In a collaboration focused on developing new pain treatments, Merck & Co. will advance Quartet Medicine’s pipeline of small molecule drugs designed to modulate the tetrahydrobiopterin (BH4) pathway.

The partnership could generate up to $595 million for Quartet, a private biotech founded by scientists at Boston Children’s Hospital and École Polytechnique Fédérale de Lausanne (EPFL) in Switzerland, in conjunction with Atlas Venture.

Quartet said it will use translational BH4-based biomarker tools, plus preclinical disease models, to select ideal early clinical proof-of-concept indications for a modulator of the BH4 synthesis pathway, which has been implicated in a range of chronic human pain and inflammatory conditions.

The company said it is also enabling a translational biomarker strategy for clearly establishing human target engagement early in Phase I clinical trials. Quartet reasons that the dual approach will help it de-risk its lead program as it advances through early clinical development.

“This agreement provides a mutually beneficial collaboration framework, while providing Quartet significant non-dilutive research and development funding to advance our program through human proof-of-concept,” Quartet President and CEO Kevin Pojasek, Ph.D., said in a statement.

Quartet said the R&D funding will be used to advance its lead program through Phase IIa clinical proof-of-concept for the treatment of pain. Merck agreed to pay Quartet at least $20 million—of which half would be paid up front and the other half tied to an undisclosed future development milestone. In return, Merck obtains an exclusive option to purchase Quartet. If Merck exercises the option, Quartet will receive a pre-determined but undisclosed option exercise payment, as well as potential development, regulatory and sales milestones of up to $575 million.

“The Quartet team has done a tremendous job building a compelling preclinical data set around new drug candidates that modulate BH4. We look forward to collaborating with Merck as the Quartet pipeline continues to mature,” Quartet Chairman Bruce Booth, D.Phil., a partner at Atlas Venture, said in a statement.

Atlas was among investors in a series A financing of $23.25 million completed by Quartet in October 2015. Three new investors—including Dallas-based Remeditex Ventures and two undisclosed Shanghai-based strategic investors—joined Atlas as well as Novartis Venture Funds, Partners Innovation Fund, Pfizer Venture Investments.

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