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