Pfizer (PFE), Merck KGaA Enter Agreement to Develop Anti-PD-L1 Antibody; Pfizer Trims FY14 Reported EPS Outlook

Pfizer (NYSE: PFE) has entered into an agreement with Merck KGaA, Darmstadt, Germany, to jointly develop and commercialize MSB0010718C, an investigational anti-PD-L1 antibody currently in development by Merck KGaA as a potential treatment for multiple types of cancer. Pfizer and Merck KGaA will explore the therapeutic potential of this novel anti-PD-L1 antibody as a single agent as well as in various combinations with Pfizer’s and Merck KGaA’s broad portfolio of approved and investigational oncology therapies.

Building on the ongoing Phase 1 program that has treated more than 550 patients, both companies will collaborate on up to 20 high priority immuno-oncology clinical development programs expected to commence in 2015. These clinical development programs include up to six trials (Phase 2 or 3) that could be pivotal for potential product registrations.

“This global alliance enables Pfizer and Merck KGaA to join forces and combine complementary strengths with the goal of meeting the needs of patients with multiple types of cancer,” said Albert Bourla, group president Vaccines, Oncology and Consumer Healthcare Businesses, Pfizer. “Immuno-oncology is a top priority for Pfizer. Combining this promising anti-PD-L1 antibody with Pfizer’s extensive portfolio of small molecules and antibodies, provides an opportunity to potentially broaden the use of immunotherapy for patients with cancer and rapidly expand our oncology business. In addition, this alliance enables us to significantly accelerate the timeframe of our development programs and move into the first wave of potential immuno-oncology based treatment regimens.”

“Collaborating globally with Pfizer will allow us to benefit from the strengths and capabilities of both companies in immuno-oncology, further accelerating this promising asset in the race to address the needs of cancer patients across multiple tumor types. Up to 20 high priority immuno-oncology clinical development programs are expected to commence in 2015, including pivotal registration studies,” continued Belén Garijo, president and chief executive officer of Merck’s biopharmaceutical division Merck Serono and Executive Board Member Elect. “On top of that, the global alliance will enable Merck to gain an early entry into the US oncology market as well as to strengthen our existing oncology business in several other important global markets.”

There are currently two clinical development programs underway evaluating Merck KGaA’s anti-PD-L1 antibody. In a Phase 1 trial, more than 550 patients have been treated with MSB0010718C across multiple types of cancers. As part of the Analyst and Investor Day hosted by Merck KGaA on September 18, 2014, interim data were presented from an ongoing Phase 1 study demonstrating a complete response and partial responses in patients with non-small cell lung cancer and ovarian cancer. Additional data are expected to be presented at medical congresses in 2015. There is also an ongoing Phase 2 trial evaluating this antibody in patients with metastatic Merkel cell carcinoma, a rare form of skin cancer. For more information, please visit www.clinicaltrials.gov.

“Early results for Merck KGaA’s PD-L1 in patient trials are impressive and consistent with the results seen with the class of PD-1 and PD-L1 antibodies,” said Mikael Dolsten, M.D., Ph.D., president of Pfizer Worldwide Research and Development (WRD) and executive vice president, Pfizer. “This promising foundation of research will form the basis of multiple registration trials.”

Separate from the PD-L1 programs, Pfizer and Merck KGaA will also combine resources and expertise to advance Pfizer’s anti-PD-1 antibody into Phase 1 trials. The parties have also agreed to co-promote Pfizer’s XALKORI in the United States and several other key markets.

Under the terms of the agreement, Merck KGaA will receive an upfront payment of $850 million and is eligible to receive regulatory and commercial milestone payments up to approximately $2 billion. Both companies will jointly fund all development and commercialization costs and all revenues obtained from selling any anti-PD-L1 or anti-PD-1 products generated from this collaboration will be shared equally.

As a result of this transaction, Pfizer will recognize this upfront payment as a certain significant item which will impact Reported Diluted earnings per share or EPS.(*) Pfizer is updating its previous 2014 Reported Diluted EPS guidance range from $1.50 - $1.59 to $1.40 - $1.49, while maintaining the other elements of its 2014 financial guidance.(**).

Our updated 2014 financial guidance does not reflect the additional impact of the exchange of future profits of Xalkori which will be measured at fair value and will reduce our 2014 reported financial results as the fair value is currently being determined. Our current expectation is that it may be between $250-$400 million on a pre-tax basis as we have not concluded our analysis of this component as of this date.

You May Also Be Interested In

• Tesla touts acceleration of new models, but Q1 results fall short of estimates
• Chubb Corp. (CB) Tops Q1 EPS by 10c
• Baker Hughes Company (BKR) Tops Q1 EPS by 4c, Beats on Revenue