Merck & Co. and Hanmi Pharmaceutical on Tuesday entered into an exclusive licensing agreement to develop efinopegdutide (formerly HM12525A), an investigational once-weekly therapy for the treatment of nonalcoholic steatohepatitis (NASH), a type of liver disease tied to obesity.
Under the agreement, Merck (MRK) will be granted an exclusive license to develop, manufacture and commercialize efinopegdutide in the US and globally. South Korea-based Hanmi will receive an upfront payment of $10 million and will receive milestone payments of up to $860 million conditional on the development, regulatory approval and commercialization of efinopegdutide. In addition, Hanmi will be eligible to get double-digit royalties on sales of approved product and retain an option to commercialize efinopegdutide in Korea.
“Data from phase 2 studies has provided compelling clinical evidence that warrants further evaluation of efinopegdutide for the treatment of NASH,” said Merck’s Sam Engel. “We continue to build on our proud legacy of developing meaningful medicines for the treatment of metabolic diseases and look forward to advancing this candidate.”
Efinopegdutide is a glucagon-like peptide-1 GLP-1/glucagon receptor dual agonist, which activates both the GLP-1 and glucagon receptors. The safety and efficacy of efinopegdutide has previously been evaluated in multiple Phase 1 and Phase 2 clinical trials, including for the treatment of severely obese individuals with and without type 2 diabetes.
Merck shares are currently trading down more than 9% year-to-date, while analysts have a cautiously optimistic Moderate Buy consensus on the stock. That breaks down into 5 Buy ratings versus 3 Hold ratings. Meanwhile, the average analyst price target of $93.20 implies 13% upside potential in the coming year.
Goldman Sachs analyst Terence Flynn this week raised the stock’s rating to Buy from Hold with a price target of $105 (27% upside potential), up from $91, saying that the market “seems to be underappreciating a potential opportunity of between $13 billion and $18 billion in pipeline assets”.
Flynn sees the stock’s risk/reward as attractive in view of a list of upcoming readouts later this year and into next for cancer, HIV and COVID-19. The analyst noted that Merck also has $45 billion of “firepower” for potential acquisitions or business development after halting its share repurchase program this year. (See Merck stock analysis on TipRanks)
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