Tiny KalVista Explodes on $760 Million Deal With Drug Giant Merck & Co.

Published: Oct 12, 2017

Tiny KalVista Explodes on $760 Million Deal With Drug Giant Merck & Co.
October 10, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Cambridge, Mass. – KalVista Pharmaceuticals inked a collaboration deal with Merck & Co. for KVD001, a potential treatment for diabetic macular edema (DME), in addition to future DME therapeutics based on plasma kallikrein inhibition.

Under the deal, KalVista gave various rights to Merck, including an option to acquire KVD001 through a period after completion of the Phase II proof-of-concept clinical trial that KalVista plans to start by the end of this year. It also granted Merck a similar option for orally delivered molecules for DME that the company plans to develop. Merck is paying $37 million upfront. KalVista is eligible for payments related with the exercise of options by Merck, milestones for each program that could total up to $715 million, and tiered royalties on net sales of any subsequent commercial products.

KalVista will fund and control the Phase II trial, as well as the development of the other compounds through Phase II, unless Merck exercises its options before that happens.

Also, KalVista entered a separate $9.1 million private placement deal with Merck. Merck acquired 1,070,589 shares of KalVista, which totals a 9.9 percent ownership stake. The price was $8.50 per share.

“We are pleased to collaborate with Merck for the continuing development of KDV001 and future oral programs for patients with DME,” said Andrew Crockett, KalVista’s chief executive officer, in a statement. “Plasma kallikrein inhibition is a novel approach to the treatment of DME that we believe may offer benefit to a significant number of patients, and an oral therapy particularly would represent a groundbreaking advance for treatment of this indication. We have always believed that development and commercialization of our DME therapies would require the resources of a large pharmaceutical company, and we believe Merck has the wherewithal and resources to help us advance the development of our DME drug candidates. Importantly for KalVista, this collaboration also meets our strategic objectives of maintaining control of our oral HAE portfolio that we plan to develop independently. We look forward to providing more details about the Phase II trial for KVD001 in DME patients as the trial commences.”

KalVista stock rocketed at the news, jumping 111 percent in premarket trading. Shares currently trading at $12.63. Shares traded at $7.35 yesterday before the news broke.

John Carroll, with Endpoints News, writes, “The U.S./UK hybrid biotech, which started the day with a $72 million market cap, saw its fortunes changes instantly as news spread that Merck was paying $8.50 a share for a 10 percent stake in the company.”

In addition to KVD001, KalVista has a compound in the clinic for hereditary angioedema.

Diabetic macular edema results in the accumulation of fluid in the macula, part of the retina that is involved in handling detailed vision. It is caused by leaking blood vessels caused first by diabetic retinopathy, which is a disease that damages the retina’s blood vessels.

“The KalVista team has already made important progress in advancing this candidate into the clinic,” said Ben Thorner, Merck Research Laboratories’ senior vice president and Head of Business Development & Licensing, in a statement. “At Merck, we look forward to the opportunity to apply our expertise and resources upon the achievement of proof of concept for KVD001. Merck is seeking to collaborate on the development of candidates that we believe have the potential to transform practice in areas where there is a clear need for new and improved therapeutic options.”

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