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Zealand Pharma acquiring Encycle Therapeutics to expand peptide drug development

Zealand Pharma A/S will acquire Toronto-based private biotechnology company Encycle Therapeutics Inc. in a bid to expand its peptide platform with Encycle's potential peptide drug that is being developed to target inflammatory bowel disease.

As part of the deal, the Danish biotechnology company will acquire all of Encycle's outstanding shares, its intellectual property, and rights to develop and commercialize the peptide drug, named ET3764. However, it will not acquire any infrastructure or personnel costs.

Zealand, which develops peptide-based medicines mainly for gastrointestinal and metabolic diseases, also gains access to Encycle's screening library of about 5,000 peptide macrocycles that could provide additional targets for research.

The total future consideration of the transaction is likely to reach $80 million in one-time contingent value rights, out of which $10 million in earn-outs will be payable after a successful phase 2 trial of ET3764.

Zealand can pay the earn-outs, which are linked to the completion of certain development, regulatory and commercial-related milestones, either in cash or via equity, according to an Oct. 22 news release.