Merck & Co. (MRK, Financial), a renowned leader in the vaccines sector, announced on January 13 that it had decided to collaborate with Moderna Therapeutics, a pioneer in mRNA based therapies to develop vaccines against viral infections using the latter’s novel mRNA technology. The details of the deal have also been shared and this collaboration would aid both Merck and Moderna to profit from the synergic venture. Let’s peek in to find out what the terms of the deal are and how both companies stand to gain from such a partnership.
The deal just struck
As per the terms of the three-year contract, Merck would pay $50 million upfront to Moderna to license the use of its biotech technology, while it would contribute another $50 million for equity investment.
Merck will take all responsibility of developing the drug product as well as its commercialization after receiving approval for the drug from the FDA. Meanwhile, Moderna would be engaged in designing of the mRNA products.
Moderna, established in 2011, has been a bright star since then having successfully garnered around $950 million in three full years through various financing and commercial partnerships. Currently the company has ventured into the field of infectious diseases by spinning off a company named Valera that would be extending Moderna’s research on mRNAs.
The synergic impact
Science has long portrayed that the human immune system would strike down mRNA molecules before they could get into cells and start churning out valuable proteins. But if mRNA molecules could be made in the form of a drug it can possibly work on a wide variety of diseases and the rewards from such treatment can be highly promising. In fact, AstraZeneca (AZN, Financial) was the first pharma company that jumped on this concept and paid $240 million to Moderna to use its technology on 40 different drug candidates mainly for cardiovascular, metabolic and kidney diseases.
Now, it seems that the pharma giant, Merck, is following AstraZeneca’s footsteps through investment of $100 million for the biotech technology. As Moderna is a private company, most of its research information is not let out, but recently its CEO Stephane Bancel in an interview at the JP Morgan Health Conference at San Francisco stated that his company has experimental information that suggests that mRNA molecules could produce protective level of antibodies with a single shot compared to traditional vaccines that take several weeks to build up a similar level in the human body.
Merck, taking advantage of Moderna’s unique technology, has plans of developing five mRNA-based product candidates to target four different viruses. As per this partnership, Valera, a venture company of Moderna would be responsible for leading the combined company’s operations. Vaccines to be developed by Valera would be based on preclinical trials conducted by Moderna on animals which could demonstrate the modified mRNA’s capability to produce antigens that trigger responses from antibodies in the body’s immune system.
Hinting at more strategic partnerships in the near future, Moderna’s CEO stated, “Given the tremendous potential for messenger RNA Therapeutics across a wide range of therapeutic applications, establishing long-term strategic relationships with world leaders in their fields will accelerate our ability to bring mRNA products to patients in need.” Since Merck happens to be a world leader in vaccines and anti-infective treatments, such a collaboration can prove beneficial to Moderna from the development-and-commercialization-related milestones as well as royalties for every product.
To conclude
Merck seems convinced that its leadership in the vaccine segment will remain untouched after this collaboration produces the impact expected this year, and the words of its president, Roger M. Perimutter, are testimony to this statement. He quoted after the partnership announcement was made public, “By combining Merck's strength in vaccine and antiviral therapeutic development with Moderna's mRNA Therapeutics technology, we are well positioned to develop differentiated candidates with the potential to provide meaningful benefit to patients.” Thus the smart move of Merck would ensure its added growth as a result of the high demand for the radical treatment. Overall, both the companies are pleased with the collaboration and are looking forward to create new dimensions in the drug world.
