Germany’s Merck KGaA has entered a collaboration agreement with UK drug development company Avillion to develop its anti IL-17 A/F Nanobody as a treatment for plaque psoriasis, a chronic and inflammatory skin condition. Financial terms were not disclosed.

The therapy is an investigational bi-specific half-life extended Nanobody that is thought to have the potential to treat inflammatory diseases. Merck said that due to the small size and unique structure of Nanobodies, they could be an ideal building block for a new generation of novel biological drugs. The Darmstadt-based company acquired full rights to anti IL-17 A/F Nanobody under a global development and commercialization deal with Belgium biopharma Ablynx in 2013.

The Nanobody has completed Phase I development and is due to start Phase II in plaque psoriasis this year. Avillion will be responsible for developing the therapy from Phase II through Phase III trials and will finance the clinical program through to regulatory submission. Merck will take over commercialization if the treatment makes it to market.

Merck executive board member and CEO of Healthcare, Belén Garijo, said the deal allows the company to optimize the potential of IL-17, which could address several areas of unmet need. She added: “In parallel, we have several highly promising priority clinical assets in our pipeline, all of which we must continue to drive in-house. By partnering appropriately, not only can we maintain the internal focus on our R&D innovation strategy, but also maximize other opportunities that emerge from our pipeline.”

Avillion’s CEO, Allison Jeynes-Ellis, commented: “This agreement is a further endorsement of our innovative business model. We are very encouraged that our collaborative approach to advancing the development of clinical candidates and boosting our partners’ R&D productivity is gaining such awareness in the biopharma industry.”