On February 23, 2015 NGM Biopharmaceuticals and Merck reported that they have entered into a multi-year collaboration to research, discover, develop and commercialize novel biologic therapies across a wide range of therapeutic areas (Press release Merck & Co, FEB 23, 2015, View Source [SID:1234501835]). This agreement will become effective upon the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

“We are very pleased to establish this alliance with Merck, which will be transformational for NGM, providing us with the resources and flexibility to pursue our ambitious research and development goals while preserving our unique drug discovery culture,” said William J. Rieflin, Chief Executive Officer of NGM. “We look forward to working with Merck to generate a robust pipeline of therapies with the potential to make a significant difference in the lives of patients.”

“NGM has developed a uniquely powerful research program that has permitted identification of novel, and quite consequential, pathways for metabolic regulation,” said Dr. Roger M. Perlmutter, President of Merck Research Laboratories. “Through this new collaboration, we hope to apply Merck’s well-established translational capabilities to advance innovative biologics that address the needs of patients suffering from diabetes, metabolic dysregulation, and malignancy.”

The collaboration includes multiple drug candidates currently in preclinical development at NGM, including NP201, which is being evaluated for the treatment of diabetes, obesity and nonalcoholic steatohepatitis (NASH). NGM will lead the research and development of the existing preclinical candidates and have the autonomy to identify and pursue other discovery stage programs at its discretion. Merck will have the option to license all resulting NGM programs following human proof of concept trials. If Merck exercises this option, Merck will lead global product development and commercialization for the resulting products, if approved.

Under the terms of the agreement, Merck will make an upfront payment to NGM of $94 million and will purchase a 15 percent equity stake in NGM for $106 million at a price per share that represents a 20 percent premium to NGM’s most recent financing. Merck will commit up to $250 million to fund all of NGM’s efforts under the initial five-year term of the collaboration, with the potential for additional funding if certain conditions are met.

Prior to Merck initiating a Phase 3 study for a licensed program, NGM may elect to either receive milestone and royalty payments or, in certain cases, to co-fund development and participate in a global cost and revenue share arrangement of up to 50 percent. The agreement also provides NGM with the option to participate in the co-promotion of any co-funded program in the United States. Merck will have the option to extend the research agreement for two additional two-year terms.

“This collaboration brings together our biology-driven research and development product platform with Merck’s late-stage development and commercialization expertise, while also enabling NGM to explore exciting new drug targets,” commented Dr. Jin-Long Chen, Founder and Chief Scientific Officer of NGM. “Both companies’ commitment to scientific excellence and willingness to creatively combine our strengths was key to establishing this relationship.”

NGM’s lead program, NGM282, currently in clinical development for primary biliary cirrhosis (PBC) and NASH, as well as programs that are the focus of NGM’s pre-existing collaboration agreements, are not subject to the option under the Merck collaboration.