Merck KGaA-Mersana Therapeutics Strike a Deal on ADCs - Analyst Blog

Merck KGaA's (MKGAF) biopharmaceutical division Merck Serono inked a deal with Mersana Therapeutics for the development of next-generation antibody-drug conjugates (ADCs) for the treatment of cancer.

The antibody present in ADCs targets cancer cells and specifically delivers the cytotoxic drug to these cells so as to increase the level of drug reaching the tumor site.

Terms of the Deal

Merck KGaA will provide monoclonal antibodies to Mersana for the development of ADCs using Mersana's Fleximer technology platform.

Merck KGaA has an exclusive license from Mersana to develop and commercialize any product under this agreement. The company intends to employ a collaborative research and development model and create strategic partnerships to drive innovation.

In addition to an upfront payment, Mersana will receive milestone payments and royalties on worldwide net sales of the products.

The agreement should be beneficial for Merck KGaA since the company will be able to expand its oncology portfolio. With this deal, Merck KGaA's cancer immunotherapy portfolio, which consists of both early-stage and late-stage candidates, will be strengthened.

Currently, Merck KGaA is focusing on its immuno-oncology portfolio and has inked quite a few deals to boost its pipeline in this disease area. Earlier this month, the company entered into an agreement with MorphoSys AG for the discovery and development of therapeutic antibodies against undisclosed immune checkpoints.

The use of ADCs is becoming an important method of treatment that allows selective administration of highly cytotoxic agents to the tumor cells thereby sparing normal tissue. Some ADCs approved for the treatment of cancer include Roche's (RHHBY) Kadcyla and Seattle Genetics' SGEN Adcetris.

Merck KGaA carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is ARIAD Pharmaceuticals Inc. ARIA carrying a Zacks Rank #2 (Buy).