Merck KGaA Signs Cancer-MS Barter Deal With Japan's Ono

Merck Serono and Ono exchange rights to clinical programs in MS and cancer, with little cash changing hands

Why pay cash if you can barter asset rights instead? In a duo of agreements announced Oct. 4, Germany's Merck KGaA licensed worldwide rights ex-Japan, Korea and Taiwan to Ono Pharmaceutical Co. Ltd.'s Phase II MS candidate, ONO-4641, while granting Ono Japanese rights to its own Phase III cancer immunotherapy Stimuvax.

The deals were described as two separate agreements, but linking them means that less cash changes hands: Merck owed Ono Yen 1.5 billion ($18.6 million) for the MS drug, but is able to knock a third of that by granting Ono the Stimuvax rights for €5 million ($6.6 million). No further financial details were given, except that milestone payments would be made to Ono on Merck's progress with the MS drug. Merck Serono licensed exclusive worldwide rights to Stimuvax (BLP25 liposome vaccine) from the U.S. biotech, Oncothyreon Inc.

This is the second barter-style deal that Ono has signed in recent weeks. It licensed Japanese rights to Bristol-Myer Squibb's Orencia (abatacept) on September 20, while BMS gained rights in additional territories to an Ono antibody, ONO-4538/BMS-936558.

And Merck Serono has also recently snapped up another MS therapy, PI-2301, from a U.S. company going through liquidation, Peptimmune Inc., for what appears to be a bargain $1.5 million up front (Also see "Deals Of The Week: Bristol/Ono, Bristol/Ambrx, Merck Serono/Peptimmune" - Pink Sheet, 26 Sep, 2011.).

Since the failure in June 2011 of its oral MS candidate cladribine, uncertainty has surrounded Merck's plans for its aging MS franchise. That franchise is led by the beta-interferon Rebif, and is under assault by newcomers such as Novartis AG's oral Gilenya (fingolimod), launched in the U.S in October 2010. Gilenya is expected to achieve blockbuster status (Also see "Germany's Merck Scraps MS Drug Cladribine After Regulators' Rebuff" - Pink Sheet, 22 Jun, 2011.)) (Also see "Gilenya Off And Running, But Keeping Pace Long-Range Is Key" - Pink Sheet, 8 Aug, 2011.)). Hence the group is expected to turn to aggressive in-licensing and cost-saving to offset top line pressure, as noted by analysts at Jefferies in a September note.

Like Gilenya, ONO-4641 is a sphingosine-1-phosphate receptor modulator. It is in a Phase II clinical trial in patients with relapsing-remitting multiple sclerosis, called DreaMS (Drug Research Evaluation For Multiple Sclerosis). Merck declined to comment on the compound's potential advantages, although with the annual cost of Gilenya predicted to be in the region of $45,000 per patient, the market is likely to have room for alternatives.

Stimuvax, a cancer vaccine, is in Phase II development in Japan, and Phase III development outside of Japan, for the treatment of non-small cell lung cancer (NSCLC). Like Dendreon Inc.'s recently launched Provenge, another high-profile cancer vaccine, Stimuvax has had a rocky ride: clinical trials were suspended in March 2010 after a patient contracted encephalitis. The NSCLC trials restarted in June 2010, although a trial in advanced breast cancer remains on hold. And as Dendreon's experience shows, such therapies can struggle even post-approval (Also see "Disappointing Provenge Sales Stir Doubts About Demand" - Pink Sheet, 4 Aug, 2011.)).

The START study, in more than 1,500 patients, is evaluating Stimuvax in patients with unresectable NSCLC who have had a response or stable disease to radiotherapy/chemotherapy, with overall survival as the primary endpoint. A second Phase III trial, INSPIRE, with an almost identical design to START, is underway in patients in China, Hong Kong, Korea, Singapore and Taiwan.

- John Davis ([email protected])