Merck Inks $2B Licensing Deal With Chinese Biotech for Oral Heart Drug

Merck MRK announced that it has entered into an exclusive licensing deal with China-based Jiangsu Hengrui Pharmaceuticals (Hengrui Pharma) for the latter’s investigational oral small-molecule Lipoprotein(a) [Lp(a)] inhibitor, HRS-5346.Per the terms of the deal, Merck will acquire the global rights (excluding Greater China) to develop and market HRS-5346. In return, Hengrui Pharma will receive an upfront cash payment of $200 million. In addition, Merck will pay up to $1.77 billion in milestone payments as well as royalties on the drug’s future sales to Hengrui Pharma.The deal is expected to be closed in the second quarter, subject to the fulfillment of customary closing conditions, including regulatory approvals. Merck expects to record a pre-tax charge of $200 million (or nearly six cents per share) after closing this deal.Per Merck, elevated levels of Lp(a) are a significant risk factor for cardiovascular disease like heart attack and stroke. An accumulation of Lp(a) in blood vessel walls can contribute to atherosclerotic plaque formation (similar to LDL cholesterol) and limit blood flow. According to the company, approximately 1.4 billion people worldwide are affected by elevated levels of Lp(a).Hengrui Pharma is currently evaluating HRS-5346 in a mid-stage study in China.MRK Stock’s PerformanceYear to date, Merck’s shares have lost nearly 12% against the industry’s 7% growth.Image Source: Zacks Investment ResearchMRK Continues Licensing Spree in ChinaThis is the third time that Merck has tapped Chinese biotechs for licensing deals. Toward the end of last year, the company struck multi-billion dollar deals with Hansoh Pharma and LaNova Medicines. While the Hansoh deal added the investigational oral GLP-1 receptor agonist HS-10535 to Merck’s pipeline, the LaNova deal added the experimental bispecific antibody LM-299.The idea behind these deals is clear — Merck intends to diversify its current revenue base, which has become highly dependent on Keytruda. In 2024, the company generated nearly 46% of its total revenues from the drug’s sales. With concerns over Keytruda’s potential loss of exclusivity after 2028, the successful development and potential commercialization of these in-licensed drugs could help Merck reduce its dependence on a single product for growth.MRK’s deals with China are also a reflection of a broader industry trend, where big pharma is turning toward the country for access to newer drugs at more attractive valuations.Earlier this week, Novo Nordisk NVO signed an exclusive license agreement with China-based United Biotechnology for an experimental obesity drug in a deal valued at up to $2 billion. Through this deal, NVO intends to expand its portfolio of differentiated potential treatment options that cater to the diverse needs of people living with these highly prevalent diseases.Last week, British drugmaker AstraZeneca AZN announced a $2.5 billion investment in China to establish a new R&D hub. This AZN deal also includes collaboration and licensing agreements with three local biotech firms — Harbour BioMed, Syneron Bio and BioKangtai — to expand its pipeline across multiple segments, including immunology, oncology and chronic diseases. Through these deals, AstraZeneca also intends to expand its operations in the country.Merck & Co., Inc. Price Merck & Co., Inc. price | Merck & Co., Inc. QuoteMRK’s Zacks RankMerck currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AstraZeneca PLC (AZN): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis Report Merck & Co., Inc. (MRK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks