Lycia sells $365.1m of shares to test drugs that send harmful antibodies into cells to be destroyed

In Short. Lycia Therapeutics, which makes drugs designed to remove harmful proteins from the blood, has sold shares worth about $365.1m in its first public offering. Most of it is earmarked for trials of three drugs, led by one for food allergy.

AN ALLERGY starts in the immune system, which makes an antibody that marks a harmless food or pollen as a threat, and the next encounter sets off a reaction. The antibody that drives many allergies, including food allergy, is IgE (immunoglobulin E). The best-known drug against it, Xolair (omalizumab), binds IgE so that it cannot act. According to a prospectus filed by Lycia Therapeutics, a company in South San Francisco, such blockers "inhibit but do not remove IgE", and their dose depends on a patient's body weight and IgE level.

Every cell has a compartment that breaks down material it no longer needs, called the lysosome. Most drugs work by blocking a protein. Some newer ones instead get the cell to destroy the protein, an approach called targeted protein degradation. The earlier versions of this approach rely on machinery inside the cell, so they work only on proteins that sit at least partly inside it, as a 2020 paper in Nature explained. IgE, like many proteins involved in disease, works outside cells.

That paper, from the Stanford laboratory of Carolyn Bertozzi, a Nobel laureate in chemistry, described a way to reach them. Its molecule has two ends. One holds the target protein and the other holds a receptor on the cell surface, so the cell pulls in both and the target is broken down in the lysosome. The authors called these molecules lysosome-targeting chimeras, or LYTACs, and Lycia was founded on the work. Its lead drug, LCA-0061, is an antibody that holds IgE joined to a small molecule that binds a receptor on liver cells. The prospectus says that inside the cell the drug lets go of the IgE and is designed to return to the cell surface and catch more. The company calls this version a cataLYTAC.

LCA-0061 is now in a Phase 1 trial, a first small trial in people that mainly checks safety. The trial, in Canada, started on June 26th and plans to enroll 72 people, according to the ClinicalTrials.gov registry. The prospectus describes it as randomized, double-blind and placebo-controlled, with eight participants per group assigned three to one to drug or placebo. In a first group of healthy adults with allergies and high IgE, planned at eight people, most of whom received the drug, a single 70mg injection under the skin cut total IgE by a mean of 92% from their starting level at 24 hours, the prospectus reports. The mean largest fall was 96%, and "the majority" of treated participants stayed more than 95% below their starting level at day 28. Unbound IgE fell in the same way. These figures come from a handful of volunteers and measure IgE in the blood, not allergic reactions. Lycia expects data in people with food allergy, whom the registry lists as people with peanut allergy, in 2027.

Two other drugs follow. LCA-0321 is designed to remove the antibodies that overstimulate the thyroid in Graves' disease, and is in a Phase 1 trial in the Netherlands with data expected in 2027. LCA-0062, a second IgE drug, has not yet been given to people. The prospectus says Lycia is "currently conducting IND-enabling activities", the laboratory work needed before a trial can start, and expects initial Phase 1 data in the second half of 2027.

The offering closed on October 26th. Lycia sold 20,286,000 new shares at $18.00 each, including 2,646,000 extra shares that the banks running the sale bought in full, for gross proceeds of about $365.1m before fees, according to the company. The shares began trading on Nasdaq on October 23rd. Net proceeds are about $335.0m, by the prospectus's estimate for a full sale of the extra shares.

The prospectus earmarks about $80.0m for LCA-0061, $70.0m for LCA-0062 and $90.0m for LCA-0321, each to be taken "substantially through our planned Phase 2 clinical trial", a mid-stage test of whether a drug works. It also states that the money "will not be sufficient" to take any of them through approval. Lycia had $148.1m in cash and similar assets on June 30th, and expects its money to last "into the second half of 2029". That estimate was made before the extra shares were sold. Eli Lilly paid Lycia $35.0m upfront in a 2021 research deal and ended it without cause in February 2026.

Lycia now has the money, by its own estimate, to take its lead IgE drug and its Graves' disease drug substantially through mid-stage trials. The first results in people with peanut allergy are expected in 2027.