Merrion Pharmaceuticals has signed a collaboration and option agreement with Novo Nordisk, it was announced today.

The agreement will see feasibility studies on the ability of Merrion's patented Gipet technology to boost the oral bioavailability of an undisclosed proprietary compound.

Once the studies are complete, Novo Nordisk will have the option to enter into a further licensing agreement for the Gipet technology.

Under the deal, Merrion has granted Novo Nordisk a warrant to acquire ordinary shares of up to €1.5 million in Merrion at yesterday's closing share price of €3, which will be exercisable for 20 business days beginning from the day following the signing of a license agreement.

Merrion chief executive John Lynch said the agreement would further strengthen the links between the two companies.