PPD Inc. is taking a stake in privately held Syrrx Inc. as part of a drug development deal.

The companies agreed to partner their resources in further developing Syrrx-designed human dipeptidyl peptidase-IV (DP4) inhibitors for Type II diabetes and other diseases.

"Our company is always looking for opportunities, as we have in the past, and metabolic endocrine is one of our top-five areas of focus," Nancy Zeleniak, PPD's head of corporate communications, told BioWorld Today. "Looking at the market and looking at opportunities, it appeared a good fit to us."

She added that PPD beat out multiple suitors that approached Syrrx for partnerships. Syrrx called the deal noteworthy in its transition from a platform company to one that makes therapeutics.

PPD bought $25 million worth of Syrrx's convertible preferred stock and will fund the majority of preclinical and clinical studies through Phase IIb development. The partners agreed to share Phase III costs equally. In addition, Wilmington, N.C.-based PPD will make milestone payments to Syrrx upon certain clinical and regulatory events. PPD said it would fund its share of development costs from existing cash resources, which stood at $174.8 million as of Sept. 30.

Should a product be approved, PPD and Syrrx would share profits equally. Admittedly, though, such progress remains distant.

The collaboration's initial efforts will focus on further preclinical studies, which could lead to Phase I work down the road. The partners said they expect to file an investigational new drug application in the second half of next year.

San Diego-based Syrrx said studies to date indicate that DP4 plays a role in regulating insulin levels in the body. Inhibitors of DP4 have been shown to block the destruction of glucagon-like peptide-1 (GLP-1), a protein that increases glucose-dependent insulin secretion and stimulates pancreatic beta-cell growth in insulin biosynthesis.

Early stage clinical trials conducted primarily by large pharmaceutical companies have shown that orally delivered DP4 inhibitors reduced blood glucose and increased insulin response, the company said. The data also indicate that small-molecule inhibitors that target DP4 could potentially treat diseases such as Type II diabetes, obesity, high cholesterol and other forms of metabolic syndrome.

"Type II diabetes is our first focus, but there are other potential indications that DP4 inhibitors can target," Zeleniak said, adding that the collaboration aims to explore such additional uses.

For PPD, the deal fits with prior models through which it has developed products. The most advanced compound, dapoxetine, is in a Phase III program for premature ejaculation under the watch of Johnson & Johnson. PPD had licensed those rights to ALZA Corp., now a unit of New Brunswick, N.J.-based J&J. PPD originally brought the rights in from Indianapolis-based Eli Lilly and Co., and carried its development through Phase II proof-of-principle studies.

PPD's pipeline also includes another in-licensed compound, a microsomal triglyceride transfer protein inhibitor from Leverkusen, Germany-based Bayer AG. It is being studied as a lipid-lowering agent. The company also has an option to license a lead neutrophil-stimulating candidate stemming from a collaboration with Vancouver, British Columbia-based Chemokine Therapeutics Corp. The product could enter the investigational new drug application stage by the second quarter of next year.

PPD also has equity investments in two drug delivery firms - Newark, N.J.-based BioDelivery Sciences International Inc., whose oral delivery technology PPD has an option to use with drugs in its portfolio, and Oriel Therapeutics, a pulmonary delivery business.

PPD's stock (NASDAQ:PPDI) fell $1.10 Thursday to close at $29.40.