GTx, Merck to collaborate on R&D program

Memphis Business Journal
November 6, 2007

In a multi-million dollar deal, local biopharmaceutical company GTx, Inc. and Merck and Co. Inc. will partner in a major research and development program.

GTx (NASDAQ: GTXI) will receive an upfront payment of $40 million plus $15 million in research reimbursements to be paid over the first three years of the collaboration, the company announced Tuesday.

In addition, Merck (NYSE: MRK) will make an equity investment of $30 million in GTx common stock at a 40 percent premium on the 30-day average closing price.

GTx will also be eligible to receive up to $422 million in future milestone payments associated with the development and approval of a drug candidate if multiple indications receive regulatory approval. Additional milestones may be received for the development and approval of other collaboration drug candidates. GTx will receive royalties on any resulting worldwide product revenue.

Under the terms of the collaboration agreement and related stock purchase agreement, GTx and Merck will combine their selective androgen receptor modulator (SARM) research programs. SARMs are the active molecules in GTx's Ostraine drug, which is now in Phase II clinical trial for the treatment of muscle loss in patients with cancer.

The collaboration will pool the companies' resources to develop a new class of drugs with the potential to treat age-related muscle loss, or sarcopenia, as well as other musculoskeletal conditions. As part of this global agreement, Merck will be responsible for all future costs associated with ongoing development and, if approved, commercialization of Ostraine and other investigational SARMs resulting from the collaboration.