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Lycera Expands Partnership with Merck for Potential $600M

By Catherine Shaffer
Staff Writer

Lycera Corp. doubled its sweet 2011 deal with Merck and Co. Inc., of Whitehouse Station, N.J., in a new agreement designed to expand on the companies' prior relationship, which has centered on retinoic acid-related orphan receptor (ROR[gamma]t). Lycera will receive an undisclosed up-front payment and research funding, and could receive more than $300 million in milestone payments based on research, development, regulatory and commercial accomplishments, plus royalties on marketed products.

"This is actually completely separate from the ROR[gamma] collaboration," Lycera CEO Kathleen Metters told BioWorld Today.

The prior collaboration allowed Ann Arbor, Mich.-based Lycera to work closely with Merck, forming a thriving relationship between the two organizations.

Lycera reached its first milestone under that previous collaboration in 2011.

"The productivity and the way the groups worked together gave a very, very firm foundation for continuing the collaboration," Metters said.

Lycera and Merck first partnered nearly two years ago, in March 2011. Under that alliance, the companies pledged to develop a new class of drugs targeting the T-helper 17 (Th17) cells via the ROR[gamma]t. Th17 cells product IL-17, a pro-inflammatory molecule. (See BioWorld Today, March 4, 2011.)

ROR[gamma]t has been difficult to target in the past because of its similarity to other targets and because its native ligand is unknown. However, successful targeting of ROR[gamma]t could unlock therapies for a wide range of autoimmune and inflammatory diseases like rheumatoid arthritis, psoriasis, inflammatory bowel disease, multiple sclerosis, graft-vs.-host disease and more.

Under the new agreement, Merck will take responsibility for clinical development of resulting products and will have worldwide commercialization rights. The target, whose identity has not been disclosed, has relevance for a range of autoimmune and inflammatory diseases, Metters said. Those categories include diseases that are common and widely known, such as rheumatoid arthritis, which has marketed treatments, but also has unmet needs, through rare and orphan diseases that in some cases have no treatment. "I'm not saying we're tackling 120 diseases," Metters said. "There's a huge scope to match targets with indications."

According to Metters, the partnership agreement is a part of Lycera's overall strategy of proprietary and partnered programs in those fields.

One factor contributing to the affinity between Lycera and Merck is the similar culture in both companies. "We share a culture of scientific excellence, of really putting the needs of patients first and foremost," Metters said, also noting a "strong legacy of excellence in medicinal chemistry" at both companies.

The collaboration is not directly related to Lycera's technology in the area of bioenergetics, which it defines as a field of biology focusing on how energy is made and used in normal and diseased cells. Lycera is developing small molecules that take advantage of bioenergetic abnormalities in lymphocytes, resulting in selective silencing of those cells.

Lycera has identified a family of pro-apoptotic compounds with steroid-like efficacy in models of lupus, rheumatoid arthritis, psoriasis, graft-vs.-host disease and inflammatory bowel disease.

The compounds address mitochondrial F[sub]1F[sub]0-ATPase, which is involved in producing energy in the cells.

"We have developed mechanisms to successfully deplete the body of disease-causing cells while keeping normal healthy cells intact," Metters said. That offers the opportunity to produce drugs with potential for improved safety and tolerability.

Regarding Lycera's technology, Metters said, "I hesitate to call it a platform. It's really around mining specific pathways for molecular targets."

Although Lycera did not disclose more specific financial details of the transaction, Metters said that its strategy is to attract financing through equity investment and structured collaborations with "high caliber partners such as Merck."