Bayer AG’s deal to buy Merck & Co. Inc.’s consumer unit is coupled with a pact to jointly develop and commercialize soluble guanylate cyclase (sGC) modulators, including Bayer’s already approved Adempas (riociguat).

Under the consumer health transaction, announced May 6, Bayer will pay Merck $14.2 billion for the business, which many analysts see as a good deal for Merck. But Bayer will also get paid by Merck as part of the cardiovascular alliance – $1 billion up-front, with a further $1.1 billion in sales milestones possible from Adempas and other compounds.

For Bayer, adding Merck’s consumer unit will give it world leadership in dermatology and gastrointestinals, two of the five key non-prescription health care product categories, and make it number two in the cold, allergy, sinus and flu category. [Editor’s note: In-depth analysis of the deal is available from ouraffiliatedpublication, “The Tan Sheet,” which covers the OTC marketplace. Please visit the publication’s website to sign up for a free trial.]

For Merck, selling the consumer unit will net between $8 billion and $9 billion after tax. The firm said it will use the proceeds “to resource those areas within its business that represent the highest potential growth opportunities, such as MK-3475, to augment the company’s pipeline with external assets that can create value and to continue to provide an industry-leading return of capital to shareholders.”

MK-3475, Merck’s anti-PD-1 cancer checkpoint inhibitor, is now under priority review at FDA and was a highlight of the company’s same-day R&D call (see related story,[A#14140506005]).

The Bayer deal didn’t receive much attention at that event, but Merck Research Laboratories President Roger Perlmutter suggested that it was a long time coming, noting that the company “has talked with Bayer for years about pulmonary hypertension.”

Bayer’s release on the deal quoted Marijn Dekkers, Bayer’s chief executive, stating “Merck’s expertise and global presence in the cardiovascular therapeutic area make it a collaboration party of choice for our sGC programs. We truly believe that this collaboration increases our chances of bringing new medicines to more patients.”

Taking Turns In America

Bayer and Merck will equally share costs and profits from the sGC modulators and pursue a joint development and commercialization strategy. Bayer will lead the commercialization for Adempas in North and South America, while Merck will lead the commercialization outside the Americas.

The collaboration includes various pulmonary hypertension conditions and pipeline products such as vericiguat, an investigational compound that is currently being developed in two Phase IIb studies in worsening chronic heart failure.

Bayer is looking to vericiguat as a key future growth driver (see related story,[A#14140506007]).

For vericiguat and other potential investigational sGC modulators, Bayer will lead the commercialization outside the Americas while Merck will lead the commercialization in the Americas. Both companies will have the option to co-promote Adempas and the follow-on sGC modulators in each other’s territories.

Merck noted its strength in primary care promotion as one of keys to the deal is it able to offer the right “commercial infrastructure” for potential future launches.

Bayer’s deal announcement stated that “this collaboration demonstrates our commitment to sGC modulators, allowing us to better explore the potential of these promising cardiovascular compounds.”

So far, Adempas is indicated only for two orphan diseases – pulmonary arterial hypertension (PAH) and chronic thromboembolic pulmonary hypertension (CTEPH) ([A#14131014001]).

Olivier Brandicourt, Bayer HealthCare’s new chief executive, told “The Pink Sheet” DAILY in a recent interview that “We think that because of this unique mechanism of action that we were able to get that unique indication and we are going to make a significant difference for those patients. We also have a lifecycle plan for this drug which will look at other subgroups of pulmonary hypertension.”

Riociguat has already shown promise as a potential treatment option beyond these two pulmonary hypertension indications. An early clinical study was conducted in PH-ILD (interstitial lung disease), a disease characterized by lung tissue scarring (fibrosis) or lung inflammation which can lead to pulmonary hypertension, and, based on positive data, the decision was taken to initiate Phase IIb studies in PH-IIP (idiopathic pulmonary fibrosis), a subgroup of PH-ILD.

“It’s a very large group with a couple of subgroups where our intention is to carry out clinical studies and seek the indication, so we’re trying to enlarge the scope of pulmonary hypertension type of patients.”

Bayer/Merck Cardio Rx Collaboration Pumped Up By Consumer Deal

More from Germany

More from Europe