Germany’s Merck Inks €900M Agreement For Head And Neck Cancer Drug

Germany’s healthcare and chemicals group Merck KGaA has inked a global licensing agreement with Debiopharm to develop and commercialize xevinapant for the treatment of head and neck cancer.

As part of the agreement, Merck KGaA (0O14) will pay Swiss-based Debiopharm €188 million upfront and up to €710 million in regulatory and commercial milestones, as well as royalty payments. The companies expect to close the transaction in early Q2 of 2021.

Merck will co-fund with Debiopharm an ongoing 700-patient Phase 3 clinical trial, which will evaluate the efficacy and safety of xevinapant vs. placebo when added to definitive chemoradiotherapy (CRT) in cisplatin-eligible patients with high-risk locally advanced squamous cell carcinoma of the head and neck (LA SCCHN). Xevinapant, a potent oral inhibitor of apoptosis proteins (IAP) antagonist, is the only medicine in its class in late-stage clinical development, Merck said.

“This late-stage asset complements our Healthcare pipeline, which will be one of Merck’s key growth drivers in the coming years,” said Merck CEO Stefan Oschmann.

According to the results of a Phase 2 trial, xevinapant in combination with chemoradiotherapy lowered the risk of death by 51% vs standard of care. Based on the Phase 2 study, the US Food and Drug Administration (FDA) in February last year, granted xevinapant Breakthrough Therapy Designation status for the treatment of patients with previously untreated LA SCCHN, in combination with standard of care.

“By bringing our expertise and heritage in head and neck cancer to the development of xevinapant, we have the opportunity to explore an important new treatment option in an area of high unmet need where other approaches, including immunotherapy, have seen limited success,” commented Merck Healthcare CEO Peter Guenter. “The promising long-term efficacy of xevinapant in the Phase II trial suggests that antagonism of IAP has the potential to be a transformative approach in this cancer.”

Shares of Merck dropped about 5% over the past month after climbing more than 20% over past year. The stock scores a cautiously optimistic Moderate Buy analyst consensus rating based on 5 Buys versus 7 Holds and 1 Sell rating. (See Merck stock analysis on TipRanks)

Meanwhile, the average analyst price target stands at €144.73, implying 6.3% upside potential over the coming 12 months.

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