NGM CEO William Rieflin

After signing a rich collaboration deal with Merck and raising a Series D, NGM is well fixed to continue its focus on drug discovery

CEO: William Rieflin
Based: South San Francisco
Founded: 2008
Clinical focus: Cardiometabolics
Company web site:

The scoop: Merck R&D chief Roger Perlmutter tends to invest in people as much as technologies. So perhaps it was no great surprise earlier this year when Merck ($MRK) signed off on an unusually innovative research collaboration with NGM Bio. Perlmutter knew the key players at NGM, including CSO Jin-Long Chen, who had joined Amgen's ($AMGN) research team after Perlmutter arranged for the acquisition of Tularik when he was running the West Coast biotech's big research organization. The new pact with NGM came with $94 million up front, a $106 million stake for 15% of NGM's stock and $250 million in research support over 5 years. NGM was left free to innovate, and Merck happily signed on for the ride.

What makes NGM Bio Fierce: It was a great deal for NGM, but it would never have happened unless the biotech's auction process hadn't first led them to conclude that Merck was the runner-up. NGM was going with another partnership offer. Perlmutter, though, wasn't taking no for an answer, and he flew out over the weekend to pitch a much broader deal. The biotech will call all the shots on research through Phase II, and if Merck opts for a Phase III buy-in, NGM has the right to stay involved and co-promote in the U.S.

"There's an explicit trust that exists, which enables a deal like this," says Rieflin about the pact. And the CEO is well aware of the unusual position his company is in, which is quite similar to the same collaborative R&D process that Sanofi and Regeneron enjoy.

Not long after NGM did its deal with Merck, investors put together a $57.5 million D round, leaving NGM with plenty of cash on the books as Merck handles a big portion of the yearly burn. Now, instead of cannibalizing its discovery budget to pay for a development program, Rieflin says that NGM can stay committed to what it does best: Finding novel drugs. And Merck can pick up the heavy costs associated with development.

The company has been focused on a simple goal, coming up with a new drug that could mimic the immediate biologic effects of gastric bypass surgery, which could have a profound impact on human health. But now that the biotech has developed considerable expertise in cardiometabolics, NGM is looking past that field into cancer, where Merck might find plenty of valuable programs that could be tied in with their big new PD-1 drug Keytruda.

Back in March, NGM announced that NGM282 (which is not included in the Merck deal) had succeeded in a Phase II study of its FGF19 hormone that's been engineered to tackle two biomarkers for primary binary cirrhosis (PBC): alkaline phosphatase as well as 7α-hydroxy-4-cholesten-3-one, both key factors for a healthy liver. By impacting bile acid synthesis, the company believes it's on track with this drug to affect several potential bile acid disease targets--they may be too late on PBC--including primary sclerosing cholangitis. A much bigger target would be Type 2 diabetes and nonalcoholic steatohepatitis.

So why didn't NGM go public when the market was ripe? All Rieflin will say is that the company regularly reviews its options. With Merck's 5-year partnership, though, there's plenty of time to ponder the best move for assuring the company's future.

Investors: Its investment consortium includes The Column Group, Merck, Prospect Ventures, Rho Ventures, Tichenor Ventures and Topspin Partners.

For more:
Merck bets big on NGM with a $450M handshake
NGM completes $50M Series C to advance cardio-metabolic therapies
NGM raises $13M for cardio/metabolic R&D work
NGM lands $51M for preclinical diabetes work

-- John Carroll (email | Twitter)


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