Merck & Co. Inc. acquired Calporta Therapeutics Inc. for an up-front payment and milestone payments that could total $576 million. Calporta is a build-to-buy spinout of La Jolla, Calif.-based COI Pharmaceuticals Inc.

Calporta develops selective small-molecule agonists to TRPML1, foremost in the mammalian mucolipin TRP channel subfamily. The cation-permeable channel is mostly localized on membranes of late endosomes and lysosomes in all mammalian cell types. It's thought to play a role in lysosomal function by promoting autophagy and lysosomal exocytosis to help deal with the toxic accumulation of proteins, fats or other cellular macromolecules.

Altering TRPML1 function has been implicated in several neurodegenerative diseases and dystrophies, where intracellular protein or fat accumulation has been shown to be toxic to the cell. Activating TRPML1 signaling with small molecules could reestablish lysosomal processes and restore cellular function.

Calporta's preclinical-stage TRPML1 agonists are being evaluated for treating various lysosomal storage and neurodegenerative disorders, including Alzheimer's and Parkinson's diseases. In the deal, it all goes to Merck, except the personnel.

Sandy Madigan, CEO, Calporta

"We'll make sure that Merck has the appropriate corporate knowledge around Calporta," Sandy Madigan, Calporta's CEO and COI's senior vice president of business development, told BioWorld. "We have a transition plan in place, a several-months plan. There will be a total intellectual download and we'll walk them through exactly how we got to where we are. Both parties are aligned in making sure Merck hits the ground running."

That's typical at COI, where, as companies are funded and started, COI slots people into them. If a company is acquired, they don't get any employees.

"We make sure no company knowledge is lost," Madigan said. "We have a vested interest and that makes transactions a little more than seamless."

Fiona Marshall, vice president of neuroscience discovery at Merck Research Laboratories, said the company plans to evaluate the potential of TRPML1 agonists to "activate a natural clearance mechanism the brain employs to clear toxic proteins."

COI, the Company of Innovation, was created in 2013 to support Avalon Ventures portfolio companies. Avalon, a 32-year-old venture capital firm, has founded or funded nearly 130 IT and life sciences companies.

In prepping companies for launch, COI provides intellectual capital, an R&D infrastructure and mentors to guide development. The deal to sell Calporta to Merck was about six months in the making.

Jay Lichter, president and CEO, COI

"The whole model of setting up COI Pharmaceuticals was that it's essentially a service group," Jay Lichter, COI's president and CEO and Avalon's managing director, told BioWorld. "The idea goes back over 10 years."

If the job's done right, Lichter added, the biology will play out in the company's favor. An asset may be sold, like the Merck deal, but the people who worked on it more often than not stay at COI and continue working on multiple projects.

"An outstanding team stays aligned," Lichter said about in-house development. "Sometimes a project gets to a point where it takes a nap for a while and we let external factors happen. When you maintain the team that built the asset class, the team is there and so is the data."

Three years ago, COI's Fortis Therapeutics Inc., then a preclinical immuno-oncology project, attracted an $18 million series A fundraiser, with Avalon leading the charge and joined by Bregua Corp., Lilly Asia Ventures, Osage University Partners and Vivo Capital. (See BioWorld, Sept. 28, 2016.)

A year ago, the FDA cleared two new IND applications for Fortis' lead candidate: FOR-46 in metastatic castration-resistant prostate and one in late-stage multiple myeloma.

Aside from Fortis and Calporta, COI has 11 other companies it's overseeing, including Adanate, a biotech that's developing antibodies against receptors on the surface of innate and adaptive immune cells, and Avelas Biosciences Inc., which is developing AVB-620, a drug/device combination for use during cancer surgery. AVB-620 is in a phase II/III registration trial to evaluate optimal conditions to differentiate between malignant and nonmalignant tissue using fluorescent signals.

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