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Lycera Keeps Its Investors Happy, Snags $11M to Pursue New Autoimmune Drugs

Xconomy Detroit/Ann Arbor — 

Lycera has taken an important early step in its journey of developing new treatments for autoimmune diseases. The startup, with operations in Plymouth, MI, and Cambridge, MA, has nailed down an $11 million cash infusion, which represents the second installment of a three-part, $36 million financing originally announced a year ago.

The company secured the new money from Clarus Ventures, InterWest Partners, and Arch Venture Partners, about 12 months after that crew provided $10 million and some ambitious goals to hit if the company wanted any more. Clarus’s Jeff Leiden, the former president of Abbott Laboratories, is taking on the additional role of chairman at Lycera, and the company said it has hired Robin Goldstein, a veteran of ArQule and Novartis, as part of its push through the next critical phase of preclinical testing.

Lycera, which we profiled back in January, was founded in 2006 based on research from Gary Glick‘s lab at the University of Michigan. The vision is to treat autoimmune diseases, in which the immune system goes awry and attacks healthy tissue like a virus, in a new way. Rheumatoid arthritis, just one of many autoimmune conditions, already makes up an estimated $13 billion worldwide annual market for companies like Amgen, Johnson & Johnson, and Abbott. While those companies’ treatments have been a godsend for many patients, they are injectable, and they disable part of the immune system, leaving patients vulnerable to infections. Lycera hopes to improve upon this standard with oral pills that are more convenient, and by hitting novel targets on cells that can tamp down the autoimmune activity without weakening people’s natural defenses.

Over the past year, Lycera’s small team of about 15 people have shown they can create orally-delivered small-molecule compounds that were shown to be safe and effective in animal experiments involving rodents, dogs, and other species, Glick says. The company is now gearing up to do the experiments it will need to get the green light from the FDA to start clinical trials, which it expects to begin in 2011.

Gary Glick

Gary Glick

“These weren’t softball milestones,” Glick says. “These were significant scientific achievements. Our people worked extremely hard and really know what they are doing.”

Most of the “action” at Lycera is happening at the company’s laboratories in Plymouth, MI, near Glick’s lab at the University of Michigan, according to CEO Bill Sibold. The company has a drug discovery team there, many of whom used to work together at Pfizer before the company closed its research center there. But the company is setting up key business functions, like clinical development, regulatory affairs, business development, and executive leadership in Cambridge, to take advantage of the Boston region’s deep biotech talent pool, Sibold said when he joined the company in January.

Managing a small company in Michigan and Massachusetts hasn’t been a problem, Sibold says. It’s about a 90-minute flight, and Lycera’s office is 20 minutes from the Detroit airport. Between multiple phone calls a day, and e-mail, “we stay in touch,” Sibold says.

Lycera’s lead drug candidate is designed to inhibit an enzyme called ATPase, that controls the energy source of a cell. It’s based on Glick’s research, which has found that activated T-cells that attack healthy tissue have a different way of producing ATP than T-cells that people need to have a strong immune defense. Once Lycera’s scientists had a good understanding of the structural difference between the ATPase in the different cell types, so they were able to synthesize specific drugs that can inhibit the T-cells that harm healthy tissue, while leaving the important T-cells alone, Glick says.

About 12 months behind that program, Lycera has another drug in the works that hits a different target, called Th17. The Th17 biological pathway is involved in producing IL-17, one of a number of inflammatory proteins that are thought to be involved in autoimmunity.

No drugs on the market today work by hitting those targets, so this is very much uncharted territory for drug development. South San Francisco-based Rigel Pharmaceuticals (NASDAQ: RIGL) struck a partnership in February with AstraZeneca that brought in a $100 million upfront payment to co-develop an oral rheumatoid arthritis drug. And Pfizer, the world’s largest drugmaker, is developing an oral pill that hits a different target called JAK-3.

Both of those drugs are further along in development, having completed mid-stage clinical trials. So they are competitors in that they have oral pills for the same disease, although Lycera says it believes it is in the lead in terms of hitting its specific targets.

“These are novel pathways we are pursuing, and there are not a lot of comparables to us,” says Sibold, the CEO. “We are pioneering, breaking new ground here.”