Merck (MRK) has signed a licensing agreement for a heart disease drug developed by a Chinese company in a deal worth up to $2 billion, the latest in a series of cross-border deals between Western drug giants and China as big pharma companies seek new pipeline candidates.
Last year Merck agreed a similar licensing deal, also worth $2 billion, for Chinese biotech Hansoh Pharma’s experimental oral obesity drug, while yesterday Denmark’s Novo Nordisk (NVO) bought the global rights to China-based United Laboratories International’s weight-loss drug candidate in a deal worth up to $2 billion.
AstraZeneca (AZN) last week said it would invest $2.5 billion in a new research and development hub in China, which included three licensing and joint venture agreements with local biotech firms Harbour BioMed, Syneron Bio, and BioKangtai.
Merck-Hengrui Pharma Deal Announced
Under the latest deal, Merck gets exclusive rights to develop, manufacture and sell Jiangsu Hengrui Pharmaceuticals’ experimental oral heart disease drug, HRS-5346.
Hengrui Pharma will receive an upfront payment of $200 million and is eligible to receive incremental payments contingent on meeting certain development, regulatory and commercial milestones up to $1.77 billion, as well as royalties on sales of the drug, if approved.
“Elevated blood concentrations of Lp(a) provides a well-documented risk factor for atherosclerotic cardiovascular disease, affecting as many as 1 in 5 adults globally,” said Dr. Dean Y. Li, president, Merck Research Laboratories. “HRS-5346, an investigational oral small molecule inhibitor of Lp(a) formation, is an important addition that expands and complements our cardio-metabolic pipeline.”
The moves in China by the likes of Merck also come as the industry stares down a wave of generic drugs this year that has made the issue of securing new candidates all the more pressing. However, President Trump’s threat to put 25% tariffs on imported pharmaceuticals presents another headache.
Is MRK a Good Stock to Buy?
On Wall Street, MRK is rated a Moderate Buy based on 11 Buys and six Holds. The average MRK price target of $111.88 implies about 23% upside.
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