DUBLIN, Ireland - Zealand Pharmaceuticals A/S has raised DKK 57 million (US$7.8 million) in its second financing round.

A consortium of five Danish institutional investors, led by BankInvest, of Copenhagen, participated in the deal. The Glostrup-based company has raised DKK 114 million in total, which represents 75 percent of its equity, said vice president of finance and licensing Jakob Dynnes Hansen. It has also secured a loan of DKK 40 million from the government-backed Danish Growth Fund.

Zealand's core technology is a peptide-modification technique developed at the Royal Veterinary and Agricul tural University in Copenhagen by researcher Bjarne Due Larsen, who is now an employee of the company. It enables orally delivered peptides to evade enzymatic degradation in the gastrointestinal tract. It is based on a bound "probe," which induces a folding in the peptide structure that renders it resistant to cleavage. "Our initial findings indicate that the biological activity is maintained," Hansen said.

Zealand is applying this technology to peptides for treatment of Type II diabetes, cardiovascular disease and CNS diseases. The company is working with compounds that have a documented clinical effect. It may also initiate its own drug discovery efforts, Hansen said.

The company's Type II diabetes program is its lead project, but it is still a year away from Phase I clinical trials. It aims to license its drug candidates to partners before the Phase II stage. It also plans to license its modification technology to other companies engaged in peptide drug development. Licensing activities have just commenced, Hansen said, so the company does not expect to enter an alliance in the immediate future.

Zealand has 27 people on the payroll. It was originally set up on a small scale in April 1997, but was restructured in October last year under new management. Its CEO, Eva Steiness, is formerly executive vice president of R&D at the pharmaceutical company H. Lundbeck A/S, of Copenhagen. The company's annual cash burn is about DKK 40 million.

Hansen said it will seek further investment 18 months from now. n