Shares in Irish drug development company Merrion Pharmaceuticals rose over 40 per cent today after it announced a multi-million euro deal with Novo Nordisk to develop oral diabetes products.
Under the agreement Novo Nordisk will pay Merrion for the cost of its development work, provide €45.7 million ($58 million) in staged payments and provide the Dublin-based company with an undisclosed stake in the royalties on sales of any product brought to market from the collaboration.
The news sent shares in Merrion up 42 per cent to €3 by 2.38pm in Dublin.
Merrion develops technologies that allow injection-delivered drugs to be delivered and absorbed in oral form.
John Lynch, Merrion chief executive said oral insulin is "the Holy Grail of the drug delivery business" and adds no other major pharmaceutical firm has a similar product in development.
He said Merrion's technology was particularly relevant for biopharmaceuticals because most were given by injection: "To give them in tablet form can really transform the use of the drug. It changes the economics of a drug".
Novo Nordisk is one of the largest suppliers of diabetes medicines and the collaboration with Merrion will focus on its new generation peptide and protein-based insulin drugs. The two companies have been working together since 2007.
Mr Lynch said he was delighted with the collaboration, the biggest in the listed company's four-year history. "Novo Nordisk are the world's leader in this diabetes field . . . and they are very good at developing these new insulin products".
As a result of the deal Merrion is going to increase its full-time staff of 26 people by "around 25 per cent".
The main challenge is to ensure the correct dosage is delivered through an oral insulin product and clinical trials are expected to begin next year.
Mr Lynch declined to comment on the likely development time but industry sources suggested such a project would require 3 to 5 years.
Merrion was formed in 2004 to commercialise a number of technologies bought from Elan. It is based in biotechnology institute on the Trinity College Dublin campus.
In a note to investors NCB Stockbrokers said the deal validated the company's drug delivery technology and provided it with cash for its research and development.
Merrion said the global insulin market is worth an estimated $9 billion.
At €3 the company has a market capitalisation of €50 million. Even with today's share price rise the company's stock has lost 31 per cent this year. It floated on December 18th, 2007.
