By Natalia Drozdiak and Christopher Alessi
FRANKFURT-- Pfizer Inc. and Germany's Merck KGaA are teaming up
to develop a new tumor treatment product, in a move that will boost
the U.S. company's oncology business but reduce its full-year
earnings per share.
Merck said Monday it would receive $850 million upfront to
jointly develop and commercialize an anti-PD-L1 antibody with
Pfizer and could receive a further $2 billion in regulatory and
commercial milestone payments. Merck is already developing the drug
as a treatment against various types of tumors.
"It is the largest deal in the pharmaceutical industry for a
single asset in this stage of development," said Belén Garijo,
chief executive of Merck's pharmaceutical division. The deal also
"enables Merck to accelerate its entry into the U.S. oncology
market," Ms. Garijo added.
The two companies will also work to push Pfizer's anti-PD-1
antibody--another tumor fighting agent--into phase 1 trials, while
Merck will co-promote Pfizer's lung cancer drug XALKORI in the U.S.
and other markets.
As a result of the transaction, Pfizer is downgrading its
previous 2014 reported diluted earnings per share guidance to
between $1.40 and $1.49, from between $1.50 and $1.59.
Both companies will jointly fund development and
commercialization costs and will share all revenues from selling
any anti-PD-L1 or anti-PD-1 products, Merck said.
Merck added that about 20 immuno-oncology clinical development
programs are set to begin next year.
Growth in Merck's pharmaceutical division, Merck Serono, was
held back in the third quarter, reported Nov. 13, because of a 69%
decline in royalty, license and commission income connected with
patent expirations for arthritis drugs Humira and Enbrel.
Third-quarter pharmaceutical sales were driven largely by growth in
emerging markets such as China and Brazil.
The company has moved over the past year to bolster its
non-pharmaceutical divisions through the acquisitions of the U.K.'s
AZ Electronics PLC and U.S.-based Sigma-Aldrich Corp., a supplier
of laboratory testing materials.
Merck KGaA isn't affiliated with Merck & Co. of the U.S.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and
Christopher Alessi at christopher.alessi@wsj.com
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