A startup focused on treating celiac disease is the first to be launched by Avalon Ventures and GlaxoSmithKline (GSK) in their $495 million collaboration announced in April to form and fund up to 10 early-stage life science businesses in San Diego, using $10 million in Series A financing and R&D support from the VC firm and pharma giant.

The startup, named Sitari Pharmaceuticals, is targeting the transglutaminase 2 (TG2) pathway as it develops drugs for celiac and other diseases. Sitari was founded on IP licensed from the laboratory of its scientific founder, Chaitan Khosla, Ph.D., professor of chemical engineering and chemistry at Stanford University and director of the Stanford Institute for Chemical Biology.

GSK has the option to acquire Sitari upon identification of a clinical candidate. If GSK chooses not to exercise that option, Sitari ownership will remain with Avalon, which will be free to enter into other strategic transactions.

Avalon has agreed to provide Sitari with executive leadership and operational management consistent with its current portfolio strategy. Some additional support will come from COI Pharmaceuticals, an Avalon-established venture-pharma entity that will provide a fully equipped R&D facility and experienced leaders, both to Sitari and future companies to be created from the Avalon-GSK collaboration.

Under the collaboration—the second-largest industry-venture alliance according to a GEN List published in June—Avalon agreed to contribute $30 million from its $200 million Fund X that closed last year, and provide executive leadership and operational management consistent with its current portfolio strategy. GSK agreed to provide up to $465 million in company seed funding, R&D support, and payments tied to preclinical and clinical milestones toward the 10 startups, each focused on discovery of drugs against disease targets.

While 10 startups are set to be formed, the alliance may be extended to form more companies, Pearl Huang, Ph.D., GSK’s global head of discovery partnerships with academia, told the Union-Tribune of San Diego,

“COI is a ‘Community of Innovation’ that provides an environment where entrepreneurial and scientific risks are encouraged and rewarded for life science inventors with bold ideas.” Jay Lichter, CEO of COI and managing director of Avalon, said in a statement, “We are attracting and in-licensing innovative discoveries with significant potential for drug development and working with founding scientists to launch promising early-stage companies such as Sitari.”

COI also assists several companies in Avalon’s current biopharma portfolio, including Afraxis, Avelas Biosciences, RQx Pharmaceuticals, and Sova Pharmaceuticals.

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