A leading biotech company specialising in drug development has announced a £1.5m deal to set up home in the North-East and create 20 jobs.

The deal ensures that Xcellsyz Limited will establish laboratories and offices in Newcastle's International Centre for Life.

Xcellsyz was formed as a spin off company from Newcastle University, University College London (UCL) and the University of Barcelona. The firm saw the North-East as a natural base for its research using human cells to advance medicine research.

The company relies on the expertise of members of staff at Newcastle University and the availability of the laboratory facilities the International Centre for Life offers.

The firm's initial focus will be to establish human cell lines to assist in the development of therapies for the most common form of diabetes.

Key to the venture was financing put in place by a partnership between North-East venture capital firm NEL (Northern Enterprise Limited) and Japanese investment group ITX Corporation. The deal brings together investors from the UK, Spain and Japan.

Regional development agency One NorthEast also gave the company grant aid totalling nearly £300,000.

The company's approach to drug discovery, using cells from human volunteers to discover new drugs to treat disease, has been hailed as a highly promising technology by the pharmaceutical industry.