Merck pays $760M to buy into KalVista drug for diabetic eye disease

Lead candidate KVD001 is heading for phase 2 trials later this year.

KalVista has been looking for a big pharma partner for its plasma kallikrein inhibitors, and just had its wish fulfilled by Merck & Co.

Merck is paying $37 million up front for an option to buy KalVista’s program in diabetic macular edema (DME), an accumulation of fluid in the eye that can cause sight loss, and has also agreed to provide up to $715 million in milestones plus royalties if it leads to a commercial product. It’s also paying $9 million for a 9.9% stake in the biotech.

The main focus of the deal is KVD001, which KalVista said has cleared a phase 1 study and is due to start phase 2 proof-of-concept testing later this year. However, Merck is also taking an option to follow-up compounds that could potentially be dosed orally.

It’s a boost for the Anglo-American biotech, which operates out Cambridge, Massachusetts, and Salisbury in the U.K., as it provides a deep-pocketed partner for the DME and will help provide free resources down the line for its oral plasma kallikrein inhibitor program in hereditary angioedema (HAE), led by KVD818 which is heading for the end of its first phase 1 trial.

“Plasma kallikrein inhibition is a novel approach to the treatment of DME that we believe may offer benefit to a significant number of patients, and an oral therapy particularly would represent a ground-breaking advance for treatment of this indication,” said KalVista CEO Andrew Crockett.

“We have always believed that development and commercialization of our DME therapies would require the resources of a large pharmaceutical company,” he added. As it stands, KalVista will fund and run the phase 2 trial of KVD001 with Merck expected to take a decision on its option thereafter.

The deal gives KalVista a partner with a strong presence in diabetes through drugs such as DPP4 inhibitors Januvia (sitagliptin) and Janumet (sitagliptin/metformin), and could add to that portfolio shortly with Pfizer-partnered SGLT2 inhibitor ertugliflozin, which was filed in the U.S. and Europe in May.

In HAE, KalVista is pushing to enter a market with first-generation kallikrein inhibitors already on the market such as Shire’s injectable Kalbitor (ecallantide) which has been on the market since 2009, and a string of newer, oral candidates coming through the pipeline. KalVista is playing catch-up with BioCryst, which has a kallikrein inhibitor called BCX7353 in mid-stage testing having reported disappointing results with earlier candidate avoralstat last year.