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AstraZeneca plc (ADR) (AZN), Merck & Co., Inc. (MRK), Endocyte, Inc. (ECYT): Three Things You Need to Know About This Big Pharma Deal

Two big pharmaceutical players on opposite sides of the Atlantic have forged yet another bond.

AstraZeneca plc (ADR) (NYSE:AZN)

Through the years, London-based drugmaker AstraZeneca plc (ADR) (NYSE:AZN) and U.S. pharmaceutical firm Merck & Co., Inc. (NYSE:MRK) have partnered on several occasions to develop drugs together. Last week, the two companies added another deal to the list with an agreement for AstraZeneca plc (ADR) (NYSE:AZN) to license Merck & Co., Inc. (NYSE:MRK)’s experimental cancer drug MK-1775. Here are the three most important things you need to know from this recent agreement.

1. Money for Merck & Co., Inc. (NYSE:MRK)
Granted, with $16 billion or so socked away in liquid assets, Merck & Co., Inc. (NYSE:MRK) isn’t in desperate need of cash. Every little bit helps, though. And, with the MK-1775 deal, this latest little bit totals $50 million upfront with the prospects of more down the road from milestone payments and royalties.

MK-1775 is an oral small molecule inhibitor of WEE1 kinase in phase 2a trials targeting treatment for certain types of ovarian cancer. Why would Merck & Co., Inc. (NYSE:MRK) want to license the drug rather than develop it on its own? It’s not really for the money.

Merck & Co., Inc. (NYSE:MRK) wants to be able to focus more attention on its other cancer drugs. Foremost among these is vintafolide, which the company licensed from Endocyte, Inc. (NASDAQ:ECYT) in April 2012. Vintafolide is currently under review in the European Union for treating platinum-resistant ovarian cancer and is in phase 3 studies for the same indication in the United States.

The other primary cancer drug that Merck wants to further along is MK-3475. This experimental drug is currently in a phase 2 study for treating metastatic melanoma. MK-3475 targets the Programed Cell Death-1, or PD-1, protein, and by doing so, boost the body’s immune system to fight against cancerous cells. Merck trails behind Bristol-Myers Squibb Co (NYSE:BMY), whose anti-PD-1 drug nivolumab is already in late-stage testing.

2. Alternatives for AstraZeneca plc (ADR) (NYSE:AZN)
While Merck gets some money and the opportunity to focus on other solid opportunities, the MK-1775 licensing arrangement gives AstraZeneca plc (ADR) (NYSE:AZN) another drug to bolster its oncology pipeline. The British drugmaker counts one cancer drug in phase 3 right now, with six other drugs in phase 2 studies. Three of these current cancer candidates are small molecule drugs like MK-1775.

AstraZeneca plc (ADR) (NYSE:AZN) picked up rights to selumetinib from Array BioPharma back in 2003.

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