- Novo Nordisk intends to acquire U.K.-based Ziylo in a deal that could be worth north of $800 million and ultimately provide the big diabetes drugmaker with new insulin products.
- Ziylo is a University of Bristol spinout with a technology platform that creates synthetic glucose-binding molecules. Novo believes the molecules could lead to next-generation insulins that are safer and more effective. Like many diabetes companies, Novo is also getting pinched from increased pricing pressure and market competition.
- "A glucose responsive insulin would help eliminate the risk of hypoglycaemia, which is the main risk associated with insulin therapy and one of the main barriers for achieving optimal glucose control," the pharma said in a Friday statement. "Thus, a glucose responsive insulin could also lead to better metabolic control and thus overall reduce the burden of diabetes for people living with the disease."
Last November, at an investor and analyst event called Capital Markets Day, Novo outlined a handful of strategic priorities for the company. One was building a larger and more valuable insulin business.
It's a fitting strategy, seeing as Novo is one of the big three diabetes drugmakers along with Sanofi and Eli Lilly. It's also somewhat risky given the mounting challenges in the diabetes market.
There, payers have been pushing back against the more expensive therapy options — in turn dampening some company bottom lines. Sanofi reported diabetes and cardiovascular drug sales of 1.5 billion euros (about $1.7 billion) during the second quarter, down nearly 10% from the same period in 2017. And at Novo, diabetes care and obesity drug sales from January through June fell 4% year over year to 45.6 billion Danish krones (nearly $7 billion).
Yet the headwinds clearly haven't deterred Novo, which could spend more than $800 million to bring Ziylo and its technology onboard. That sum includes earn-outs as well as upfront and milestone payments. Though Novo didn't explain how it would finance the acquisition, it did report having 18.1 billion Danish krones (about $2.8 billion) in cash and cash equivalents by the end of June.
Fueling that high price tag is the fact that Ziylo may allow Novo to bring to market the first glucose-responsive insulin. The buyer noted in its August 17 statement that Ziylo's molecules "exhibit an unprecedented selectivity to glucose in complex environments such as blood" — a characteristic that fits well with Novo's larger aims.
"I believe it's well known for most that of the more than 400 million people who live with diabetes, it's only a fraction, down to 6%, who actually live lives without the risk of developing late-stage complications. So the majority of patients are not in good control and that's based on the efficacy of the products we have today," Novo CEO Lars Fruergaard Jørgensen said during the company's most recent earnings call.
"[W]e believe there are significant opportunities for bringing better products to people with diabetes," Jørgensen added, "and I think it's justified or it's supported by significant uptakes you see when new products are launched because physicians are in need of better medication."