Big deal: Novo pens $800m Ziylo acquisition

More than 422 million people worldwide have chronic metabolic disease diabetes, according to a report by the UN’s public health agency the World Health Organisation (WHO), which projected that by 2030 the disease will be the seventh leading cause of death.

There is currently no cure for either type 1 or type 2 diabetes. The cause of type 1 diabetes remains unknown and is characterised by low levels or absence of insulin, requiring daily injections of the hormone that helps the body process sugar.

Type 2 diabetes, the most common form of the disease, is largely caused by obesity and physical inactivity, which over time causes the body either to produce insufficient levels of insulin or develop a resistance to the hormone.

A third type, gestational diabetes, affects women during pregnancy and is characterised by high blood sugar levels that remain below the level of chronic diabetes. It can, however, cause complications and increase the risk that mother or child will suffer from type 2 diabetes in the future.

A total of 1.6 million deaths each year are already directly attributable to diabetes, according to the WHO, a figure likely to rise further as one in three adults is overweight and one in 10 is obese.

The disease – if not monitored constantly and treated through insulin injections, medication, diet and physical activity – leads to serious damage to the heart, blood vessels, eyes, kidneys and nerves.

So the acquisition of Ziylo, a UK-based spinout from University of Bristol working on technology to develop next-generation insulin, by Novo Nordisk, the world’s largest manufacturer of diabetes medicines – it held a 27% market share as of November 2017 – should not come as a surprise.

Neither party has revealed the specifics of the acquisition deal, noting only that, including milestone payments, the total amount could exceed $800m – an outstanding return for a spinout that had raised just £2m ($2.5m) in combined angel funding and government grants, and a phenomenal loss for university venture funds and VC firms that lost out on a deal that stands among the largest yet for life sciences spinouts.

Founded in 2014, Ziylo has designed synthetic glucose-binding molecules that react and adapt to glucose levels in the blood and thereby prevent dangerously low blood sugar levels, known as hypoglycaemia.

Ziylo is based on research by Anthony Davis, professor of supramolecular chemistry, and his PhD student, Harry Destecroix, who went on to become the spinout’s chief executive. The pair co-founded the business with chief financial officer Tom Smart.

Davis said: “The glucose responsive insulin we will develop with Novo Nordisk combines a natural molecule – insulin–  with an artificial component – Ziylo’s glucose binding molecules. This combination of natural and unnatural could be a new approach to biodesign.

“These unique molecules were inspired by nature and work in much the same way as natural glucose receptors. A group of chemists, called supramolecular chemists, have been working on this problem for many years. Often, they make molecules which behave quite like natural molecules, but usually they don’t work quite well enough for real-world applications.

“The success of the Ziylo molecules shows that, with persistence, the problems can be solved and that biological molecules can be matched as well as mimicked.”

The acquisition gives Novo Nordisk full rights to the platform. But in an interesting twist, the deal also included the formation of a new spinout, Carbometrics, that has licensed back rights to help Novo Nordisk optimise glucose-binding molecules and to develop non-therapeutic applications, including continuous glucose monitoring products.

Carbometrics will employ Ziylo’s current staff, who will remain based at the Unit DX incubator, founded in March last year by Destecroix because of a lack of lab space for biotech companies in Bristol.

Novo Nordisk hopes to start clinical trials within three years and will carry out its research and development activities in Oxford, where the corporate is set to open a diabetes research centre next month, and at its existing facilities in Denmark.

Destecroix said: “Novo Nordisk is the ideal company to maximise the potential of the Ziylo glucose binding molecules in glucose responsive insulins and diabetes applications, and it brings hope of a truly ground-breaking treatment to diabetes patients.

“Novo Nordisk is the leader in the diabetes field, with deep clinical development and regulatory expertise and an established commercial infrastructure to deliver important new therapies to patients.”