Bulking up

GTx and Merck collaborate on drugs to build muscle and bone, in deal potentially worth more than $470 million

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MEMPHIS, Tenn.—GTxInc. will earn $40 million upfront from Whitehouse Station, N.J.-based Merck& Co. under an R&D and global strategic collaboration for selectiveandrogen receptor modulators (SARMs), a new class of drugs with the potentialto treat age-related muscle loss (sarcopenia) as well as other musculoskeletalconditions. In addition, Merck will pay $15 million in research reimbursementsover the initial three years of the collaboration, and GTx will also beeligible to receive up to $422 million in future milestone payments associatedwith the development and approval of a drug candidate if multiple indications receiveregulatory approval.

Furthermore, Merck will make an equity investment of $30million in GTx common stock at a 40 percent premium to the 30 day averageclosing price, subject to various regulatory approvals, and GTx will receiveroyalties on any resulting worldwide product revenue.

The deal includes GTx's lead SARM candidate, Ostarine, whichis currently being evaluated in a Phase II clinical trial for the treatment ofmuscle loss in patients with cancer, and establishes a broad SARM collaborationunder which GTx and Merck will pool their programs to discover, develop andcommercialize current and future SARM molecules. As part of this globalagreement, Merck will be responsible for all future costs associated withongoing development and, if approved, commercialization of Ostarine and otherinvestigational SARMs resulting from the collaboration.

"By selectively targeting the androgen receptor, SARMs offera promising alternative to androgen therapy with the potential advantages oforal dosing, tissue selectivity and improved safety and tolerability," saysAlan B. Ezekowitz, senior vice president for bone, respiratory, immunology andendocrine at Merck Research Laboratories.

"Following the success of the proof of concept phase IItrial, multiple pharmaceutical companies expressed strong interest both in GTxand our lead SARM," says Dr. Mitchell S. Steiner, CEO of GTx. Merck, he noted,won out because the company "has many of the key elements we were looking forto maximize our success and shareholder value."

First, he says, the deal was attractive to GTx because itdidn't focus solely on the company's lead SARM but establishes a very broadSARM collaboration.

"Together we can pursue more and larger indications bycombining our drug candidates and resources, meaning we can not only get intomore focused markets, like cancer, but also get into large unmet areas likesarcopenia," Steiner explains. "There are no currently approved treatments forsarcopenia, which affects millions of Americans and results in decreasedquality of life, as well as increased risk of various diseases, includingdiabetes."

Also working in favor of Merck was that GTx leaders felt thelarger company had similar scientific core competencies, the agreement offersvery attractive financial terms, and GTx gets to play a role incommercialization.
SARMshave the potential to treat a wide range of musculoskeletal conditions andother diseases that result in muscle wasting or bone wasting. Ostarine hasreportedly even demonstrated the ability to build lean body mass and may havethe potential to improve physical performance which, while a positive aspect,also opens up concerns about potential abuse by athletes and others. GTx hasalready started working with anti-doping agencies to help minimize thepotential for abuse, Steiner reports.

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