Novo Buys Startup Ziylo in Potential $800 Million Deal

(Bloomberg) -- Novo Nordisk A/S, the world’s biggest maker of diabetes drugs, agreed to buy Ziylo Ltd. to develop new forms of insulin that would respond better to blood sugar levels, in a deal that may value the U.K. startup at more than $800 million.

Ziylo has been developing molecules that tightly bind insulin and could be used to help patients avoid dangerous low blood sugar levels, making treatment safer and more effective, Bagsvaerd, Denmark-based Novo Nordisk said Friday.

“One of the main reasons people have high blood sugar levels is that they’re afraid of lows,” said Harry Destecroix, co-founder and CEO of closely held Ziylo, in an interview. “If you had an insulin you couldn’t really overdose on, that would be really exciting.”

Novo Chief Executive Officer Lars Fruergaard Jorgensen has sought out acquisition and licensing opportunities after losing out to rival Sanofi in an attempt to buy Ablynx NV, whose Cablivi treatment for a clotting disorder was recommended for European approval in June. The Danish company has been struggling against pricing pressure in the U.S., its biggest market, where competition and changes in the Medicare program are hurting results.

The goal of the Ziylo deal is to develop “a smart insulin that would self-regulate its activity based on glucose levels in the body,” said Marcus Schindler, Novo’s senior vice president for drug discovery.

Glucose Binding

While Novo hasn’t acquired many research-stage companies, and Ziylo’s technology is still a few years from the clinic, the Danish drugmaker had been aware of the glucose-binding science for some time and felt that it had potential, he said.

Ziylo was spun out of the University of Bristol in England, where Destecroix earned his doctorate in chemistry four years ago. The company focuses on the development of glucose-binding molecules designed by Bristol professor Anthony Davis that can sense levels of sugar in the blood that it aims to use as switches to turn insulin activity on and off, Destecroix said.

Years of chronically elevated blood sugar levels can lead to severe heart, kidney and eye disease. Yet diabetes patients and parents of young children with the condition sometimes hesitate to aggressively treat high levels for fear of lows, Destecroix said, which can result in temporary mental confusion, blackouts, and other side effects.

Novo said it will pay an upfront sum and certain undisclosed amounts later if the technology reaches regulatory and sales goals. A new company led by Destecroix, called Carbometrics, will collaborate with Novo on development of glucose-sensing insulins. Carbometrics also has the rights to use the technology to develop diagnostics, Destecroix said.

Novo shares were down 0.7 percent at 1:15 p.m. in Denmark.

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