LONDON: Merck of Germany said that the American drug giant Pfizer had agreed to pay $850 million upfront and as much as $2 billion later in a deal to jointly develop one of Merck’s cancer drugs.
Shares of Merck rose 2.5 percent to 76.02 Euros, or about $95.18, in morning trading in Frankfurt.
The alliance with Pfizer is expected to strengthen Merck’s existing oncology business in several important markets around the world, including the United States, Merck said. The deal also is expected to help spread the cost of developing the drug.
Under the agreement, Merck and Pfizer will jointly develop and commercialize MSB0010718C, a potential treatment for several types of tumor. It is a so-called immuno-oncology drug, which, if successful, would help the body’s own immune system fight cancer.
As part of the transaction, Merck, a chemical and pharmaceutical company based in Darmstadt, Germany, will receive an upfront payment of $850 million and up to $2 billion in additional payments if the drug turns out to be commercially successful. Merck also will co-promote Pfizer’s Xalkori, a treatment for nonsmall-cell lung cancer, in the United States and other markets.
“The agreement with Pfizer is a very important milestone in taking our pharma pipeline forward,” Karl-Ludwig Kley, the Merck chairman said.
Merck and Pfizer will share the cost of developing and bringing the drug to market, as well as revenue from its sales.
The alliance allows Pfizer and Merck “to join forces and combine complementary strengths with the goal of meeting the needs of patients with multiple types of cancer,” said Albert Bourla, the Pfizer group president for its vaccines, oncology and consumer health care businesses.
The deal comes nearly six months after Pfizer abandoned its pursuit of the British drug maker AstraZeneca, a bid that was driven in part by AstraZeneca’s attractive portfolio of cancer drugs. The $119 billion cash-and-stock proposal would have created the world’s largest drug company.
Under British takeover rules, Pfizer had to walk away for six months and is not allowed to make another approach to AstraZeneca until later this month.
The alliance with Pfizer is the latest effort by Merck to bolster its three core businesses: health care, performance materials and life sciences.
In September, Merck agreed to acquire the life sciences company Sigma-Aldrich for $17 billion in cash. Earlier this year, Merck completed its acquisition of AZ Electronic Materials, a maker of high-tech materials and functional specialty chemicals.
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