Pfizer (PFE) is paying $850 million up front and tied up another $2 billion in potential milestones to partner with Germany’s Merck KGaA on the development of drugs in the hot immuno-oncology space. With the largest ever upfront payment in biotech, Pfizer will get exclusive global rights to Merck’s anti-PD-L1, MSB0010718C, and the two will collaborate on advancing Pfizer’s own anti-PD-1 antibody into clinical testing.
Merck and Pfizer also agreed to co-promote Pfizer’s XALKORI (crizotinib) in the United States and several other key markets.
The pharmaceutical company is playing a bit of catch up on the anti-PD1s in immuno-onc, a space led by Bristol Myer’s (BMY) nivolumab and Merck’s (MRK) pembrolizumab. In the similar anti-PD-L1 space, Roche-Genentech (RHHBY) and AstraZeneca (AZN) currently lead with MPDL3280A and MEDI4736.
Accessing AstraZeneca’s cancer pipeline was considered a major driver of Pfizer’s failed bid for AZN this spring.
The $850 million in cash that Pfizer is shelling out puts them at the top of the list for biggest cash outlays in biotech. Earlier this year Celgene (CELG) claimed the spot with its $700 million payment to Nogra Pharma in exchange for rights to GED-0301, a drug for gastrointestinal indications. Including milestone payments, that deal was good for $2.5 billion in aggregate, not including possible royalty payments.
Pfizer now expects 2014 diluted earnings per share of between $1.40 and $1.49, revised from $1.50-1.59 previously.
