Merck pays $1B to buy into Bayer's cardio future

Merck ($MRK) plans to use the proceeds of its planned $14.2 billion consumer business sale to Bayer to beef up its pipeline, and the in-transition pharma giant isn't wasting any time, signing a billion-dollar deal with its new partner in a move to get its hands on some new cardiovascular drugs.

Under the agreement, Merck will hand over $1 billion up front to split the rights to Bayer's stable of drugs that modulate soluble guanylate cyclase (sGC), an enzyme tied to the widening of blood vessels. That includes ex-U.S. rights to Adempas, Bayer's FDA-approved treatment for pulmonary arterial hypertension, and stateside rights to vericiguat, a Phase II sGC modulator under development for worsening heart failure. Merck is on the line for another $1.1 billion in milestone payments tied to collective sales of the whole franchise, Bayer said.

Merck also gets opt-in rights on the rest of Bayer's early-stage sGC drugs and has agreed to make its similar candidates available under the same terms. The two plan to share costs and profits on all co-developed treatments along the way.

Merck expects to net between $8 billion and $9 billion from the sale of its consumer business--which includes household names like Claritin and Coppertone--and the company plans to funnel that money directly into its pipeline. That means investing in top prospect MK-3475, a promising cancer immunotherapy, and snatching up external assets that can add value, Merck said.

Merck CEO Kenneth Frazier

Bayer's sGC franchise fits that description, CEO Kenneth Frazier said, and Merck could use the help, touting a thin stable of cardio contenders headlined by the Phase III atherosclerosis drug anacetrapib and vorapaxar, a thrombosis treatment that cleared an FDA panel in January with approval likely on its way this year.

"Both Merck and Bayer have a rich history of developing and commercializing innovative products to meet significant unmet medical needs," Frazier said in a statement. "Our collaboration with Bayer builds on our respective strengths, and we look forward to working with Bayer in the field of sGC modulators."

Meanwhile, Merck's long-term R&D rethink is moving along in fits and starts. In April, the company elated investors with excellent mid-stage results for its hepatitis C combo, a treatment now expected to bring in more than $3 billion at its peak and come in second to standard-bearer Gilead Sciences ($GILD). A month later, however, the company halted a Phase III study of cancer contender vintafolide, a drug it acquired in a deal worth up to $1 billion, casting serious doubt on what had been a pillar of its late-stage oncology program.

- read Merck's statement
- here's Bayer's release

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