NEW YORK (AP) — Merck and Ariad Pharmaceuticals have revised their partnership on a potential cancer drug, with Merck covering all development costs in exchange for worldwide rights to the drug candidate, the companies said Wednesday.
The companies teamed up in 2007 to develop ridaforolimus as a cancer treatment. Late stage trial results are due late this year, and Merck may file for Food and Drug Administration approval later this year.
Under a revised arrangement, Merck will pay Ariad $50 million upfront and refund about $19 million in development costs Ariad has paid since Jan. 1.
Merck is now fully in charge of development and sales of ridaforolimus. Ariad said it could receive up to $514 million in payments if the drug is approved to treat multiple cancers and reaches sales targets. It will get royalties on worldwide sales instead of sharing the profits on U.S. sales.
Ariad said the new agreement puts it in a stronger financial position, as it will not have to pay for the costs of testing the drug or cover expenses related to regulatory review.
Last year, the companies canceled one late stage trial and delayed another. That cost Ariad millions in milestone payments.
Ariad said it could receive $65 million if ridaforolimus is approved in the U.S., Europe, and Japan, and another $200 million if it reaches sales milestones. Ariad said it will get royalty payments of more than 10 percent on international sales. It said those rates are greater than what it would have received on overseas sales under the original partnership.
The Cambridge, Mass., company could get $74.5 million if Merck starts late stage clinical trials of ridaforolimus as a treatment for other cancers.
All research will be transferred to Merck, based in Whitehouse Station, N.J., over the next six months.
Ariad will also have an option to help promote the drug in the U.S. if it is approved, and Merck would compensate it for those expenses.
The initial partnership had a total potential value of more than $1 billion. It included a $75 million upfront payment, $452 million in development milestone payments, and $600 million more based on sales targets and commitments by Merck to cover development expenses.
In premarket trading, shares of Ariad Pharmaceuticals Inc. rose 19 cents, or 5 percent, to $4. Shares of Merck and Co., which reported its first-quarter results on Tuesday, lost 56 cents to $35.25.