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Posted on Thu, Mar 3, 2011 : 10:29 a.m.

University of Michigan biotech spinoff Lycera strikes deal with Merck possibly worth $300 million

By Nathan Bomey

(This story has been updated to reflect new information about Lycera's headquarters.)

University of Michigan biotechnology spinoff Lycera Corp. recently reached a research agreement with pharmaceutical giant Merck that could be worth more than $300 million.

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.

Contact's Nathan Bomey at (734) 623-2587 or You can also follow him on Twitter or subscribe to's newsletters.


Nathan Bomey

Thu, Mar 3, 2011 : 9:11 p.m.

@djm12652 Glick is a U-M professor. The company licensed technology Glick developed at U-M. When the university launches a startup company, the university's Technology Transfer Office negotiates terms of the company's formation and intellectual property licensing. This often involves a small ownership stake for the university. However, that ownership stake is often diluted over time, as private investors put money into the company. Since Lycera is a private company, it's not required to release details on its shareholders. However, it's fair to say that Glick is an owner of the company, and Lycera's venture capital investors also each own a stake in the company; the percentage would be based on how much money each firm invests. If and when the company is sold (or, more unlikely, goes public), any proceeds due to U-M would be reinvested in U-M research, per university policy.


Thu, Mar 3, 2011 : 9:04 p.m.

Okay, I'm confused...did Glick start this company or the U of M? Who owns it?


Thu, Mar 3, 2011 : 6:08 p.m.

Since i am a liberal, i am disappointed to see large companies like this succeed. If i'm not successful, then no one should be successful.


Thu, Mar 3, 2011 : 5:54 p.m.

Sooooo, How much money does U of M get out of this spin-off? I have seen a number of articles about U of M spin-off's but there is never any mention how the money is split?

say it plain

Thu, Mar 3, 2011 : 5:11 p.m.

Wait, so, does this have implications for jobs here in town?