Who Needs a CEO? Lycera Strikes Deal with Pharma Giant Merck

3/3/11Follow @xconomy

Lycera founder and chief scientific officer Gary Glick is feeling pretty good these days. And who can blame him?

Just last fall, CEO Bill Sibold left the Plymouth, MI-based drug startup after less than a year on the job. That’s usually not a good sign.

Six months later, Lycera still doesn’t have a CEO. But that hardly seems to matter. Last month, the journal Science Translational Medicine published a Lycera study that validated its key cellular bioenergetics technology to treat autoimmune diseases.

And now this: Lycera announced today that it will collaborate with drug giant Merck to develop its Th17 drug program, a deal that includes $12 million in upfront cash, research funding, and clinical and regulatory milestone payments worth up to $295 million.

In a phone interview, Glick, a professor at the University of Michigan, says the company wants to find the right CEO but is in no particulary hurry.

“We’re executing quite well,” says Glick, with a strong hint of satisfaction in his voice. “We’re not in a rush to fill the position.”

The Merck deal represents a major milestone for the company, Glick says, because “it really validates the technology and team we’ve put together over the last 18 months…I’m really, really excited.”

Lycera’s cellular bioenergetics technology is actually more developed than Th17. Later this year, the company plans its first clinical trial of a drug designed to disrupt the ability of diseased white blood cells known to feed itself.

However, Th17 program is what caught the eye of Big Pharma because of the way it attacks autoimmune diseases including psoriasis, rheumatoid arthritis, multiple sclerosis and inflammatory bowel disease.

About 50 million Americans suffer from at least one of these autoimmune disorders, in which “T” cells that normally help us ward off bacterial and viral infections direct their assault against healthy tissues.

Until recently, T cells were divided into T1 and T2 cells based on the the cytokines (small cell-signaling protein molecules) they produce. But researchers have recently discovered a third category of T cells dubbed Th17. These particular cells produce Il-17, an inflammatory cytokine scientists believe is the source of autoimmune disorders.

“The investigation…of Th17 cells has opened up a new framework for understanding T cell differentiation,” according to a German study listed in the National Institutes of Health website. Furthermore, we now appreciate the importance of Th17 cells in… inducing tissue inflammation in autoimmune disease.”

Glick says Big Pharma companies have been primary interested in desiging drugs that target RORyt, a key protein receptor crucial to producing Il-17 cytokines found in Th17 cells. But until now, they’ve had no luck, Glick says.

Lycera says it has developed oral-based small molecules that can effectively bind to RORyt and prevent T cells from producing Il-17.

“It’s a fundamentally new approach that [strikes] at the root cause” of autoimmune diseases, Glick says. “No one else has done this before.”

Under the deal, Merck will retain worldwide marketing and commercialization rights to any resulting products. Lycera could receive millions of additional dollars if Merck meets certain global sales targets.

The deal also grants Lycera low double digit-tiered royalty payments and the option to share profits in the United States.

Given Merck’s financial support and the $36 million the company has already raised from investors, Glick says Lycera has enough money to operate for the immediate future.

“But with biotech companies, I’ve learned you never have enough capital,” Glick says.

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