Zealand Pharma acquires Encycle

Under the agreement, Zealand Pharma A/S will acquire all outstanding shares in Encycle Therapeutics Inc., and all its intellectual property, including methods for generation of nacellins, drug-like cyclic peptides that target protein-protein interactions, as well as Encycle Therapeutics' preclinical candidate ET3764. ET3764 is an oral, membrane-permeable peptide macrocycle that targets integrin alpha-4-beta-7, which is involved in the pathogenesis of inflammatory bowel disease (IBD). It might be superior to Takeda’s market-approved injected alpha4-beta-7 inhibitor vedolizumab because it is not immunogenic, and orally bioavailable.

Zealand Pharma hopes to expand its peptide therapeutics pipeline for gastrointestinal diseases by the take-over through gaining access to the Canadian company’s screening library of 5,000 peptide macrocycles. Zealand will not be acquiring any infrastructure or personnel costs with this transaction.

The total future consideration for the acquisition could potentially reach $80m in one-time contingent value rights, of which US $10m could be payable up to the successful completion of a Phase II study. All earn-outs are payable in cash and/or Zealand equity at Zealand’s discretion, are linked to the lead asset only, and contingent on 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.