ARIAD restructures its ridaforolimus collaboration with Merck
Among other terms, Merck will fund all future ridaforolimus development, manufacturing and commercialization costs, effective immediately
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CAMBRIDGE, Mass.—ARIAD Pharmaceuticals Inc. announced recently that it has restructured the collaboration forged in July 2007 with Merck & Co. for the development of ridaforolimus, ARIAD's investigational mTOR inhibitor. Under the revised deal, ARIAD has granted Merck an exclusive license to develop, manufacture and commercialize the small-molecule drug in oncology, and Merck will assume responsibility for all ridaforolimus activities, including clinical trials and regulatory filings. Previously, both companies had previously shared co-exclusive rights.
It is expected that transfer of the activities to Merck will take six months, and Merck will reimburse ARIAD for 100 percent of its ridaforolimus costs incurred until the transition is completed.
The terms call for Merck to make an upfront cash payment of $50 million to ARIAD and will reimburse ARIAD for its ridaforolimus expenses incurred since Jan. 1, 2010, which ARIAD estimates to be approximately $19 million. Merck will also fund all future ridaforolimus development, manufacturing and commercialization costs, effective immediately.
In addition, ARIAD will be eligible to receive as much as $514 million in regulatory and sales milestones based on the successful development and commercialization of ridaforolimus in multiple indications. This includes $65 million in milestones associated with the potential sarcoma indication, which currently is in Phase III clinical development. This breaks down to $25 million for acceptance of the new drug application by the FDA, $25 million for U.S. marketing approval, $10 million for European marketing approval, and $5 million for Japanese marketing approval).
Moreover, Merck will book global sales of ridaforolimus and pay ARIAD tiered double-digit royalties on global net sales of ridaforolimus. In addition to now receiving royalties on U.S. sales in lieu of a profit split, these global royalty rates are approximately one-third greater than the royalty rates that ARIAD would have received for ex-U.S. sales under the original collaboration agreement with Merck.
ARIAD retains an option to co-promote ridaforolimus with up to 20 percent of the sales effort for the product in all indications in the United States, and Merck will compensate ARIAD for its ridaforolimus sales efforts.
"The restructuring of our ridaforolimus partnership represents the culmination of over a year of negotiations with Merck and speaks to the strong commitment both companies are making to broadly develop and commercialize ridaforolimus as a potential new treatment for patients with cancer," says Dr. Harvey J. Berger, chairman and CEO of ARIAD. "We believe that the new license and collaboration deal will advance ridaforolimus both alone and in combination with other agents and will provide significant financial return to ARIAD for its discovery of ridaforolimus and for leading clinical development of ridaforolimus for its initial Phase III trial for sarcomas."
"We believe the structure and economics of this agreement put ARIAD in a very strong position to build a fully integrated oncology business based on the drugs it has discovered," Berger adds.
Looking to U.S. vs. ex-U.S. sales, Berger notes that it's too early to predict which part of the world ridaforolimus might sell better—and admits that Merck might have a better position of knowledge and experience to make such a prediction. But he does note, "If you look historically at small-molecule drugs in cancer, they have substantial markets ex-U.S. and in the U.S. and, in fact, many of the small-molecule cancer drugs have done better ex-U.S. because chronic treatment with a pill as opposed to repeated infusions—which have historically been so common in the U.S.—fit very well with the reimbursement systems ex-U.S."
Milestones associated with the start of four Phase III clinical trials in indications other than sarcoma and the development-cost advance contemplated by the original collaboration agreement are not included in the revised agreement, since Merck will be responsible for fully funding all clinical trials and other development activities.
Also, the terms for development and commercialization of ridaforolimus in potential non-oncology indications remain subject to future agreement between the companies.
It is expected that transfer of the activities to Merck will take six months, and Merck will reimburse ARIAD for 100 percent of its ridaforolimus costs incurred until the transition is completed.
The terms call for Merck to make an upfront cash payment of $50 million to ARIAD and will reimburse ARIAD for its ridaforolimus expenses incurred since Jan. 1, 2010, which ARIAD estimates to be approximately $19 million. Merck will also fund all future ridaforolimus development, manufacturing and commercialization costs, effective immediately.
In addition, ARIAD will be eligible to receive as much as $514 million in regulatory and sales milestones based on the successful development and commercialization of ridaforolimus in multiple indications. This includes $65 million in milestones associated with the potential sarcoma indication, which currently is in Phase III clinical development. This breaks down to $25 million for acceptance of the new drug application by the FDA, $25 million for U.S. marketing approval, $10 million for European marketing approval, and $5 million for Japanese marketing approval).
Moreover, Merck will book global sales of ridaforolimus and pay ARIAD tiered double-digit royalties on global net sales of ridaforolimus. In addition to now receiving royalties on U.S. sales in lieu of a profit split, these global royalty rates are approximately one-third greater than the royalty rates that ARIAD would have received for ex-U.S. sales under the original collaboration agreement with Merck.
ARIAD retains an option to co-promote ridaforolimus with up to 20 percent of the sales effort for the product in all indications in the United States, and Merck will compensate ARIAD for its ridaforolimus sales efforts.
"The restructuring of our ridaforolimus partnership represents the culmination of over a year of negotiations with Merck and speaks to the strong commitment both companies are making to broadly develop and commercialize ridaforolimus as a potential new treatment for patients with cancer," says Dr. Harvey J. Berger, chairman and CEO of ARIAD. "We believe that the new license and collaboration deal will advance ridaforolimus both alone and in combination with other agents and will provide significant financial return to ARIAD for its discovery of ridaforolimus and for leading clinical development of ridaforolimus for its initial Phase III trial for sarcomas."
"We believe the structure and economics of this agreement put ARIAD in a very strong position to build a fully integrated oncology business based on the drugs it has discovered," Berger adds.
Looking to U.S. vs. ex-U.S. sales, Berger notes that it's too early to predict which part of the world ridaforolimus might sell better—and admits that Merck might have a better position of knowledge and experience to make such a prediction. But he does note, "If you look historically at small-molecule drugs in cancer, they have substantial markets ex-U.S. and in the U.S. and, in fact, many of the small-molecule cancer drugs have done better ex-U.S. because chronic treatment with a pill as opposed to repeated infusions—which have historically been so common in the U.S.—fit very well with the reimbursement systems ex-U.S."
Milestones associated with the start of four Phase III clinical trials in indications other than sarcoma and the development-cost advance contemplated by the original collaboration agreement are not included in the revised agreement, since Merck will be responsible for fully funding all clinical trials and other development activities.
Also, the terms for development and commercialization of ridaforolimus in potential non-oncology indications remain subject to future agreement between the companies.
