Merck invests $600 million in new company founded in Michigan

Advancements in medical research are vital to helping medical professionals save lives and improve the health of the population. Also, medical research can lead to profits for those who are in the position to capitalize from it. This may have been the reason behind Merck deciding to invest $600 million into a new company , which focuses on biotechnology and was started at the University of Michigan.

Initially Merck offered the company, Lycera, $12 million of investment capital as well as an additional $295 million which would be contingent upon the progress of Lycera’s research. The research company’s drug is designed to combat diseases of the autoimmune system. The drug does this by zeroing in on small molecules that normally attack T-helper cells. Lycera believes that this is a unique method for fighting diseases, such as psoriasis, inflammatory bowel disease, and rheumatoid arthritis.

The research startup has already obtained $36 million in 2009 from its initial round of raising investment funding. Lycera is planning to attempt to move forward with clinical trials within a year and a half or sooner. The research company’s basis stems from research performed at the University of Michigan. Merck recently announced it is increasing its investment package to $600 million to be presented to Lycera.

The Michigan research company’s success in obtaining investment funding stems from the profitability of the drug that it is currently developing. However, in order for any business to show potential for profit the new company will need a solid business plan in order present to possible investors. In industries that are heavily regulated, such as the pharmaceutical industry, the company’s owners and executives will need to be knowledgeable of applicable laws and regulations.

Source: wealthdaily.com, ” Promising Biotech Startup ,” Swagato Chakravorty, Feb. 15, 2013