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UMich Spinout Lycera Nets $36M in VC Cash; Taps NYU Immunologist for New Research Program

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This article was originally published on April 16.

University of Michigan spinout Lycera, which is developing treatments for autoimmune disorders including rheumatoid arthritis, lupus, and inflammatory bowel disease, said today that it has closed a $36 million series A venture capital financing round.

Lycera received a $10 million first tranche and will receive the remaining $26 million in a pair of tranches as it meets specific undisclosed milestones. Venture capital firms InterWest Partners, ARCH Venture Partners, and Clarus Ventures co-led the financing.

EDF Ventures, which previously led a seed financing for an undisclosed amount in Lycera when the company was founded in 2006, also participated in the latest financing.

Lycera said that it will use the financing to advance through Phase II proof-of-concept studies its first drug candidate, based on research conducted at UM; and into Phase I trials a second candidate based on the NYU research.

The company also said it has expanded its therapeutic program to include small-molecule immunomodulators developed by Dan Littman, a prominent immunology researcher at the New York University School of Medicine.

Lycera was founded on research conducted by Gary Glick, a professor of chemistry and biological chemistry at the UM Medical School. The company has licensed an IP portfolio from the school covering a novel molecular target and its mechanism, composition of matter and uses for the compositions, and screening assays for identifying and developing compounds.

A number of the patents in the portfolio relate to derivatives of benzodiazepine and related compounds, as well as methods of using them to treat conditions associated with the faulty regulation of programmed cell death, autoimmunity, inflammation, and hyperproliferation.

Benzodiazepines have traditionally been known to bind to receptors in the central nervous system that have enabled them to treat various CNS disorders including anxiety and epilepsy.

However, according to some of the UM patents, this drug class has also been shown to have potential pro-apoptotic and cytotoxic properties "useful in the treatment of transformed cells grown in tissue culture," and has been reported to have potential anti-cancer, analgesic, and anti-inflammatory properties – potential indications that have been noted since at least 1983.

In conjunction with the financing announced today, Lycera said in a statement that it has "expanded its development initiatives for small-molecule immunomodulators through the addition of a program targeting the Th17 pathway," discovered by Littman, a professor of molecular immunology, pathology, and microbiology at the Skirball Institute of Biomolecular Medicine at the NYU School of Medicine.

The Th17 pathway refers to one of the most recently discovered subsets of T-cells known as T-helper 17 cells. These cells have in recent years been linked to a number of inflammatory and autoimmune conditions. Most recently, Littman's lab discovered a link between certain bacteria in the intestinal tract of mice and the generation of Th17 cells, which may have implications for treating inflammatory bowel disease.

It is unclear whether Lycera is sponsoring research related to the Th17 pathway in Littman's lab or if it has licensed IP related to the discoveries. A spokesperson for the company told BTW that such information was not available at this time.

The spokesperson also said that the approaches discovered at UM and NYU were "highly complementary" and represented a "yin-yang approach to treating autoimmune disorders."

In a statement, Jeffrey Leiden, a managing director with Clarus Ventures, said that Lycera "combines two of the most exciting, new small-molecule approaches for treating autoimmune diseases," and that Lycera would "leverage the complementary expertise and discoveries" of Glick in the area of medicinal chemistry with those of Littman in the area of the Th17 pathway.

As part of the recent financing, Leiden, along with Kristina Burow, a partner with ARCH, and Nina Kjellson, a general partner with InterWest, have joined Lycera's board of directors, which now numbers six people.

In addition, Lycera said that Steven Gillis, a managing director with ARCH, and Mary Campbell, a managing director at EDF Ventures, will serve as board observers; and that NYU's Littman will serve as chairman of the company's scientific advisory board.

Lycera, which is based in Plymouth, Mich., located about 20 miles northeast of UM's Ann Arbor location, has in recent years received non-dilutive financing from Michigan as part of the state's attempt to retain nascent biotech businesses, particularly in the wake of Pfizer's decision early last year to shutter its Ann Arbor research campus.

As reported in January by BioRegion News, a BTW sister publication, Lycera received an approximately $500,000 state tax credit, while agreeing to create 28 direct jobs and six indirect jobs. And last November, Lycera and four other life-sciences companies received $400,000 from regional economic-development engine Ann Arbor SPARK, through the Michigan 21st Century Jobs Fund, a $2 billion, 10-year state initiative created in 2005.