Baxter International will co-develop and co-commercialize Merrimack Pharmaceuticals’ lead cancer drug candidate MM-398 (nanoliposomal irinotecan injection or “nal-IRI”), and gain commercialization rights for all potential indications of MM-398 outside the U.S. and Taiwan, in an up-to-$970 million exclusive licensing deal.

Merrimack would retain U.S. commercialization rights to MM-298, for which the company is preparing an NDA with the FDA. The drug candidate would be indicated for treating patients with metastatic pancreatic cancer who were previously treated with a gemcitabine-based therapy. Taiwanese rights are held separately by PharmaEngine under a 2011 agreement with Merrimack.

The deal would also move Baxter’s biopharma business into the oncology sphere at a time when it is preparing to be spun out of the drug-device giant, resulting in two separate companies. Earlier this month, Baxter said the biopharma spinout would be named Baxalta.

''Oncology represents an exciting new area and growth driver for our biopharmaceutical business,'' Ludwig Hantson, Ph.D., president of Baxter BioScience, said in a statement. ''With this new collaboration with Merrimack on MM-398, a promising new anti-cancer agent, we continue to augment our growing pipeline focused on challenging diseases with significant unmet needs, while capitalizing on our broad global reach.''

MM-398 is a Merrimack-developed encapsulation of irinotecan in a long-circulating nanoliposomal formulation designed to increase drug deposition and prolong cytotoxic effects, with the goal of improving its anti-cancer properties.

In May, Merrimack said that its Phase III NAnoliPOsomaL Irinotecan (NAPOLI-1) trial achieved its primary and secondary endpoints for patients with metastatic pancreatic cancer who were previously treated with a gemcitabine-based therapy. NAPOLI-1 assessed MM-398 in combination with 5-fluorouracil (5-FU) and leucovorin, in what according to Merrimack was the first positive global Phase III study in a post-gemcitabine setting to show a survival benefit in the disease.

MM-398 demonstrated a statistically significant improvement in overall survival, progression free survival and overall response rate compared to the control arm of 5-FU and leucovorin alone, the company stated at the time. The study evaluated two MM-398 regimens, 80 mg/m2 combined with 5-FU and leucovorin every two weeks, and 120 mg/m2 as a monotherapy every three weeks. Each MM-398 regimen was compared to a control arm of 5-FU and leucovorin on the primary endpoint of overall survival. A total of 417 patients were randomized across the study’s three arms.

Based on its Phase III data, Merrimack plans to submit its NDA for MM-398 by year’s end, while Baxter expects to submit applications for regulatory approvals outside the U.S. beginning next year.

The companies also said a Phase I clinical trial is in progress to assess a potential companion diagnostic for MM-398 in patients with multiple cancer types. The study is designed as a first step toward determining which patients are most likely to benefit from treatment with the drug.

Baxter agreed to pay Merrimack $100 million upfront, which Baxter said it will recorde as a special pre-tax in-process research and development charge in the third quarter. Merrimack is also eligible for $120 million in regulatory milestone payments related to the first pancreatic cancer indication as these milestones are achieved, and $280 million in development and regulatory milestone payments for a second pancreatic cancer indication.

Merrimack is eligible for an additional $220 million in future development and regulatory milestone payments related to two additional indications. Merrimack could receive $250 million in sales milestone payments, as well as tiered royalties on net sales of MM-398 where it holds commercialization rights.

''This partnership also complements our strategy by allowing us to develop our own commercial efforts in the United States while aggressively pursuing the development of MM-398 across multiple cancer indications,'' added Robert Mulroy, Merrimack’s president and CEO.

Since Baxter announced its spinout plans in March, it has been very busy reshaping the biopharma business.

Baxter agreed in April to acquire Chatham Therapeutics, the developer of several developmental gene therapy programs aimed at treating hemophilia, for $70 million-plus. In July, Baxter acquired orphan drug developer AesRx, whose lead product is the Phase II prophylactic treatment for sickle cell disease Aes-103, for an undisclosed price. Less than a month later, Baxter agreed to sell to Pfizer two vaccines commercially marketed outside the U.S. and a related production facility for $635 million.

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