US biopharmaceutical group Lycera will be celebrating news that drug giant Merck & Co has expanded a research collaboration to develop treatments for autoimmune disorders.

The two companies have formed a new alliance to discover, develop and commercialise small-molecule therapies directed at selected novel targets under investigation for a broad range of immune-mediated disorders.

Under the terms of the deal, Lycera will get an upfront fee and research funding, and stands to receive more than $300 million in research, development, regulatory and commercial milestone payments. 

Other specific financial aspects of the deal were kept under wraps, but it was announced that Lycera is entitled to royalty payments, as well as development and sales milestones, on global sales from any products resulting from the alliance.

Merck is responsible for clinical development and will have worldwide marketing and commercialisation rights to any products developed.

The move builds on an earlier pact entered into in 2011, under which the companies are working on small molecules that target T-helper 17 (Th17) cells, key mediators of inflammation, in order to develop therapies for condition such as psoriasis, rheumatoid arthritis, and multiple sclerosis.