Merck, Eisai sign deal to further develop, sell Eisai cancer drug

(Adds company comment, deal details, background)

By Bill Berkrot

March 7 (Reuters) - Merck (Jakarta: 28586808.JK - news) & Co Inc and Japan's Eisai Co Ltd on Wednesday announced a potential multibillion-dollar collaboration to develop and sell Eisai's cancer drug Lenvima, which is already approved in dozens of countries for two uses.

The deal, under which Lenvima will be developed for several types of cancer alone and in combination with Merck (LSE: 0O14.L - news) 's immunotherapy Keytruda, could be worth up to $5.76 billion to Eisai, but most of that would be contingent on eventual sales.

Meanwhile, U.S. drugmaker Merck will be entitled to half of all global Lenvima sales revenue, even for its already approved uses for thyroid cancer and in combination with another drug for kidney cancer.

The deal is similar to a multibillion-dollar oncology collaboration Merck struck with AstraZeneca Plc (NYSE: AZN - news) on its cancer drug Lynparza and another medicine last July.

"Like the Lynparza deal with AstraZeneca, this starts to really broaden out Merck's portfolio," Frank Clyburn, head of Merck's commercial oncology business, said in an interview. "And Merck will start to receive revenue right away."

Under terms of the deal, Eisai will receive an upfront payment of $300 million and up to $650 million for certain option rights through March 2021, the companies said. Eisai could receive another $385 million in clinical and regulatory milestones, while Merck will receive $450 million as reimbursement for research and development costs.

The collaboration gives Eisai access to Merck's R&D and sales clout as well as a means of maximizing the potential of Lenvima in combination with the leading immunotherapy drug.

Following positive trial data showing that Lenvima with Keytruda led to tumor shrinkage in 63 percent of advanced kidney cancer patients, the combination received breakthrough designation from the U.S. Food and Drug Administration.

The combination also appeared to enhance the impact of Keytruda on advanced kidney cancer.

The companies said they will develop the combination for 11 different potential uses across six other cancer types.

"We were very impressed with results we obtained on combinations with Lenvima," Roger Perlmutter, president of Merck Research Laboratories, said in an interview.

"It makes sense ... to try to develop the drug to the full extent possible as monotherapy and in combination with Keytruda," the Merck research chief added.

Lenvima, an oral drug known chemically as lenvatinib, was discovered by Eisai scientists and belongs to a class of medicines known as tyrosine kinase inhibitors that block the blood vessel supply to tumors and tumor growth.

(Reporting by Bill Berkrot in New York Editing by Matthew Lewis and Lisa Shumaker)