University of Michigan biotech spinoff Lycera strikes deal with Merck possibly worth $300 million
(This story has been updated to reflect new information about Lycera's headquarters.)
Lycera and Merck will collaborate to pursue new oral drugs to treat autoimmune diseases, including rheumatoid arthritis, psoriasis and multiple sclerosis, the companies announced this morning.
As part of the deal, Merck will pay $12 million upfront to Lycera. But the deal could be worth up to $295 million in milestone payments depending on the key technology's progress. In addition, Lycera would receive royalty payments based on sales performance if the companies' collaboration leads to commercialized therapies.
Merck will handle clinical development of Lycera's technology and will receive marketing rights for the technology that comes out of the partnership.
The deal is an indicator that Merck believes Lycera's intellectual property may have significant commercial potential. Lycera in 2009 secured access to $36 million in venture capital from several firms, including Ann Arbor-based EDF Ventures.
“We are delighted to be working with Merck, which brings industry leading expertise in drug discovery, development and commercialization to this collaboration,” Lycera founder Gary Glick said in a statement. “This joint partnership is a significant validation of Lycera’s discovery capabilities and ... enables us to expand the scope of our research in this promising area to expedite our discovery efforts as well as our timeline to enter the clinic.”
Deals with big pharmaceutical companies provide access to cash that helps small biotech companies fund the development of their technology. On average, it can take 15 years and about $1 billion to get a drug from inception to market.
Lycera is based at the Plymouth Township-based Michigan Life Science and Innovation Center, an incubator run by Ann Arbor SPARK. The company had shifted its headquarters to Massachusetts more than a year ago to accommodate then-CEO Bill Sibold. But Sibold left the company less than a year after joining, and the company eliminated its Massachusetts office and moved its headquarters back to Michigan.
It's the latest in a series of pharmaceutical marketing deals for the Ann Arbor region's biotech industry. Ann Arbor-based NanoBio has a multimillion-dollar licensing deal with GlaxoSmithKline, and Ann Arbor-based QuatRx Pharmaceuticals has a deal with Shionogi.