ARIAD Pharmaceuticals, Inc. (NASDAQ: ARIA) and Merck & Co., Inc. (NYSE: MRK) announced on July 12 that they have entered into a global collaboration to jointly develop and commercialize AP23573, ARIAD's novel mTOR inhibitor, for use in cancer. It is expected that AP23573 will enter into Phase III clinical development for the treatment of metastatic sarcomas beginning this quarter.
The agreement provides for an initial payment of $75 million to ARIAD, up to $452 million more in milestone payments to ARIAD based on the successful development of AP23573 in multiple cancer indications (including $13.5 million for the initiation of the Phase III clinical trial in metastatic sarcomas and $114.5 million for the initiation of other Phase II and Phase III clinical trials), up to $200 million more based on achievement of significant sales thresholds, at least $200 million in estimated contributions by Merck to global development, up to $200 million in interest-bearing repayable development-cost advances from Merck to cover a portion of ARIAD's share of global-development costs (after ARIAD has paid $150 million in global development costs), and potential commercial returns from profit sharing in the U.S. or royalties paid by Merck outside the U.S.
"We are very excited to be entering into this partnership with ARIAD for the development and potential commercialization of AP23573, as it has the promise to allow us to bring an important new medicine to cancer patients globally. Merck is fully committed to the field of oncology, and this partnership further demonstrates that commitment as we strive to meet unmet medical needs in cancer," said Vlad Hogenhuis, M.D., general manager, oncology, specialty and neuroscience franchise of Merck.
The companies anticipate conducting a broad-based global development program in which clinical trials and biomarker studies will be conducted concurrently in multiple cancer indications. Each party will fund 50 percent of the cost of global development of AP23573, except that Merck will fund 100 percent of the cost of ex-U.S. development that is specific to the development or commercialization of AP23573 outside the U.S. In certain circumstances, either party may opt-out of conducting and funding certain late-stage clinical development of AP23573, which would result in changes in development and commercialization responsibilities and compensation arrangements.
Both companies will share overall responsibility for global commercialization and development of AP23573. In the U.S., ARIAD will distribute and sell AP23573 for all cancer indications and book all sales, and ARIAD and Merck will co-promote and will each receive 50 percent of the income from such sales. Outside the U.S., Merck will distribute, sell and promote AP23573 and book all sales; Merck will pay ARIAD tiered double-digit royalties on such end-market sales of AP23573. On a global basis, ARIAD will be responsible for manufacturing the active pharmaceutical ingredient used in the product, and Merck will be responsible for the formulation of the finished product (tablets).
In the U.S., ARIAD will have primary responsibility for development of AP23573 in the metastatic sarcoma indication. Merck and ARIAD will have joint responsibility in the U.S. for development of all other cancer indications being pursued. Outside the U.S., Merck will have primary responsibility for development in all cancer indications being pursued.
Stephen Friend, M.D., Ph.D., executive vice president and oncology franchise head of Merck said, "mTOR is a validated target for therapeutic intervention in human cancer and resides at a crucial intersection point controlling cell growth and survival of many tumor types. We are delighted to partner with ARIAD to develop and commercialize AP23573 for major unmet medical needs in oncology."
"This partnership aligns our interests directly with those of Merck - one of the leading global pharmaceutical companies dedicated to developing and commercializing new oncology drugs and with a demonstrated expertise in biomarker development," said Harvey J. Berger, M.D., chairman and chief executive officer of ARIAD. "From the beginning, our top corporate priority has been to establish a partnership that will maximize the commercial and clinical potential of our lead oncology product and allow us to realize our vision of becoming a fully integrated oncology company. We implemented a rigorous partnering process that generated substantial interest from multiple companies and ultimately enabled us to select Merck as our partner of choice."
Richard W. Pascoe, chief commercial officer of ARIAD, added, "We look forward to working closely with our clinical, manufacturing, marketing and sales colleagues from Merck to bring AP23573 to cancer patients as quickly as possible. The structure of this partnership allows the partners to pursue the clinical development of AP23573 in multiple indications concurrently throughout the world." -Merck
