Merck & Co., Inc. (MRK.US) acquires global rights to experimental cancer drug Lixiana for a record $3.3 billion.

Merck & Co., Inc. (MRK.US) has acquired the rights to an experimental cancer antibody from LaNova Medicines for a upfront payment of $588 million, plus milestone payments of up to $2.7 billion. The deal with LaNova Medicines has propelled Merck & Co., Inc. into the promising new area of dual-targeted antibodies. Under the agreement, the company will have exclusive global rights to LM-299, a so-called bispecific antibody that can target cancer in multiple ways. The drug is currently undergoing Phase I clinical trials in China. Dean Li, President of Research Laboratories at Merck & Co., Inc., stated in a press release that the company plans to "advance the development of this drug rapidly and rigorously for patients in need." It is understood that LM-299 works by blocking a protein called PD-1 to activate the immune system in fighting cancer, the same protein targeted by Merck & Co., Inc.'s top-selling cancer drug Keytruda. However, it also blocks a protein called VEGF, which tumors use to stimulate the growth of blood vessels. The second mechanism is similar to how Roche's cancer drug Avastin works. Following the announcement, Merck & Co., Inc. stock price rose about 1% in pre-market trading on Thursday. As of Wednesday's close, the stock has declined by 9.7% year-to-date. In recent years, Merck & Co., Inc. has been investing heavily in expanding its product portfolio and reducing its reliance on Keytruda. In 2023, the company acquired Prometheus Biosciences Inc., which produces treatments for autoimmune diseases, for nearly $11 billion, and signed a cancer drug collaboration agreement worth up to $22 billion with Daiichi Sankyo Co. Prior to this, in 2021, the company acquired Acceleron Pharma Inc. for $11 billion, which brought a treatment for a rare lung disease. Dual-targeted antibodies, known as bispecific antibodies, have become a hot area of drug development. In August, Merck & Co., Inc. acquired such a drug for blood cancers for $700 million in cash plus milestone payments from Curon Biopharmaceutical, obtaining global rights to CN201. In September, the stock price of Summit Therapeutics Inc. (SMMT.US) soared after researchers announced that their dual-targeted drug performed better than Keytruda in a mid-stage lung cancer trial. In late October, former Seagen Inc. CEO David Epstein founded a new company, Ottimo Pharma, to advance the dual-targeted approach. The company has not yet started patient trials. Merck & Co., Inc. expects the transaction to be completed in the fourth quarter and, therefore, will incur pre-tax expenses related to the $588 million upfront payment to LaNova Medicines.