By Kristy Dorsey

A UK drug development company backed by Scottish-based funds from Epidarex Capital has signed a collaboration and licensing agreement with pharmaceutical giant Novartis that could be worth up to $1.3 billion (£955 million).

Cambridge-headquartered Dunad Therapeutics – named after the ancient Scottish kingdom of Dunadd – was founded in 2020 by Patrick Gunning and Diana Kraskouskaya to further work on their protein degradation platform. This technology harnesses the natural machinery in cells to remove rogue proteins associated with disease, offering the potential to treat a range of “undruggable” targets.

The deal covers drug candidates for up to four unnamed disease targets and includes $24m (£17.6m) in upfront cash and equity, plus “significant” research funding. Should Swiss-based Novartis choose to exercise its exclusive option to commercialise any resulting products, Dunad will be eligible for up to $1.3bn in milestone payments, as well as royalties.

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Transatlantic venture capital firm Epidarex invests in early-stage life sciences firms in the US and the UK, and was founding investor in Dunad. It launched its £102m Epidarex Capital III UK fund in Edinburgh last year.

Partner Liz Roper, a board member at Dunad, said Epidarex was “delighted to see another early success” within its portfolio.

“Dunad’s rapid growth will now continue via this significant collaboration with Novartis, a leading player on protein degradation,” she added. “The agreement endorses Dunad’s highly innovative core technology and emphasises the importance of this new modality to generating new drugs for multiple diseases.”

Epidarex was an early investor in Sirakoss, a medical spin-out from the University of Aberdeen that was sold to Sweden’s OssDsign last year in a deal worth more than £8m. It also provided funding in last year’s launch of Macomics, a specialist in immune defence out of the University of Edinburgh.