Allergan Enters Into Licensing Agreement with Merck to Obtain Exclusive Worldwide Rights to CGRP Migraine Development Program

Allergan and Merck (MSD outside the US and Canada) have entered into an agreement under which Allergan will acquire the exclusive worldwide rights to Merck's investigational small molecule oral calcitonin gene-related peptide (CGRP) receptor antagonists, which are being developed for the treatment and prevention of migraine, subject to expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR).

Under the terms of the agreement, Allergan will acquire these rights for an upfront payment of $250 million, $125 million of which is payable upon HSR clearance and $125 million of which is payable in April of 2016. Merck will additionally be entitled to receive potential development and commercial milestone payments and tiered double-digit royalties based on commercialization of the programs. Allergan will be fully responsible for development of the CGRP programs, as well as manufacturing and commercialization upon approval and launch of the products. Allergan said its 2015 earnings-per-share forecast provided on 11 May 2015 is unchanged as a result of the acquisition. Allergan remains committed to de-levering to below 3.5x debt to Adjusted EBITDA by the end of the first quarter of 2016.

The agreement gives Allergan rights to two CGRP receptor antagonists:

•  MK-1602, an oral small molecule antagonist for the acute treatment of migraines. A Phase II study of MK-1602 has been completed and end of Phase II discussions with FDA are planned prior to initiating Phase III. A Phase III study is expected to begin in 2016.
•  MK-8031, an oral small molecule antagonist for the prevention of migraines. A Phase II study of MK-8031 is expected to begin in 2016.

In July 2011, Merck announced that it had discontinued clinical development of an earlier investigational oral CGRP antagonist, Telcagepant (MK-0974), after some patients showed evidence of liver toxicity. The MK-1602 & MK-8031 molecules belong to a different chemical series than Telcagepant, and in clinical trials to date have not shown evidence of liver toxicity. The potential of the CGRP antagonist mechanism has received validation from episodic and chronic migraine studies of injectable candidates in development.

"The agreement to acquire exclusive worldwide rights to Merck's CGRP migraine development program builds on our existing strength in neurosciences and helps position Allergan as a potential leader in the acute treatment of migraine and prevention of migraine for millions of patients," said David Nicholson, Executive Vice President, Global Brands Research and Development at Allergan. "With two novel oral therapies in development for treating and preventing migraines, we have the opportunity to provide therapies that could alleviate an intensely debilitating and immobilizing condition for patients worldwide. We look forward to supporting the continued development of these programs and to potentially bringing these new therapies to market."

"We are pleased that this agreement will enable Allergan to advance these promising molecules for the potential benefit of migraine sufferers, and that Merck will be able to continue to further focus our research and development resources on our priority therapeutic areas," said Iain D. Dukes, Senior Vice President of Business Development & Licensing, Merck Research Laboratories.