Merck MRK announced a collaboration deal with private biotech, Orna Therapeutics to discover and develop vaccines and medicines for infectious disease and oncology, leveraging Orna’s next generation of RNA technology called circular RNA (oRNA) technology.
Pre-clinical data presentations by Orna have shown the oRNA technology’s potential in expression and delivery to develop the next generation of RNA vaccines and medicines. Orna believes that its circular RNA technology will be more effective than traditional, linear RNA technology in treating diseases as it has greater stability as well as the potential to produce larger quantities of therapeutic proteins inside the body.
For the deal, Merck will make an upfront payment of $150 million to Orna that will be recorded in the third quarter of 2022. In addition, Merck will make $3.5 billion in milestone payments to Orna as well as royalties on any products developed under the deal. In addition, Merck will invest $100 million in Orna’s equity (Series B round). Orna will retain the rights to its oRNA-LNP platform.
Merck stock has risen 18.2% this year so far compared with an increase of 0.4% for the industry.
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Merck, in order to build its long-term portfolio, is tapping external sources. The company has entered into several licensing deals in the past few years and targets more such deals.
Among some key deals, the July 2017 profit-sharing deal with AstraZeneca AZN added two key assets (Lynparza/ Koselugo) to its oncology pipeline.
On Tuesday, Merck and AstraZeneca announced that the FDA has granted priority review to a supplemental new drug application (sNDA) seeking approval for Lynparza in combination with J&J’s prostate cancer drug, Zytiga (abiraterone), and corticosteroid prednisone as a treatment for metastatic castration-resistant prostate cancer (mCRPC). With the FDA granting priority review to the sNDA, Merck and AstraZeneca expect a decision in the fourth quarter of 2022.
Similarly, in March 2018, Merck formed a deal with Japan’s Eisai to co-develop and commercialize the latter’s tyrosine kinase inhibitor, Lenvima, both as a monotherapy as well as in combination with Keytruda, for several types of cancer.
Merck also has a deal for joint global development and potential commercialization of Seagen’s SGEN antibody-drug conjugate ladiratuzumab vedotin (now MK-6440), which is in mid-stage development for breast cancer and other solid tumors. Last month, there were rumors of a potential buyout of Seagen by Merck. Per some reports, Merck may also offer a strategic or a marketing agreement to Seagen rather than a complete buyout of the former.
In July this year, Merck in-licensed co-development and co-commercialization rights to Finnish pharmaceutical company, Orion Corporation’s pipeline candidate, ODM-208 being developed for the treatment of metastatic castration-resistant prostate cancer.
Zacks Rank & Stocks to Consider
Merck has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock in the biotech sector is Alkermes ALKS which has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alkermes’ estimates for 2022 have narrowed from a loss of 16 cents to earnings of 20 cents over the past 30 days. Earnings estimates for 2023 have gone up from 32 cents to 50 cents over the same time frame. Shares of Alkermes have risen 13.8% this year so far.
Earnings of Alkermes beat estimates in all the last four quarters, delivering a surprise of 325.48%, on average.
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