Novo ends microneedle patch diabetes partnership with Zosano

Zosano's microneedle patch delivers drugs via the top layer of skin.--Courtesy of Zosano

Despite "continued progress" during a drug delivery collaboration with Johnson & Johnson ($JNJ) spinoff Zosano, Novo Nordisk ($NVO) has discontinued a development partnership, Zosano said Monday in a statement.

Novo's decision was made as part of a "strategic reprioritization," Zosano said, and will result in the termination of a January 2014 agreement intended use Zosano's microneedle patch system in conjunction with Novo's Phase III weekly diabetes treatment semaglutide.

Zosano's system uses a patch covered with tiny needles for under-the-skin dosing. As part of the original agreement, Novo agreed to pay an undisclosed up-front sum plus up to $60 million in milestones and up to $55 million for each future project.

All of the licensed technologies will be returned to Zosano as a result of the separation, the company said.

However, the project wasn't Zosano's major focus as it's committing most of its R&D energy to the microneedle-delivered hormone treatment ZP-PTH, designed to treat osteoporosis. The program--currently in Phase II--has the backing of Eli Lilly, which has agreed to commercialize the treatment upon approval through up to $425 million in milestone payments. Also in Zosano's pipeline are a Phase II hormone glucagon delivery system to treat severe hypoglycemia and a preclinical migraine microneedle system.

After last year completing a $50 million IPO with the help of equity backer Eli Lilly, Zosano's shares have fallen nearly 30%.

- here's the release (PDF)
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