GlaxoSmithKline and Merck KGaA to strike immunotherapy deal worth up to $4.23 billion

U.K.-based GlaxoSmithKline plc and Germany-based Merck KGaA are partnering with each other to develop and commercialize a therapy for patients with advanced non-small cell lung cancer (NSCLC) in a deal worth up to $4.23 billion, the companies announced Tuesday. The therapy, dubbed M7824, is a bifunctional antibody designed to simultaneously target two pathways in the body that serve as immune checkpoints: one that involves a protein called transforming growth factor-β and another involving the programmed death ligand-1 (PD-L1). Under the terms of the deal, Merck KGaA will receive an upfront payment of €300 million, or $342.75 million, and will be eligible for potential development milestone payments of up to €500 million, or $571.25 million. Merck KGaA will also be eligible for further payments upon approval and commercial milestones of up to €2.9 billion, or $3.31 billion, for a total potential deal value up to €3.7 billion, or $4.23 billion. Both GSK and Merck KGaA will be involved in development and commercialization, and all profits and costs will be shared equally, the companies said. The partnership is another step in GSK's oncology pipeline development. The company recently acquired Tesaro, an oncology-focused company based in Waltham, Mass. M7824 is currently in Phase 1 studies for the treatment of solid tumors, as well as a randomised Phase 2 trial to evaluate the safety and efficacy of M7824 compared with pembrolizumab as a first-line treatment in patients with PD-L1-expressing advanced NSCLC. Shares of GSK have gained 0.6% in the year to date, while shares of Merck KGaA have gained 4.4%. The S&P 500 has gained 8.7%.

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