Merck Buys NASH Candidate, Keytruda Wins 5 Approvals in Japan

Merck & Co., Inc.MRK announced that it has exercised its option to in-license a once-monthly insulin sensitizer, NGM313, from partner NGM Biopharmaceuticals, Inc., being developed for the treatment of NASH and type II diabetes.

With this deal, Merck gets exclusive global rights to develop, manufacture and commercialize NGM313, now renamed as MK-3655. The company made a payment of $20 million to NGM for securing the deal.

Merck and NGM share a broad multi-year strategic collaboration since 2015 to discover novel biologic therapies across a wide range of therapeutic areas. The latest deal is part of this collaboration.

Merck's one-time option was triggered as NGM completed a phase Ib proof-of-concept study on the candidate. Data from the study presented last November showed that a single dose of the medicine led to a statistically significant reduction in liver fat content (LFC) and improvements in multiple metabolic parameters after five weeks of treatment.

Merck plans to initiate a phase IIb study on the candidate while NGM Biopharmaceuticals retains the option to take a 50% cost and profit-sharing partnership for NGM313 once the candidate enters late-stage development. In case NGM does not exercise this option, it will be entitled to future milestones and royalty payments.

In the past year, shares of Merck have outperformed the industry . The stock has rallied 29.9% compared with 1.2% increase for the industry.

Meanwhile, Merck's PD-1 inhibitor, Keytruda, gained five new label expansion approvals in Japan. These included a first-line treatment option for advanced non-small cell lung cancer (NSCLC) as both monotherapy and in combination with chemotherapy, an adjuvant therapy for melanoma and for advanced microsatellite instability-high (MSI-H) tumors.

Keytruda is a key contributor to Merck's sales. Within a very short span, Keytruda has become Merck's largest product. It is already approved for use in 12 indications across eight different tumor types in the United States.

The Keytruda development program is also progressing well and the drug is being studied for more than 30 types of cancer in more than 850 studies including 400 plus combination studies. Merck is collaborating with several companies, namely Amgen AMGN , Incyte INCY , Glaxo GSK and Pfizer separately for the evaluation of Keytruda combined with other regimens.

Merck currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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