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Merck KGaA (MKGAF) recently announced that it entered into an exclusive license agreement with Copenhagen, Denmark-based Symphogen A/S for the worldwide development and commercialization of oncology candidate, Sym004.

As per the terms of the agreement, Merck KGaA will make an upfront payment of €20 million to Symphogen A/S and will also make payments based on the achievement of development, regulatory and sales milestones. Once the candidate is launched, Symphogen will be entitled to royalties on net worldwide sales.

Sym004 is currently in phase I/II studies for the treatment of patients diagnosed with advanced KRAS wild-type metastatic colorectal cancer (mCRC) who previously progressed under treatment with standard chemotherapy and a commercialized anti-EGFR monoclonal antibody (mAb).

Additionally Sym004 is being studied in an open-label phase II study being conducted in squamous cell carcinoma of the head and neck (SCCHN) patients who previously failed to respond to an anti-EGFR-based therapy.

The addition of Sym004 will strengthen Merck KGaA’s early-stage oncology pipeline. Merck KGaA’s oncology portfolio currently includes drugs like Erbitux indicated for the treatment of patients with KRAS wild-type mCRC and SCCHN.

Erbitux was originally developed by ImClone LLC, which is now a wholly-owned subsidiary of Eli Lilly and Co. (LLY - Analyst Report). Merck KGaA has the right to market Erbitux outside the US and Canada. The drug is jointly developed and marketed by Eli Lilly and Bristol-Myers Squibb Co. (BMY - Analyst Report) in the US, Japan and Canada.

We note that Merck KGaA was in the news recently due to a collaboration agreement signed between Dr. Reddy’s Laboratories Ltd. (RDY - Analyst Report) and Merck Serono, a division of Merck KGaA, for the co-development and commercialization of a portfolio of biosimilar compounds in oncology, primarily focused on monoclonal antibodies (MAbs).

Our Recommendation

Merck KGaA currently retains a Zacks #4 Rank (short-term Sell rating).

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