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Allergan PLC (NYSE:AGN) To Acquire Rights To Migraine Drugs From Merck & Co., Inc. (NYSE:MRK)

Earlier this week, Allergan PLC (NYSE:AGN) revealed plans to acquire exclusive rights to new migraine drugs from Merck & Co., Inc. (NYSE:MRK).

The company announced that the two had closed a $250 million deal for the drugs, and the payment will be on an upfront basis. Merck might also benefit from royalty and milestone payments upon the commercialization of the two drugs. They are both calcitonin gene-related peptide receptor antagonists aimed at preventing or treating migraines.

Researchers have been targeting CGRP as the main focus for new solutions to migraines for a few years now. The CGRP is a brain chemical that is believed to be influential in the transmission of pain, but it does not play any role in regular brain functions. The goal that researchers have been trying to achieve is to come up with a way to block the CGRP receptors. They have therefore been experimenting with various trial drugs to prevent the CGRP from functioning.

Merck had carried out CGRP trials in 2011 that did not go as planned. The trials were called off because the test subjects showed signs of liver toxicity. The two firms were happy to announce that the recent drug trials showed no evidence of toxicity. Allergan plans to commence phase three drug trials in 2016. The trials will involve one of the oral drugs.

Once the company obtains regulatory clearance, it will pay half of the agreed $250 million to Merck. The remaining amount is expected to be paid up by April next year. Allergan has been busy trying to build up its portfolio by engaging in different deals. On Monday, Allergan announced a new deal to acquire Oculeve for $125 million cash. Oculeve deals with experimental treatments for dry eye disease.

In June, Allergan struck a deal to acquire Botox maker, Kythera Biopharmaceuticals Inc (NASDAQ:KYTH) for $2.1 billion as part of its plan to solidify its presence in cosmetic medicine. The Merck acquisition will be a significant addition for Allergan for its therapeutic division.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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