The pair received an £800,000 grant from Innovate UK to fund the majority of the £1mln preclinical programme.
Under the agreement, the parties will share any costs and commercial returns from SPOR-COV and plan to complete a pre-clinical programme with the aim of being ready to enter the first human clinical trials within 18 months.
Destiny Pharma will contribute with its expertise in pre-clinical and clinical drug development.
The SPOR‑COV product, already shown to provide complete protection in preclinical models of influenza virus, consists of a proprietary formulation of Bacillus bacteria that will be administered nasally as a spray.
The formulation is different to vaccines in that it utilises the innate immune system with the aim of developing COVID-19 protection a few days after dosing.
As an “easy to use” first line of defence, it has the potential to reduce infection rates and transmission significantly, the AIM-listed company said.
Analysts at finnCap noted it has the potential to be used in other respiratory viral infections although it is now focusing on COVID-19.
Shares in Destiny added 12% to 55p on Monday before close.