Merck invests in diabetes through KalVista deal
- Merck & Co. will drop $37 million upfront to gain access to KalVista Pharmaceutical, Inc.'s Phase 2-ready diabetic macular edema (DME) drug, promising another $715 million in potential milestone payments.
- Under deal terms, Merck secures an option to acquire KVD001, an intravitreal (IVT) injection, after the completion of a Phase 2 proof-of-concept study that KalVista has planned for later this year.
- Merck will also acquire a 9.9% stake in the Cambridge biotech at a price of $8.50 per share through a private placement. Shares in KalVista surged more than doubled Tuesday on the news, although Wednesday morning trading pared back some of those gains.
Merck took an interest in the small biotech's early-stage drug, seeing a potential complement to its diabetes portfolio.
KalVista's drug treats DME, a complication of type 2 diabetes characterized by a weakening of the blood vessels in the eye due to high blood sugar. The condition can lead to light sensitivity and even blindness. For patients whose diabetes isn't well managed, it can be quite common.
While the big pharma doesn’t have any programs in its pipeline that focus on the eye, diabetes has long been an area of interest for Merck.
One of the company’s leading products is its DPP-4 inhibitor Januvia (sitagliptin). The diabetes franchise, which includes Januvia alone and in combination with other therapies, has long been Merck’s best-selling portfolio, bringing in upwards of $6 billion in 2016. Increased competition in the diabetes space, however, has put the franchise under pressure.
The deal with KalVista gives Merck an option to offer diabetes patients another treatment on the continuum of care and fits with Merck's slow expansion of its assets in the space.
The company partnered with Pfizer Inc. on an SGLT-2 inhibitor called ertugliflozin that was filed with the Food and Drug Administration and the European Medicines Agency in March. A decision from the FDA is expected by December.
Merck's agreement with KalVista also lines up another option for an oral program in DME. Kalvista will continue to develop this program on its own until Merck chooses to opt in.
- KalVista Pharmaceuticals, Inc. Press release
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