DRUG discovery company Evotec is to receive £4.3m from a major drug company to develop a potential treatment for diabetes.

The German-owned company, which has a laboratory at Milton Park, near Didcot, has signed a deal with MedImmune, the global biologics unit of AstraZeneca, to research the regeneration of insulin-producing beta cells.

As well as the upfront payment of £4.3m, if the research is successful, Evotec could earn milestone payments of up to £215m plus royalties.

Chief scientific officer Dr Cord Dohrmann said early tests seemed promising. “The loss of insulin-producing beta cells is tightly linked to the development of diabetes."

He added: “MedImmune is a leader in biopharmaceutical research with cutting edge protein production and engineering capabilities and thus a perfect partner for Evotec. Together we intend to generate a pipeline of biological factors that have the potential to prevent or reverse disease progression, and confer optimal glycaemic control in patients. ”