Merck Serono expands osteoarthritis collaboration with Ablynx

Merck Serono, a division of Germany’s Merck KGaA (MRK: DE) has entered into a third agreement with Ablynx (Euronext Brussels: ABLX) to co-discover and co-develop nanobodies against two targets in osteoarthritis, providing some good news for the Belgian drug developer which, in the past week, saw its shares plunge on the news that Pfizer had returned global development and commercialization rights to its nanobodies targeting TNF-alpha (The Pharma Letter November 7).

Under the terms of the latest deal, Ablynx will receive an upfront payment of 20 million euros ($27.5 million) payable in two tranches over the next three months and will be fully responsible for all activities and costs for each program, excluding manufacturing costs and costs relating to certain in vivo models, up to the delivery of the pre-clinical package that will form the basis of an Investigational New Drug filing or IND equivalent filing. Ablynx is entitled to receive a further 15 million euros for each program if the preclinical packages are accepted by Merck Serono. At that point, Ablynx has the option to continue with Merck Serono on a 50:50 co-development basis and share the resulting profits, or to convert this collaboration into an exclusive, worldwide licensing deal with milestone payments and tiered royalties.

"We are pleased with the progress we have made to date in our existing collaborations with Ablynx, and we look forward to further developing our productive relationship," said Bernhard Kirschbaum, head of global discovery and early development at Merck Serono, noting:"We are impressed by the speed with which Ablynx has progressed in our ongoing programmes and we believe they could become a valuable source of new drug candidates for Merck Serono. We believe that the specific features of the Nanobodies have the potential to address key challenges in the treatment of osteoarthritis."