Biotech Values

[DewDiligence]

Re: MRK-NSTK deal:

Nice going, Randy. As usual, your instincts were impeccable.

The area where I disagree is on the deal money: $5M is not even bus change for MRK, and $210M of the milestone payments are sales milestones (rather than regulatory milestones). You can’t simply assume that the sales thresholds required to trigger such milestones will be met, even if MRK manages to bring NSTK’s PYY to market.

Further, NSTK’s obtaining the full $120M of regulatory milestones is dependent on PYY being approved in multiple jurisdictions, not just the U.S.

Some posters on this message board disparaged MRK’s AMD deal with Alnylam (ALNY) as merely a low-risk option on ALNY’s pipeline rather than a serious commitment. I disagreed, saying that MRK’s deal with ALNY was not bad for a compound family still in preclinical development for which a lead molecule had not even been selected.

MRK’s partnership with NSTK, on the other hand, is for a compound that has already completed multiple phase-1 trials. For an addressable market as large as obesity and a compound about to enter phase-2, one would expect a deal to command a larger amount of up front money than the MRK-ALNY deal. Yet the MRK-NSTK deal is for even less up-front money, leading me to question just how confident MRK really is about PYY.