Merck will purchase $95 million in FoxHollow common stock at $29.629 per share, representing approximately an 11% stake in the company. This expands the scope of their existing strategic collaboration for atherosclerotic plaque analysis.
Under the terms of the expanded collaboration agreement, Merck will pay $40 million to FoxHollow over four years in exchange for FoxHollow’s agreement to collaborate exclusively with Merck in specified disease areas. If Merck extends the collaboration program beyond this period to continue the exclusive collaboration arrangement Merck would pay $10 million per year, which may be offset by potential royalty and milestone obligations.
Merck will also provide a minimum of $60 million in funding to FoxHollow over the first three years of the four-year collaboration for research activities to be conducted by Fox Hollow under Merck’s direction, including removal of atherosclerotic plaque from patient arteries for analysis, conduct of clinical trials, and drug profiling by Merck. FoxHollow will receive milestone payments on successful development of drug products or diagnostic tests utilizing results from the collaboration, as well as royalties.