Merck & Co. has agreed to license Codexis’ CodeEvolver® protein engineering platform technology to develop enzymes for use in the manufacture of the pharma giant’s pharmaceutical products.

The deal that could generate at least $18 million over two years for Codexis—$5 million upfront plus $13 million tied to achieving technology transfer milestones—plus up to $15 million for each API developed by Merck using CodeEvolver and used toward commercial manufacturing.

In return for the money, Codexis agreed to grant Merck a nonexclusive license to use CodeEvolver. Codexis also agreed to locate a CodeEvolver platform at an unnamed Merck research site upon completion of the technology transfer.

The deal marks the second CodeEvolver licensing agreement inked by Codexis with a pharma giant; the first was signed last year with GlaxoSmithKline (GSK). Under that agreement, GSK agreed to pay Codexis up to $25 million over approximately two years, plus milestone payments ranging from $5.75 million to $38.5 million per project based on GSK's successful application of the licensed technology. Codexis is also eligible for royalties based on net sales of a limited set of products developed by GSK using CodeEvolver.

“We view licensing agreements involving our CodeEvolver technology such as this one with Merck as an attractive component of our business model. It allows us to monetize our core technology, while continuing to provide services and supply products to customers under our traditional business model,” Codexis president and CEO John Nicols said in a statement.

“This licensing transaction builds upon our productive eight-year relationship with Merck and further validates the ability of CodeEvolver to effectively and cost-efficiently improve certain manufacturing processes,” Nicols added.

Rich Tillyer, senior vice president, and head of global chemistry, Merck Research Laboratories, stated that the tech transfer and licensing agreement with Codexis built upon Merck’s longstanding collaboration with Codexis, which specializes in enzyme optimization services and development of biocatalyst products.

Merck was the first subscriber to Codexis’ Codex™ Biocatalyst Panels, a biocatalysis research product, under a 2007 agreement that gave the pharma access to Codexis biocatalysts for in-house application to its pipeline. Three years later, the two companies won the annual Presidential Green Chemistry Challenge Award from the U.S. Environmental Protection Agency (EPA) for the development of a novel biocatalytic method for the synthesis of sitagliptin—a method detailed by the companies in a paper published in Science.

In 2012, the companies extended their collaboration agreement three years, and reported the development of a highly efficient, enzyme-based production method for a key intermediate in the production of boceprevir, the active ingredient in Merck's Hepatitis C virus NS3/4A protease inhibitor Victrelis®.

Also that year, the FDA approved a manufacturing process co-developed by Codexis for the manufacture of sitagliptin, the active pharmaceutical ingredient in Merck's dipeptidyl peptidase-4 (DPP-4) inhibitor Januvia® for type 2 diabetes. And in November, a Merck executive—MSD China President Pam Cheng—was appointed to Codexis’ board.

“Increased access to the CodeEvolver technology positions Merck to potentially expand upon the use of enzymes in its pharmaceutical manufacturing processes,” Tillyer said.

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