By Karen Pihl-Carey

Flamel Technologies entered into its first development and licensing agreement for its long-acting basal insulin product with Novo Nordisk AS in a deal worth $42 million.

The deal means $5 million up-front in licensing fees for the Lyon, France-based company, as well as $37 million in potential milestone payments. It also means royalties on future product sales, not to mention validation of Basulin, a once-a-day formulation of human insulin, and Medusa, the system by which the drug is subcutaneously delivered.

"We enjoy it," Flamel CEO Gerard Soula said of the news, "because we worked hard to deliver the technology and to convince this type of company. It's not easy to convince people. We are very happy today about it."

Flamel's stock (NASDAQ:FLMLY) rose 57.5 percent at the news to close Wednesday at $1.968, up 71.88 cents.

Novo Nordisk, of Bagsvaerd, Denmark, will fund clinical trials and product development, in return for acquiring exclusive worldwide development and marketing rights to Basulin.

Soula said Flamel has worked three years on the project, and Basulin is now in Phase I development for Type I and Type II diabetes. "It's very challenging," he told BioWorld Today. "Many people have tried to do a long-acting insulin with a drug delivery system. And we are alone today working on this type of project."

In preclinical studies, Basulin provided continuous coverage of insulin for 24 hours, as opposed to marketed products that provide coverage for about 12 hours, the company said. Results of the Phase I trial of Basulin under way in the UK are expected in the first quarter of 2000. Basulin is the first application of Flamel's Medusa delivery system for therapeutic proteins, peptides and small molecules.

Soula said the technology might be applicable with proteins such as interferon and interleukin, among others, to create cancer therapies.

"The polymer is self-assembled in nanoparticles," he said, explaining how the technology works. "These nanoparticles have the properties to associate with protein. In this case, it's insulin. And when you inject that subcutaneously, you have a slow release of the protein."

Marketed products by Eli Lilly & Co., of Indianapolis, and Novo Nordisk can deliver insulin for 12 to 14 hours, meaning the drug must be administered twice a day, Soula said.

Although Basulin only needs to be administered once a day, which in itself is an advantage to current therapies, it has a more far-reaching value for people with diabetes, he added.

"We can control the glucose level to avoid hyperglycemia during the night," Soula said. "The drama is during the night."