Merck Invests $3.288 Billion for Sole Rights to Drug LM-299

On November 14, Merck revealed that it has secured a partnership with Lixin Pharmaceutical to acquire exclusive worldwide rights for LM-299, a novel PD-1/VEGF bispecific antibody. This agreement encompasses the development, production, and commercialization of LM-299, which is currently in the experimental phase.

LM-299 is a pioneering treatment that combines an anti-VEGF antibody with two C-terminal single-domain anti-PD-1 antibodies. This bispecific antibody is engineered to block the immune checkpoint PD-1/PD-L1 and the VEGF/VEGFR signaling pathways. The innovative dual mechanism aims to enhance anti-tumor effects by integrating "tumor immunity" with "anti-angiogenesis" strategies. Presently, LM-299 is undergoing Phase I clinical trials in China.

As per the agreement, Lixin Pharmaceutical has granted Merck the exclusive rights to globally develop, manufacture, and market LM-299. In return, Lixin Pharmaceutical will receive an upfront payment of $588 million. Furthermore, Lixin is entitled to receive milestone payments that could accumulate to $2.7 billion, depending on the progress of LM-299 across various stages, including technology transfer, development, regulatory approval, and commercialization of multiple indications.

The deal is anticipated to finalize in the fourth quarter of 2024. Post-transaction, Merck is expected to record a pre-tax charge of $588 million. This charge will be reflected in both GAAP and non-GAAP financial statements for the closing quarter. The impact of this transaction on Merck's earnings per share (EPS) will be communicated after the deal is closed.