Dive Brief:
- Eli Lilly is teaming up with Lycia Therapeutics, a small, San Francisco-based biotech company, in the hopes of creating new drugs that break down disease-causing proteins.
- Through a collaboration announced Wednesday, the companies will use Lycia's technology to find and develop new drugs for up to five protein targets in Lilly's main areas of research, including immunology and pain. Deal terms have Lilly paying $35 million up front, and potentially more than $1.6 billion later should Lycia hit certain development and commercial milestones. The biotech could also receive tiered royalties on product sales that stem from the collaboration.
- Lycia's so-called LYTAC technology tries to encourage cells to eliminate harmful proteins. To do this, Lycia engineers special antibodies that bind both to these molecules and to lysosomes, the cellular organs responsible for disassembling proteins. By putting the protein near the lysosome, Lycia's technology, in theory, helps catalyze its degradation.
Dive Insight:
Typically, drugs that act on a particular protein do so by blocking or inhibiting it. But there are huge number of proteins for which that approach is not effective.
Protein degradation offers a potential workaround, and, as a result, has attracted interest from drugmakers and investors alike. Last year, three biotechs specialized in protein degradation — Nurix, C4 Therapeutics and Kymera Therapeutics — raised a combined $565 million through initial public offerings, according to a database compiled by BioPharma Dive.
More recently, San Diego-based BioTheryx brought in another $92 million through a series E financing round. And in June, the Versant Ventures-backed Monte Rosa Therapeutics went public, raising $222 million in the process.
Lycia, too, caught the attention of Versant, and was formed in 2019 with the firm's funding and the scientific direction of Carolyn Bertozzi, a renowned chemist and director of Stanford University's ChEM-H research institute.
Two years later, Lycia has a nod of confidence from one of the world's largest pharmaceutical companies.
"We believe Lycia's technology may allow us to develop targeted therapeutics that were not previously feasible and make advances for patients in areas of high unmet need," Ajay Nirula, vice president of immunology at Lilly, said in a statement Wednesday.
Lycia may have been on Lilly's radar for some time, given Bertozzi served as in independent director on Lilly's board. (On Wednesday, Lilly also announced that Bertozzi has resigned from that role because of the collaboration and licensing agreement with Lycia).
But Lilly's also shown interest in protein degradation before. The company's venture arm invested in Kymera back in 2017. And late last year, Lilly inked a collaboration with Seed Therapeutics, a young biotech looking to treat cancer, infectious diseases and neurodegenerative disorders by breaking down harmful proteins.
Though it's receiving attention and investments, protein degradation is still a relatively nascent area of drug development, having yet to advance potential medicines into the later stages of human testing. One of the field's leading companies, Arvinas, is currently recruiting two mid-stage studies testing its experimental drugs in patients with breast or prostate cancer.
Like Lycia, Arvinas has recently caught the eye of a big pharma. In July, the Connecticut-based biotech entered an agreement with Pfizer that provided $650 million up front and a $350 million equity investment. In exchange, Pfizer gets a share of the profits if Arvinas' breast cancer drug comes to market.
Besides Lilly and Pfizer, other large companies like Roche, Vertex and Biogen have partnered with biotechs to research and develop therapies that rely on protein degradation.