ANN ARBOR—The University of Michigan spinoff company Lycera Corp. has closed on $36 million of venture capital financing.

The company, which focuses on developing small molecule drugs for treating autoimmune diseases such as rheumatoid arthritis and lupus, has received the first $10 million and will receive the remainder in two installments as specific milestones are met.

InterWest Partners, Clarus Ventures and ARCH Venture Partners are participating equally in the financing. EDF Ventures, which provided seed financing, also is participating.

Lycera’s research and development facilities are housed in a former Pfizer facility in Plymouth now known as the Michigan Life Science Innovation Center, and several former Pfizer scientists are employed by the company.

Lycera Corp. was founded in Ann Arbor by Gary D. Glick, the Werner E. Bachman Professor of Chemistry. The company is based on Glick’s research at U-M on immune system-modulating drug candidates with promise for treating diseases including rheumatoid arthritis, lupus erythematosis, psoriasis, inflammatory bowel disease and graft versus host disease. These compounds target a novel therapeutic pathway and, in a range of animal models, demonstrate efficacy without the unwanted side effects associated with current treatments for those diseases.

Lycera also is adding a program aimed at developing small-molecule immunomodulators that target the TH17 pathway, which plays a critical role in a number of chronic inflammatory diseases including inflammatory bowel disease. This program is based on discoveries made by Dan Littman of New York University School of Medicine and the Howard Hughes Medical Institute. Going forward, Littman will chair the Lycera Scientific Advisory Board.

“Lycera combines two of the most exciting, new small-molecule approaches for treating autoimmune diseases,” said Jeffrey Leiden, a managing director with Clarus Ventures. “The company will leverage the complementary expertise and discoveries of Dr. Glick in medicinal chemistry with those of Dr. Littman in immunology and the Th17 pathway. The Series A financing will enable Lycera to advance its first drug candidate through Phase II proof-of-concept studies and a second candidate into Phase I clinical trials.”

Glick said, “This financing is a very important validation of the Lycera technology platforms. The company is fortunate to be working with such a talented and experienced group of investors. Their expertise in the discovery and development of drugs to combat immune diseases and their track record at building world-class companies will be invaluable to Lycera. I am also delighted to have the opportunity to work closely with Dan Littman. Dan is a renowned immunologist, and Lycera is fortunate to have him on the team.”

In conjunction with the closing, Leiden, along with Kristina Burrow, a partner with ARCH, and Nina Kjellson, a general partner with InterWest, have joined Lycera’s board of directors. These additions have increased board membership to six. Steven Gillis, a managing director with ARCH and Mary Campbell, a managing director at EDF Ventures, will serve as board observers.

Related Links:

• Lycera Corp.