Merck KGaA-Pfizer to Co-promote Xalkori for Lung Cancer - Analyst Blog

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Merck KGaA MKGAF and partner Pfizer Inc. PFE announced that they have finalized an agreement to co-promote the latter's anaplastic lymphoma kinase (ALK) inhibitor, Xalkori, for the treatment of ALK-positive advanced non-small cell lung cancer (NSCLC).

Terms of the Deal

The companies will co-promote Xalkori in two phases - the first phase will begin in the second and third quarters of 2015 in the U.S., Canada, Japan and five countries in the EU (France, Germany, Italy, Spain and the UK), while the second phase will commence in 2016 in China and Turkey.

In 2015, Merck KGaA will receive a reimbursement related to its co-promotion of Xalkori, apart from profit on sales of the product in a 20:80 ratio (20% of the profit will belong to Merck KGaA Pfizer will get the rest), starting 2016. The term of this co-promotion agreement will last through Dec 31, 2020 in the U.S., Canada and the five EU countries. In China and Turkey, Xalkori co-promotion will begin on Jan 1, 2016 and last through Dec 31, 2021. Pfizer will be responsible for reporting Xalkori sales in countries where the drug will be co-promoted with Merck KGaA.

Merck KGaA stated that this deal has been signed in connection to its collaboration agreement with Pfizer, announced in Nov 2014, to jointly develop and commercialize investigational anti-PD-L1 monoclonal antibody avelumab, and to accelerate the development of immuno-oncology treatments. Merck KGaA also said that both companies intend to join forces on up to 20 high-priority immuno-oncology clinical development programs. Several of the programs are expected to begin in 2015.

Merck KGaA and Pfizer believe that their combined efforts to co-promote Xalkori will benefit both companies. On one hand, this agreement should solidify Merck KGaA's presence in the oncology market in the U.S. and Canada, thereby paving way for future success. On the other hand, it should lead to the development of a solid base for the potential launch of avelumab, which is currently being co-developed by Merck KGaA and Pfizer as a potential treatment for multiple types of cancer.

We note that Xalkori is approved in the U.S. for the treatment of metastatic NSCLC in patients with ALK-positive tumors. In the EU, Xalkori is approved for treatment-experienced patients suffering from ALK-positive advanced NSCLC. In 2014, Xalkori generated revenues of $438 million, up 55.3% year over year.

Investors looking for well-ranked stocks in the health care sector may consider Cytokinetics, Incorporated CYTK and Astellas Pharma, Inc. ALPMY . While Cytokinetics carries a Zacks Rank #1 (Strong Buy), Astellas holds a Zacks Rank #2 (Buy).

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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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