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Merck Inks $2B Licensing Deal With Chinese Biotech for Oral Heart Drug

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Merck (MRK - Free Report) announced that it has entered into an exclusive licensing deal with China-based Jiangsu Hengrui Pharmaceuticals (Hengrui Pharma) for the latter’s investigational oral small-molecule Lipoprotein(a) [Lp(a)] inhibitor, HRS-5346.

Per the terms of the deal, Merck will acquire the global rights (excluding Greater China) to develop and market HRS-5346. In return, Hengrui Pharma will receive an upfront cash payment of $200 million. In addition, Merck will pay up to $1.77 billion in milestone payments as well as royalties on the drug’s future sales to Hengrui Pharma.

The deal is expected to be closed in the second quarter, subject to the fulfillment of customary closing conditions, including regulatory approvals. Merck expects to record a pre-tax charge of $200 million (or nearly six cents per share) after closing this deal.

Per Merck, elevated levels of Lp(a) are a significant risk factor for cardiovascular disease like heart attack and stroke. An accumulation of Lp(a) in blood vessel walls can contribute to atherosclerotic plaque formation (similar to LDL cholesterol) and limit blood flow. According to the company, approximately 1.4 billion people worldwide are affected by elevated levels of Lp(a).

Hengrui Pharma is currently evaluating HRS-5346 in a mid-stage study in China.

MRK Stock’s Performance

Year to date, Merck’s shares have lost nearly 12% against the industry’s 7% growth.

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MRK Continues Licensing Spree in China

This is the third time that Merck has tapped Chinese biotechs for licensing deals. Toward the end of last year, the company struck multi-billion dollar deals with Hansoh Pharma and LaNova Medicines. While the Hansoh deal added the investigational oral GLP-1 receptor agonist HS-10535 to Merck’s pipeline, the LaNova deal added the experimental bispecific antibody LM-299.

The idea behind these deals is clear — Merck intends to diversify its current revenue base, which has become highly dependent on Keytruda. In 2024, the company generated nearly 46% of its total revenues from the drug’s sales. With concerns over Keytruda’s potential loss of exclusivity after 2028, the successful development and potential commercialization of these in-licensed drugs could help Merck reduce its dependence on a single product for growth.

MRK’s deals with China are also a reflection of a broader industry trend, where big pharma is turning toward the country for access to newer drugs at more attractive valuations.

Earlier this week, Novo Nordisk (NVO - Free Report) signed an exclusive license agreement with China-based United Biotechnology for an experimental obesity drug in a deal valued at up to $2 billion. Through this deal, NVO intends to expand its portfolio of differentiated potential treatment options that cater to the diverse needs of people living with these highly prevalent diseases.

Last week, British drugmaker AstraZeneca (AZN - Free Report) announced a $2.5 billion investment in China to establish a new R&D hub. This AZN deal also includes collaboration and licensing agreements with three local biotech firms — Harbour BioMed, Syneron Bio and BioKangtai — to expand its pipeline across multiple segments, including immunology, oncology and chronic diseases. Through these deals, AstraZeneca also intends to expand its operations in the country.

MRK’s Zacks Rank

Merck currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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