(Updates with cancer statistics in third paragraph, executive’s comment in fourth.)
Feb. 3 (Bloomberg) -- Merck KGaA agreed to pay Threshold Pharmaceuticals Inc. as much as $525 million for the right to jointly develop and sell a drug for cancer, sending the California company’s stock up 67 percent in premarket trading.
The German drugmaker will pay $25 million initially for some rights to TH-302, an experimental medicine being tested in soft-tissue sarcoma and pancreatic cancer, the companies said today in a statement. Threshold, based in Redwood City, is eligible for an additional $35 million this year if development goals are met, and total potential milestone payments are $525 million, the companies said.
Pancreatic cancer has a high mortality rate, with only surgery, chemotherapy or radiation as treatment, according to the National Cancer Institute. AB Science SA stock soared 72 percent yesterday after announcing that its masitinib drug, which is also being studied for pancreatic cancer, performed better in a clinical trial than Pfizer Inc.’s Sutent for gastrointestinal tumors.
Because pancreatic cancer is difficult to treat, “successful Phase II results could represent important upside for our company,” Susan Jane Herbert, head of global business development and strategy at Merck Serono, said in the statement.
Threshold rose to at $2.15 in premarket trading as of 8:10 a.m. in New York. The stock had declined 27 percent in the 12 months before today, valuing Threshold at $63.4 million.
Threshold expects to receive data from a mid-stage trial for advanced pancreatic cancer this month. As part of the deal, Darmstadt, Germany-based Merck will pay Threshold a milestone payment of $20 million for positive results in that trial. The drug is also in a late-stage clinical trial for patients with soft-tissue sarcoma, and Threshold is studying it in other cancers.
Merck will receive co-development rights and exclusive worldwide marketing rights to the drug, and Threshold will have the option to market the drug in the U.S.
Threshold will develop TH-302 in the U.S. for soft-tissue sarcoma. The two companies will jointly develop the drug for all other indications, and Merck will pay 70 percent of worldwide development costs, the companies said.
--Editors: David Risser, Phil Serafino.
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