Dublin-listed pharmaceutical company Merrion has announced a collaboration agreement with Danish company Novo Nordisk.

Under the deal, the companies will examine the ability of Merrion's GIPET technology to improve the delivery of an undisclosed compound.

After the feasibility studies, Novo Nordisk will have the option to enter into a further licensing agreement for the GIPET technology, which is designed to improve the absorption of drugs.

The financial terms of a possible future licensing agreement have been pre-agreed, with Merrion granting Novo Nordisk a warrant to acquire ordinary shares worth up to €1.5m in Merrion at yesterday's closing share price of €2.73.

The warrant will be exercisable for 20 business days starting on the day after the signing of a licence agreement.