The California Institute for Biomedical Research will occupy 50,000 square feet in La Jolla.

Merck & Co. will join with a chemist-turned-biotechnology entrepreneur to launch the California Institute for Biomedical Research (Calibr) in La Jolla, CA, with the goal of advancing discoveries into new drugs. Merck will provide the new nonprofit institute $90 million over seven years. In return, it will hold options to obtain exclusive commercial licenses to any proteins or small molecule therapeutic candidates resulting from Calibr research.

For any projects the company chooses not to license, Calibr can pursue grants from government agencies and other organizations toward research. At Calibr, research will progress to preclinical proof of concept, at which stage commercial partnerships will be sought for further development. Schultz also said the incubator will occupy about 50,000 square feet and be equipped for programs in immunology, autoimmune and metabolic disorders, cardiovascular disease, regenerative medicine, cancer biology, and neurodegenerative disease.

Calibr will start off with 20–40 employees, a number expected to grow to an eventual 150, Merck spokesman Ian McConnell told Xconomy. Peter G. Schultz, Ph.D, Calibr’s director and Scripps professor of chemistry at The Scripps Research Institute, says that Calibr will offer “a new paradigm for early-stage translational research” intended to give academic researchers “the opportunity to maximize the potential therapeutic value of their research” through collaborations with the institute’s investigators.

Investigator collaborators should be easy to find, since La Jolla and the rest of the San Diego region is home to Scripps and numerous other research institutions, including the Salk Institute, Sanford-Burnham Medical Research Institute, Torrey Pines Institute for Molecular Studies, and University of California, San Diego. “This institute can serve a unique role in the San Diego area by capturing the terrific science going on here and translating it into new medicines,” Schultz told the San Diego Union-Tribune.

According to the quarterly MoneyTree Report, 10 San Diego startups secured a total $142 million in venture capital during the fourth quarter of 2011, up from $125 million but down from 16 startups in Q4 ’10. The region lags behind the top-tier biopharma clusters in the San Francisco Bay Area and Boston/Cambridge, MA.

According to Merck, Calibr will select project proposals from scientists on the basis of novelty, biomedical impact, and technical feasibility. The projects will be reviewed by a scientific advisory board headed by Christopher T. Walsh, Ph.D., Hamilton Kuhn professor, department of biological chemistry and pharmacology, Harvard University. An independent board of directors headed by John D. Diekman, Ph.D., founder and managing partner of 5AM Ventures, will oversee Calibr.

Merck is launching Calibr at a time when it, like other biopharma giants, is scrambling to cut losses anticipated as patent protection ends for several blockbuster drugs. For example, Merck’s patent on asthma drug Singulair, which grew 10% last year to reach $5.479 billion in sales, runs out in the U.S. in August.

“We expect a significant decline in sales,” Adam Schechter, Merck evp and president, global human health, told analysts February 2 on the conference call following release of fourth-quarter and full-year 2011 results. “However, Singulair will retain exclusivity in the EU until February of 2013 and in Japan until 2016.We also expect to see continuing growth for Singulair in many of the emerging markets. Japan and emerging markets accounted for about $1.1 billion of overall Singulair sales last year, he said.

Merck joins another pharma giant in looking to the San Diego region for translation of research into money-making new drugs. In October, Johnson & Johnson transformed part of its La Jolla drug research center into Janssen Labs at San Diego, an incubator for startup drug development and medical device companies. J&J envisions up to 20 startups occupying 35,000 square feet left vacant when the pharma giant consolidated regional operations. Pfizer, however, has wound down operations at the 28,000 square foot La Jolla incubator it opened on its Global Research & Development campus in 2007, a spokeswoman told the Union-Tribune last fall.

To read the story from Xconomy, click here.

To read the story from the San Diego Union-Tribune, click here.

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