Merck & Co announces a 20-million-Euro deal with Ablynx

Merck & Co Inc. announced it has reached an agreement with Ablynx – a biotech company that uses antibodies from llamas and alpacas to fight disease. The deal is considered to be able to help Merck become more competitive and bring a new generation of cancer drugs to market.

The companies said that Merck will work with Ablynx, which is known for its technology that stems from proteins found in the camelid family of animals. The partnership is considered to help the companies develop the so-called immunotherapies, which increase the ability of the human body to attack cancer cells. Currently, Ablynx develops small antibodies, which are called nanobodies. Their size makes them more versatile than the larger antibodies in human organism that fight different diseases.

The deal between Merck & Co Inc. and Ablynx is the latest one in a series of research tie-ups, which involve small biotech companies at the leading position and forefront of immunotherapy as Merck and its competitors fight to build their capabilities.

As reported by the Financial Times, according to the terms of the deal, Ablynx will receive 20 million Euro up front from Merck, with additional funding of up to 10.7 million Euro during the initial three-year collaboration. The potential profit of the company if the tests turn out to be successful, is estimated to up to 1.7 billion Euro in so-called milestone payments as well as royalties from any successful drugs.

Ablynx is alredy a partner not only with Merck, but also with some other drug companies such as Novartis and AbbVie. The partnership with these companies is required due to the fact Ablynx is making a research over treatments for conditions that vary from osteoporosis to Alzheimers disease. However, the potential of nanobodies is considered a lot bigger than any other research made by the company.

Daniel ODay, the head of pharmaceutical at Roche, said last week for the Financial Times: “It is incredibly exciting area but it is also a very complex area. The companies with the best minds working on this are the ones that are going to find best way forward.”

Merck & Co Inc. settled 1.01% lower on Friday at $52.97, and its one-year return rate is up 31.34%. The 17 analysts offering 12-month price forecasts for MCNNMoney have a median target of $53.00, with a high estimate of $65.00 and a low estimate of $44.00. The median estimate represents a +0.06% increase from the latest closing price