Sun Pharma licenses Phase 3 psoriasis candidate, tildrakizumab from Merck

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• Merck has licensed global rights on anti-IL-23p19 mAb tildrakizumab (MK-3222) to Mumbai-based Sun Pharma for an upfront fee of $80M

• The license is for all indications, although development to date has been limited to psoriasis.  Two Phase 3 studies are currently closed for enrollment and due to reach their primary endpoint Q2 2015

• Merck will continue all clinical development and regulatory activities, but this will be funded by Sun

• Once approved, Sun will be responsible for all regulatory, manufacturing and commercial activities

• Merck is eligible to receive milestone payments and mid-single-digit to teen royalties on commercial sales.

Comments:  Merck published 16wk tildrakizumab data in 2013.  More recent data presented at AAD described long term data with q12w dosing.  Impressively, efficacy was maintained for at least 20wks following discontinuation at 52wks.  This suggest that treatment holidays or reduced dosing frequency may be possible.  Merck indicated in its press release that  today's decision reflects a central strategy to focus it's commercial and R&D activities.  Indeed outlicensing tildrakizumab along with little obvious activity in terms of defending Remicade against biosimilars in effect takes the company out of immunology.  In exception, two developmental candidates remain in respiratory disease.  Sun Pharma indicated that the deal is a part of a strategy of pipeline growth, especially in dermatology.  Sun Pharma is primarily positioned as a generics company, and indeed with the proposed acquisition of Ranbaxy, will consolidate itself as the 5th largest global specialty generic pharma company and the leader in generic dermatology.  This therefore raises questions on the positioning of tildrakizumab.  With the high efficacy of IL-17 mAbs and their likely earlier market entry, Sun Pharma may be intending to eventually launch Tildrakizumab as a more affordable option in both developed and emerging markets. Of note Sun Pharma, along with its subsidiaries, currently has a large network of FDA approved manufacturing sites including those outside of the US which could be leveraged to drive down cost. This in turn would impact not only the IL-17 class but also other IL23mAbs.  Janssen and Boehringer are both developing this class.  Indeed, Janssen reported excellent Guselkumab (CNTO-1959) efficacy from the Phase 2b X-PLORE study at AAD earlier this year and Phase 3 studies have now been announced