Viagra maker Pfizer Inc. (PFE) on Monday, paraded a replacement partner in immuno-oncology in the form of Germany's Merck KGaA (MRK) after abandoning its £69.4 billion ($108.5 billion), one-sided courtship of AstraZeneca plc (AZN) in the spring.
Pfizer said it will pay $850 million for the rights to an experimental Merck treatment for cancer, dubbed MSB0010718C, that taps the body's anitbodies to help fight tumors.
Pfizer and Darmstadt, Germany-based Merck agreed to jointly finance the further development and marketing of the drug, while Merck stands to gain up to an additional $2 billion in bonus payments depending on the treatment's success. The two companies will also equally share any revenue.
"In immuno-oncology, Germans had trailed the leading companies," wrote Berenberg Bank analyst Alistair Campbell in a note. "Prizer's an impressive, financially strong partner."
Pfizer in May walked away from AstraZeneca after painting itself into a corner by describing a takeover proposal - one of a series - as "final." The transaction had also encountered political resistance in the U.S. and the U.K. Politicians in Washington criticized the approach as an attempt to avoid taxes by relocating abroad, while some U.K. lawmakers doubted that the New York company would make good on what it called "unprecendented commitments" on jobs and investment at the target.
The deal would have also given Pfizer access to AstraZeneca's own immuno-oncology treatment, which are known as anti-PD-L1 compounds. The compounds inhibit what's called the programmed death-1 checkpoint pathway. Tumors exploit this path to evade a protective response by the body's immune system that occurs when cancer cells are present.
The New York company has now found a less contentious way to access the technology.
Immuno-oncology drugs have proven very effective and the FDA regularly grants breakthrough drug status to new compounds in hope of getting the treatments on the market more quickly.
"Immuno-oncology is a top priority for Pfizer. Combining this promising anti-PD-L1 antibody with Pfizer's extensive portfolio of small molecules and antibodies provides an opportunity to potentially broaden the use of immunotherapy for patients with cancer and rapidly expand our oncology business," said Pfizer's Albert Bourla, who heads vaccines, oncology and consumer healthcare at Pfizer, in a statement.
Merck's treatment is currently part of two clinical studies. In the first – a Phase I trial – 550 patients with varying kinds of cancer are testing the drug. Patients with non-small cell lung cancer and ovarian cancer have showed some form of response. A Phase II trial is also looking at it in Merkel cell carcinoma, a form of skin cancer.
In addition to the ani-PD-L1 treatment, Merck and Pfizer will also cooperate on the marketing of Pfizer's XALKORI drug for battling non-small cell lung cancer in the U.S. and other unnamed markets.
"The global alliance will enable Merck to gain an early entry into the U.S. oncology market as well as to strengthen our existing oncology business in several other important global markets." said Belén Garijo, president and CEO of Merck's Merck Serono biopharmaceutical unit.
Investors welcomed the news, pushing Merck's shares up 2.9%, or €2.135, to €76.31 ($95.27) in Monday afternoon trading in Frankfurt.