Saturday, May 9, 2015

To Complete The Record, On Kenilworth's NGM Relationship -- SEC Filed Form 10-Q

We made only passing mention of this back in February, because all the MSM outlets ran stories. Of course, most repeated only what the press release offered. Now, though, as a potentially material relationship, Merck's SEC lawyers have given us a window with a significantly more Technicolor view -- as the Form 10-Q was filed on the 7th. I repeat it here, en todo.

Do see the lower portion of page 9, of the recently filed SEC Form 10-Q:

. . . .In February 2015, Merck and NGM Biopharmaceuticals, Inc. (“NGM”), a privately-held biotechnology company, entered into a multi-year collaboration to research, discover, develop and commercialize novel biologic therapies across a wide range of therapeutic areas. The collaboration includes multiple drug candidates currently in preclinical development at NGM, including NP201, which is being evaluated for the treatment of diabetes, obesity and nonalcoholic steatohepatitis. NGM will lead the research and development of the existing preclinical candidates and have the autonomy to identify and pursue other discovery stage programs at its discretion.

Merck will have the option to license all resulting NGM programs following human proof of concept trials. If Merck exercises this option, Merck will lead global product development and commercialization for the resulting products, if approved. Under the terms of the agreement, Merck made an upfront payment to NGM of $94 million, which is included in Research and development expenses, and purchased a 15% equity stake in NGM for $106 million. Merck committed up to $250 million to fund all of NGM’s efforts under the initial five-year term of the collaboration, with the potential for additional funding if certain conditions are met.

Prior to Merck initiating a Phase 3 study for a licensed program, NGM may elect to either receive milestone and royalty payments or, in certain cases, to co-fund development and participate in a global cost and revenue share arrangement of up to 50%. The agreement also provides NGM with the option to participate in the co-promotion of any co-funded program in the United States. Merck will have the option to extend the research agreement for two additional two-year terms.

Each party has certain termination rights under the agreement in the event of an uncured material breach by the other party. Additionally, Merck has certain termination rights in the event of the occurrence of certain defined conditions. Upon a termination event, depending on the circumstances, the parties have varying rights and obligations with respect to the continued development and commercialization of compounds discovered under the agreement and certain related payment obligations. . . .

This really is an "old school" collaboration -- with the NGM scientists allowed to aim in almost any direction they please -- with Merck's half billion in funding. I do like that idea. Numerically, most of the world's blockbuster drugs were discovered in just that way. Onward -- and again -- love to all mothers, planet-wide!

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