West Coast Editor

Fresh from broadening its deal with collaborator Eli Lilly and Co., sugars expert GlycoFi entered a strategic alliance and multiyear research deal with Merck & Co. Inc., applying the technology to vaccines, antibodies and other proteins.

"It's the largest deal we've done to date," said James Posada, senior vice president of business and market development for Lebanon, N.H.-based GlycoFi.

Under the terms, Merck, of Whitehouse Station, N.J., will make an up-front cash payment and an equity investment in GlycoFi, and fund research by GlycoFi, which also is in line for milestone payments and royalties. Financial specifics were not disclosed, but Posada said the up-front and equity parts of the deal are worth "tens of millions," and the deal "could result in over $100 million" as compounds move along.

"We structured it so that some of them are fairly early, even before products go into clinical development," he told BioWorld Today, adding that "in the next 12 to 18 months, we'll start seeing some of the fruits of our labor."

The deal, Posada said, "spans over several years. We didn't announce the exact number, but it's several years and many [potential] products over that time."

GlycoFi's approach lets researchers profile, early in the development work, glycosylation-dependent structure-activity relationships. The firm has come up with various yeast strains, engineered to make proteins with a particular glycoform at near uniformity, so the one that works best can be isolated easily. By expressing the same protein in multiple strains, GlycoFi made a library of protein-glycan combinations for analysis of the properties they offer. And they can be mixed.

The older way of adding glycans to boost the performance of drugs involves mammalian cell culture, which has the drawback of making an imprecise protein with varied species of glycan present, whereas GlycoFi - using a method devised at Dartmouth University by Tillman Gerngross, the company's chief scientific officer - can make the exact molecule selected.

"Merck markets a couple of vaccine drugs made in yeast, and this unlocks value in their manufacturing assets," Posada noted.

Pharma firm Merck, which made other headlines Monday when a federal judge declared a mistrial in the lawsuit over its painkiller Vioxx (rofecoxib), lately has made public its plan to shut down several research facilities and focus more sharply on antibodies.

Antibody deals with the likes of Diversa Corp., of San Diego, and XOMA Ltd., of Berkeley, Calif., affirm Merck's interest. XOMA's license agreement with the company began in June, and provided a nonexclusive, worldwide license for antibody-related intellectual property. Under the terms, Merck receives a license to use XOMA's bacterial cell expression intellectual property for phage display. The same month, Diversa's deal with Merck, which began in January, was expanded.

The GlycoFi arrangement covers "any therapeutic candidate, any glycoprotein using our technology, wherever it comes from," Posada said. "It gives them so many more options than they had previously."

The same goes for GlycoFi. "I wouldn't preclude doing another deal, but we'll be more selective in terms of platform technology licensing," he said. "We're at a point now where we really want to focus on the Lilly and Merck collaborations and make them successful," as the firm "redouble[s] our efforts to figure out how we create our own pipeline."

This fall, the firm's protein optimization technology inspired Indianapolis-based Lilly to expand their deal, and the arrangement now is focused on engineering glycan structures into 10 preclinical compounds. That collaboration, too, included an equity investment, milestone payments and royalties, though amounts were not disclosed. (See BioWorld Today, Oct. 4, 2005.)

The deals with Lilly and Merck, along with a recent Series C financing, give GlycoFi operating capital through 2008, Posada said.