AureoGen Biosciences Inc. announced a licensing agreement with Merck, known as MSD outside the United States and Canada, for the use of AureoGen's proprietary chemistry and compounds for the development of medicines for infectious disease, including systemic fungal infections.

Under the agreement, Merck receives exclusive rights to novel derivatives of the antifungal compound aureobasidin A made by AureoGen, as well as additional derivatives generated using AureoGen's chemistry platform. AureoGen will receive an upfront payment and is eligible to receive milestone payments based on progress and regulatory approvals related to Merck's development of drug candidates, using AureoGen's chemistry and/or compounds. AureoGen is also eligible to receive royalties from commercial sales of approved products derived from the agreement.

AureoGen's proprietary chemistry allows specific functionalization of pharmacologically essential elements in the aureobasidin A structure, and using this chemistry, the compound can be modified to generate derivatives with improved activity against fungal pathogens. Most notably, the chemistry has allowed synthesis of derivatives with considerably improved activity against yeasts and molds, including Aspergillus fumigatus, a mold organism causing difficult to treat infections that is becoming increasingly resistant to azole antifungals.

"AureoGen is very pleased with the agreement with Merck. It will allow for efficient and rapid development of novel drugs for a market with a very immediate unmet medical need. And it will allow for a broadening of AureoGen's continued R&D efforts in the anti-infectives area," said Dr. Ake Elhammer, CEO of AureoGen Biosciences. "Merck's demonstrated leadership in antifungal R&D and in the marketing of antifungal drugs makes the company an ideal partner for the development of novel drugs based on AureoGen's aureobasidin A chemistry."

"Merck is committed to advancing meaningful therapeutic options to address serious infectious diseases," said Todd A. Black, Ph.D., executive director, Infectious Diseases, Merck Research Laboratories. "We are pleased to enter into this agreement with AureoGen and look forward to applying its novel chemistry platform towards the potential development of important new medicines."

AureoGen received support through the Michigan Economic Development Corporation's Entrepreneur and Innovation initiative, and the Western Michigan University Biosciences Research and Commercialization Center (BRCC). The company started at the Southwest Michigan Innovation Center (SMIC), a life sciences incubator/accelerator located in Kalamazoo.