Merck, Neurogen form alliance
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NEW YORK (Reuters) -- The world's third-largest drugmaker Merck & Co. Inc. says it has formed an alliance with Neurogen Corp. to develop pain treatments.
Under the deal announced Monday, Neurogen will be eligible to receive payments of up to $118 million for the successful commercialization of a drug. That sent shares of the smaller company soaring.
Merck initially will pay $15 million to Neurogen and purchase $15 million of Neurogen common stock.
In addition, Merck will provide Neurogen with research funding and other payments totaling $12 million during the first two years of the agreement.
The research collaboration will focus on targeting a protein known as the vanilloid receptor, which is related to pain signals in the nervous system.
Merck is in the midst of a two-year slump, as sales have been hurt by a lack of new drugs, slowing sales of cholesterol treatment Zocor and falling sales of arthritis drug Vioxx.
Two potential big-selling drugs in the late stages of development failed in November.
To bring new drugs to market, CEO Raymond Gilmartin has said Merck is warming to the biotechnology industry and currently is considering 70 research agreements with biotech firms, academic institutions and other research centers.
In September, it formed an alliance with Alnylam Holding Co., which is working on a promising new technology designed to block disease-causing genes and viruses.
In November, Merck signed up GenPath Pharmaceuticals Inc. for a deal worth up to $100 million to identify genes that might be targets of cancer drugs.
But it likely will take several years before any of the three alliances yields a new drug. Merck needs its pipeline to produce quickly, as its U.S. patent expiration for Zocor, its top-selling drug with more than $5 billion in annual sales, expires in 2006.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
