Merck Spends $3.288 Billion for Exclusive LM-299 Rights

On November 14, Merck announced a significant agreement with Lixin Pharmaceutical. Under this agreement, Merck will obtain the exclusive global rights for the development, production, and commercialization of Lixin Pharmaceutical's innovative PD-1/VEGF bispecific antibody, LM-299.

LM-299 is a novel therapeutic antibody currently under development, which merges an anti-VEGF antibody with two C-terminal single-domain anti-PD-1 antibodies. This combination aims to block both the immune checkpoint PD-1/PD-L1 pathway and the VEGF/VEGFR signaling pathway. The dual action is designed to facilitate a synergistic anti-tumor mechanism that leverages both tumor immunity and anti-angiogenesis strategies. Presently, a Phase I clinical trial for LM-299 is ongoing in China, enrolling patients to assess its efficacy and safety.

According to the terms of the agreement, Lixin Pharmaceutical has granted Merck an exclusive license to globally develop, manufacture, and commercialize LM-299. Merck will make an initial payment of $588 million to Lixin. Additionally, Lixin Pharmaceutical stands to receive milestone payments that could total up to $2.7 billion, contingent on the progress of technological transfer, development stages, regulatory approvals, and the commercialization of LM-299 for various indications.

The transaction is anticipated to be finalized in the fourth quarter of 2024. Once the deal is closed, Merck is expected to incur a pre-tax charge of $588 million. This charge will be reflected in both GAAP and non-GAAP financial data for the closing quarter. Details regarding the impact of this charge on Merck's earnings per share (EPS) will be disclosed at that time.