February 24, 2015
By Mark Terry, BioSpace.com Breaking News Staff
South San Francisco, Calif.-based NGM Biopharmaceuticals, Inc. announced yesterday that it had entered into a multi-year collaboration with Kenilworth, N.J.-based Merck & Co. (MRK). The deal includes several drug candidates that are in preclinical development at NGM, including NP201, a compound currently under evaluation for the treatment of diabetes, obesity and nonalcoholic steatohepatitis (NASH).
There is a bit more to this story than a relatively straightforward partnership. As also reported yesterday, NGM had essentially been in a bidding war over the rights to NP201. Merck was one of the bidders, but eventually lost out to an unnamed company.
Upon hearing that news, Roger Perlmutter, president of Merck Research Laboratories, called up NGM executives, scheduled a dinner and flew to the west coast. Perlmutter offered a much broader alliance than their earlier bid, apparently an offer NGM could not refuse.
Merck will make an upfront payment to NGM of $94 million. It also will acquire a 15 percent equity stake in the company for $106 million at a per share price that accounts for about a 20 percent premium to NGM’s most recent financing. In addition, Merck is ponying up to $250 million for research efforts over a five-year period, with possible extra funding for various milestones and conditions.
“NGM has developed a uniquely powerful research program that has permitted identification of novel, and quite consequential, pathway for metabolic regulation,” said Perlmutter in a statement. “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.”
Before Merck hits the go-button on a Phase III study, NGM has the option to either receive milestone and royalty payments or, potentially, to co-fund development and share in global cost and revenue sharing up to 50 percent. NGM will also have the option of co-promotion and co-funding the program in the U.S. Merck will have the option of extending the research agreement for two more two-year terms.
NGM’s NP201 has shown significant weight loss and appetite suppression in monkeys, as well as a moderation and normalization of blood sugar in other animal models. It has yet to be tested in humans.
Another of the company’s compounds, NGM282, imitates the FGF19 hormone that also plays a role in metabolism. Trial data is still pending. Merck did not acquire rights to this drug, which is currently in mid-stage clinical trials for primary biliary cirrhosis.
Part of the appeal to Merck’s offer is not only does it place more money on the table, but it leaves NGM researchers to continue to follow their own research goals.
“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,” said Jin-Long Chen, founder and chief scientific officer of NGM in a statement.
BioSpace Temperature Poll
Analyst Mark Schoenebaum, a biotech and pharmaceuticals analyst and medical doctor for ISI Group Evercore, has been running a Best Hair in Biopharma contest for several months now. So far, the candidates are Bristol-Myers Squibb Company‘s John Elicker, Receptos’ Chief Executive Officer Faheem Hasnain, Celgene‘s Vice President of Investor Relations Patrick Flanigan and Acorda Therapeutics’ Ron Cohen.
We want to know what our BioSpace community thinks: Who do you believe actually has the Best Hair in BioPharma?
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