Allergan agrees to acquire exclusive worldwide rights to Merck's CGRP migraine development program

Allergan plc (NYSE: AGN) and Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced that they 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 May 11, 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 2 study of MK-1602 has been completed and end of phase 2 discussions with FDA are planned prior to initiating phase 3. A phase 3 study is expected to begin in 2016.
• MK-8031, an oral small molecule antagonist for the prevention of migraines. A phase 2 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.

Migraine is a common disorder of the brain that affects approximately 36 million Americans. Migraines are characterized by attacks of intense, usually one-sided, throbbing head pain that can last from four to 72 hours. The pain associated with migraine is frequently accompanied by other symptoms, including nausea, vomiting, dizziness and increased sensitivity to light and sound.