Merck pays $760M to buy into KalVista drug

Merck is paying $37 million up front for an option to buy KalVista’s program in diabetic macular edema (DME).

DME is an accumulation of fluid in the eye that can cause sight loss, and has also agreed to provide up to $715 million in milestones plus royalties if it leads to a commercial product. It’s also paying $9 million for a 9.9% stake in the biotech.

The main focus of the deal is KVD001, which KalVista said has cleared a phase 1 study and is due to start phase 2 proof-of-concept testing later this year. However, Merck is also taking an option to follow-up compounds that could potentially be dosed orally.

Andrew Crockett, CEO, KalVista said, "Plasma kallikrein inhibition is a novel approach to the treatment of DME that we believe may offer benefit to a significant number of patients, and an oral therapy particularly would represent a ground-breaking advance for treatment of this indication."

"We have always believed that development and commercialization of our DME therapies would require the resources of a large pharmaceutical company," he added.

As it stands, KalVista will fund and run the phase 2 trial of KVD001 with Merck expected to take a decision on its option thereafter.

The deal gives KalVista a partner with a strong presence in diabetes through drugs such as DPP4 inhibitors Januvia (sitagliptin) and Janumet (sitagliptin/metformin), and could add to that portfolio shortly with Pfizer-partnered SGLT2 inhibitor ertugliflozin, which was filed in the U.S. and Europe in May.