UPDATED: Merck KGaA bolsters MS pipeline in $20M pact with Ono

If at first you don't succeed with a blockbuster drug, try, try again. Merck KGaA's Serono division has worked out a pair of new deals that will bring its R&D division in league with the scientists working at Japan's Ono Pharmaceutical. In one pact the German pharma company will pay $20 million upfront and a slate of unspecified milestones in exchange for development rights to the mid-stage oral MS drug ONO-4641, outside a set of Asian markets. And in the other agreement Merck will pocket $7 million as Ono picks up regional co-development rights for Stimuvax, a closely-watched cancer vaccine now in late-stage tests for non-small cell lung cancer.

For Merck Serono, the Ono deal offers another shot on the mega-market oral MS goal after a high-profile pratfall with its failed attempt to win an approval for cladribine. The pharma company sells Rebif and just recently plucked an experimental MS drug out of bankrupt Peptimmune's set of assets. The company is also partnered with Bionomics in Australia on a separate program. And it clearly has held onto hopes to break its way into the multibillion-dollar market for MS pills.

"There's a huge unmet clinical need," IHS Global Insight analyst Gustav Ando tells Bloomberg this morning. With tablets "the patient doesn't have to go to the hospital for monthly injections, which significantly impedes quality of life." And that makes this field particularly lucrative for any developer which can compete with Novartis's newly approved Gilenya.

Merck Serono has been forced to make a number of changes to its R&D division following the setback with cladribine. The once promising oral MS drug program crashed and burned after a poorly constructed development plan failed to produce convincing Phase III data. Last summer Merck KgaA hired Dr. Annalisa Jenkins from Bristol-Myers Squibb as head of drug development and medical, putting her in charge of late-stage development.

"We are very glad to partner with Merck Serono for the development and marketing of ONO-4641, given Merck Serono's commitment to developing treatments for people living with multiple sclerosis," said Gyo Sagara, Ono's president. "Moreover, we are delighted to collaborate in Japan on Stimuvax and together with Merck Serono to offer a potential future medicine for people suffering from non-small cell lung cancer."

- see the release
- here's the report from Bloomberg