Italian biotechnology company BioXell inked a $150 million dollar deal with US drugmaker Merck & Co yesterday, granting it rights to a series of compounds with potential in sepsis and other inflammatory disorders.

The Italian firm, spun out from Roche in 2002, has licensed rights to Merck to compounds targeting TREM-1, a receptor found on white blood cells that is thought to play a key role in the development of sepsis. The agreement includes $55 million in milestone payments for the development of the first TREM-1 product in the first indication, said BioXell.

None of the compounds has passed beyond preclinical development, so Merck is taking a highly speculative step into a therapeutic category riddled with defunct projects. To date, dozens of candidate sepsis treatments have failed in clinical development and only one – Eli Lilly’s Xigris (drotrecogin alfa activated) – has reached the market. Moreover, Xigris itself has not lived up to expectations, held back by lacklustre trial results [[29/04/05d]], and restrictions on its use [[25/04/05c]].

Acknowledging this challenge, Francesco Sinigaglia, BioXell’s CEO, said: “Sepsis is a challenging field and we are pleased that Merck is entering this agreement with us to explore this promising approach to address sepsis.”

BioXell has developed a soluble hTREM1-IgG fusion protein for the treatment of sepsis, and a diagnostic method to identify patients potentially responding to the hTREM1-IgG treatment. Merck has licensed rights to both these technologies.

For BioXell, which has raised 70 million euros since it achieved its independence, the Merck agreement provides new funding at a time when the environment for fund-raising in Europe, particularly for initial public offerings, is difficult. The company told Reuters that the Merck deal was the next step on the way to a flotation.