By Angela Chen
Merck & Co. Inc. said Monday that it has entered a five-year
collaboration with NGM Biopharmaceuticals Inc. to research and
develop drugs that treat diabetes and obesity, in the drug
company's latest bid to introduce new products.
Merck will pay NGM $95 million and buy a 15% equity stake for
$106 million. This price per share represents a 20% premium to the
privately-held NGM's most recent financing. Merck will then commit
up to $250 million to fund NGM, with potential for additional
funding.
The collaboration includes NGM drug candidates that are in
preclinical development. NGM will lead the research, while Merck
will license the resulting programs and lead global product
development and commercialization.
Roger Perlmutter, president of Merck Research Laboratories, said
that the collaboration would apply Merck's "well-established
translation capabilities" to NGM's research into drugs treating
diabetes, metabolic dysregulation and malignancy.
NGM can receive either milestone or royalty payments, or choose
to cofound development and share up to 50% of revenue.
Merck been becoming more active on the deal-making front to
bring in new products and exit from less desirable businesses,
especially as its drug portfolio ages. In January, it closed its
acquisition of antibiotics specialist Cubist Pharmaceuticals for
$8.4 billion, and last year acquired hepatitis C drug developer
Idenix Pharmaceuticals for $3.9 billion.
Earlier this month, Merck reported that its fourth-quarter sales
declined on a stronger U.S. dollar and patent expirations for top
drugs, while a weaker-than-expected 2015 outlook and new concerns
over prospects for an experimental hepatitis C treatment weighed on
Merck shares.
Shares of Merck, inactive premarket, have been up about 3% this
year through Friday's close.
Write to Angela Chen at angela.chen@dowjones.com
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