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Merck rode out rival to sign $450m deal with NGM

Part of a five-year alliance on metabolic disorders and cancer

Merck_Co_logoMerck & Co has taken an equity stake in Californian biotech NGM Biopharmaceuticals as part of a five-year alliance focusing on drugs to treat metabolic disorders and cancer.

The US pharma major is paying $104m for a 15% stake in NGM, as well as a $94m upfront fee, in order to get access to a portfolio of preclinical drug candidates with potential in diabetes, obesity and non-alcoholic steatohepatitis (NASH), including lead candidate NP201.

Add in another $250m in funding and the deal represents a major cash injection for South San Francisco-based NGM, particularly as it excludes the biotech's lead project - NGM282 in phase IIb clinical development for primary biliary cirrhosis (PBC) - as well as some partnered programmes. NGM has previously signed deals with Johnson & Johnson and AstraZeneca.

By his own admission, William Rieflin, NGM's chief executive, told investors on a conference call that NGM has kept something of a low profile since it was founded in 2008, but the "broad and strategic" deal with Merck was evidence of the strength of its discovery and development platform.

NGM's "broad understanding of biology and physiology - and how these insights are integrated into our biologics discovery engine - is … what led Merck to us," he said, adding that a number of pharma companies took a look at the NP201 programme over recent months as part of the partnering process.

"We were very close to signing a licensing deal for NP201 with another big pharma company before Merck proposed a broader collaboration to us." 

The company has concentrated its efforts to date on cardio-metabolic disorders, added Rieflin, but the additional funding from Merck would not only fund existing projects through to phase III proof-of-concept studies, but also allow it to expand into other areas, as the agreement is "disease-agnostic." 

Merck's head of R&D Roger Perlmutter also alluded to that broader focus in a statement, noting the two companies would work on projects that "address the needs of patients suffering from diabetes, metabolic dysregulation, and malignancy." 

The company's platform relies on human genetic association studies as well as investigations into the biological effects of clinical interventions such as gastric bypass surgery. Examining how the body responds to the interventions helps guide the selection of hormones, other molecules and pathways for study, according to NGM's chief medical officer Alex DePaoli. 

Merck has licensed rights to one of NGM's projects - called NP201- upfront, and has an option to license other candidates at the proof-of-concept stage. NGM will lead the development of the other partnered projects to that stage, so retains considerable autonomy under the terms of the deal.

Rieflin emphasised that NP201 and the other preclinical candidates partnered with Merck have a completely different mechanism of action to NGM282. The latter is an optimised form of fibroblast growth factor (FGF) 19 and also has potential in diabetes and obesity, having been shown to reduce blood glucose and body weight and improve insulin sensitivity in animal models.

"The trust that Merck is placing in NGM is truly flattering," said the firm's president Jeff Jonker, who also welcomed a clause in the deal that will give NGM to participate in commercialising a project once it goes beyond phase III.

The latest agreement comes on the back of an unusually active acquisitive period for Merck, which bought Swiss cancer specialist OncoEthix in December for $375m and is in the process of acquiring antibiotic developer Cubist for $8.4bn.

Article by
Phil Taylor

25th February 2015

From: Sales

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