – focused on a subset of molecules called aziridine aldehyde-based macrocycles.
