Merck, KalVista Reach Agreement on Development of DME Drug

Merck & Co. pharmaceuticals announced that it has entered an agreement to develop KalVista Pharmaceuticals’ investigational diabetic macular edema (DME) drug, KVD001.

The deal is reportedly worth $750 million, with Merck paying $37 million upfront to KalVista, including taking a 9.9% stake in the company, equaling more than 1 million shares.

Merck has an option to purchase KVD001 upon the completion of a phase 2 proof-of-concept study, planned to begin later in 2017 by KalVista. The agreement also purportedly includes options to acquire other DME drugs being developing by KalVista.

“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 groundbreaking advance for treatment of this indication,” KalVista CEO Andrew Crockett said in a statement. “We have always believed that development and commercialization of our DME therapies would require the resources of a large pharmaceutical company, and we believe Merck has the wherewithal and resources to help us advance development of our DME drug candidates.”

If Merck chooses to exercise its options in the agreement, KalVista could be eligible to receive more than $700 million, including milestone payments that are potentially available. Tiered royalties on the net sales of these drugs are also available to KalVista, according to the company statement.

KalVista will fund and maintain control over the planned clinical trial of KVD001, including the development of the investigational oral DME compounds through phase 2, unless Merck exercises its options of the agreement earlier.

KalVista has currently made progress in advancing KVD001 into clinical use, according to Ben Thorner, the head of business development and licensing at Merck’s Research Laboratories.

“Importantly for KalVista, this collaboration also meets our strategic objectives of maintaining control of our oral HAE portfolio that we plan to develop independently,” Crockett said. “We look forward to providing more details about the Phase 2 trial for KVD001 in DME patients as the trial commences.”

The agreement with Merck covers only the investigational intravitreal and oral plasma kallikrein inhibitors being developed for DME. KalVista reportedly will retain full rights to its oral hereditary angioedema (HAE) developments and will be able to choose and develop oral HAE compounds in the future. The company stated that it "intends to continue to aggressively pursue its efforts to develop a best-in-class oral therapy for HAE, as well as additional programs focused on other proteases."