New Haven-based Arvinas has agreed to co-develop its novel drug development technology with pharmaceutical giant Merck in a deal worth up to $434 million.

The partnership, announced on Tuesday, paves the way for Merck to develop a new class of drugs based on Arvinas’ protein degradation strategy. While the exact terms of the agreement remain confidential, Merck will provide an up front payment for the use of Arvinas’ technology to design new drugs that target multiple disease-related proteins. Arvinas will receive more payments as royalties come in and as certain developmental, regulatory and commercial milestones are reached. The collaboration could also expand to include additional target proteins per Merck’s discretion, said Manny Litchman MED ’86, Chief Executive Officer of Arvinas.

“This is a new drug development paradigm,” Arvinas founder and Chief Scientific Adviser and Yale Molecular, Cellular and Developmental Biology professor Craig Crews said.

Arvinas’ innovation lay in its decision to deviate from the standard approach of inhibiting disease-causing proteins, Crews added, deciding to instead model an approach based on research conducted at a laboratory he runs at Yale. The new approach leverages quality-control machinery already in cells that eliminates rogue proteins, Arvinas Chief Scientific Officer Jim Winkler said.

Under the current paradigm, pharmaceutical companies can develop drugs to target only 20 to 25 percent of the 20,000 proteins found in humans, said Sean Cassidy, Arvinas’ chief financial officer.

“We believe that our technology can do much better,” Cassidy added.

Crews noted that Arvinas’ technology allows drugs to be designed in a way that targets all proteins — previously, it was impossible to modify proteins that lack enzyme activity, he also said.

Arvinas is already working to develop small molecules that target proteins involved in cancer, said Crews.

“Because we have a platform technology that can be employed in different diseases and to target different proteins, there’s the opportunity for partnerships,” he added, noting that the company is currently speaking with several other companies to potentially form collaborations similar to this one with Merck.

Crews also said much of the interest in Arvinas’ technology is due to its potential ability to resuscitate “near drugs,” drug development projects that originally failed in the clinical phase, by providing alternative pathways to success.

The nearly half-billion dollar agreement reflects the quality of the science conducted at Yale, said Jon Soderstrom, managing director of the University’s Office of Cooperative Research.

Soderstom, who also sits on Arvinas’ Board of Directors, added that the OCR is currently looking to create an entrepreneurial environment around the University to help faculty commercialize their work. Such a culture, he added, could attract new faculty and investors to Yale.

“There is a growing ecosystem of bioengineers and entrepreneurs in New Haven,” Litchman said. “The fundamental platform coming out of Dr. Crew’s lab was … very compelling technology.”

Cassidy also pointed to Crews’ track record — which includes founding another startup named Proteolix that developed the multiple myeloma drug carfilzomib (Kyprolis) and was then acquired by Onyx Pharmaceuticals for $851 million — as a major reason behind Arvinas’ success.

Arvinas was founded in 2013 and first received funding from Canaan Partners, 5AM Ventures, Connecticut Innovations and Elm Street Ventures.

Interested in getting more news about New Haven? Join our newsletter!

LIONEL JIN