Potential $2-billion deal teams Pfizer and Merck KGaA on immune-oncology

Pfizer forms global strategic alliance with German Big Pharma giant to jointly develop and commercialize anti-PD-L1 antibody therapy

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NEW YORK & DARMSTADT, Germany—Pfizer Inc. announced Nov. 17 that it had entered into an agreement with Germany’s Merck KGaA (which is not affiliated with U.S.-based Merck & Co.) to jointly develop and commercialize MSB0010718C, an investigational anti-PD-L1 antibody currently in development by Merck KGaA as a potential treatment for multiple types of cancer. The companies will explore the therapeutic potential of this novel anti-PD-L1 antibody as a single agent as well as in various combinations with Pfizer’s and Merck KGaA’s broad portfolio of approved and investigational oncology therapies.
Under the terms of the agreement, Merck KGaA will receive an upfront payment of $850 million and is eligible to receive regulatory and commercial milestone payments up to approximately $2 billion. Both companies will jointly fund all development and commercialization costs, and all revenues obtained from selling any anti-PD-L1 or anti-PD-1 products generated from this collaboration will be shared equally.
The pair will be building on an ongoing Phase 1 program that has treated more than 550 patients, and they will collaborate on up to 20 high priority immuno-oncology clinical development programs expected to commence in 2015. These clinical development programs include up to six trials in Phase 2 or 3 that could be pivotal for potential product registrations.
“This global alliance enables Pfizer and Merck KGaA to join forces and combine complementary strengths with the goal of meeting the needs of patients with multiple types of cancer,” said Albert Bourla, group president of Pfizer’s Vaccines, Oncology and Consumer Healthcare Businesses. “Immuno-oncology is a top priority for Pfizer. Combining this promising anti-PD-L1 antibody with Pfizer’s extensive portfolio of small molecules and antibodies, provides an opportunity to potentially broaden the use of immunotherapy for patients with cancer and rapidly expand our oncology business. In addition, this alliance enables us to significantly accelerate the timeframe of our development programs and move into the first wave of potential immuno-oncology based treatment regimens.”
“Collaborating globally with Pfizer will allow us to benefit from the strengths and capabilities of both companies in immuno-oncology, further accelerating this promising asset in the race to address the needs of cancer patients across multiple tumor types,” added Belén Garijo, president and CEO of Merck’s biopharmaceutical division, Merck Serono. “On top of that, the global alliance will enable Merck to gain an early entry into the U.S. oncology market as well as to strengthen our existing oncology business in several other important global markets.”
According to Dr. Mikael Dolsten, president of Pfizer Worldwide Research and Development, “Early results for Merck KGaA’s PD-L1 in patient trials are impressive and consistent with the results seen with the class of PD-1 and PD-L1 antibodies. This promising foundation of research will form the basis of multiple registration trials.”
Separate from the PD-L1 programs, Pfizer and Merck KGaA will also combine resources and expertise to advance Pfizer’s anti-PD-1 antibody into Phase 1 trials. The parties have also agreed to co-promote Pfizer’s Xalkori in the United States and several other key markets.
Zacks Investment Research analysts wrote that they are “encouraged” by the collaboration and added that the agreement should help Merck KGaA’s Merck Serono division to remain on track with its “Fit for 2018” program, which was initiated in 2011. The Zacks investor note also noted that earlier this year, in June, Merck KGaA signed an agreement with MorphoSys AG for discovery and development work related to therapeutic antibodies against undisclosed immune checkpoints.
“We believe that the agreement with Pfizer will leverage Merck KGaA’s immuno-oncology pipeline and accelerate the timelines involved with the development programs. Moreover, this alliance should facilitate Merck KGaA’s entry into the U.S. oncology market apart from boosting the company’s existing oncology business in other markets,” noted Zacks in its analysis. “Additionally, the terms of the deal look favorable—costs associated with the development and commercialization of any product evolving under the agreement will be equally divided between the companies.”

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