4 January 2019 - - US-based pharmaceutical company Merck (NYSE: MRK) has exercised its option to license NGM313, an investigational monoclonal antibody agonist of the β-Klotho/FGFR1c receptor complex that is currently being evaluated for the treatment of nonalcoholic steatohepatitis and type 2 diabetes, the company said.

This is part of the companies' broad strategic collaboration to discover, develop and commercialize novel biologic therapeutics announced in 2015.

With the exercise of this one-time option, which was triggered by NGM's completion of a proof-of-concept clinical study of NGM313, Merck gains exclusive worldwide rights to develop, manufacture and commercialise NGM313, now renamed MK-3655, and related compounds. In connection with the option exercise, NGM received a USD 20m payment from Merck.

NGM retains an option, at the initiation of the first Phase 3 clinical trial for MK-3655, to participate in up to 50% of a global cost and revenue sharing arrangement for MK-3655.

If NGM does not exercise its option, NGM is eligible for further payments associated with the progress of MK-3655 development, as well as commercial milestone payments and tiered royalties ranging from low double digit to mid-teen percentage rates on product sales.

In November 2018, NGM presented positive findings from a Phase 1b proof-of-concept clinical trial of NGM313 in obese, insulin resistant subjects with nonalcoholic fatty liver disease (NAFLD) at AASLD's The Liver Meeting2018.

In the study, preliminary data indicated that a single dose of NGM313 resulted in a statistically significant reduction in liver fat content and improvements in multiple metabolic parameters after five weeks.

Based on these data, Merck intends to advance NGM313 into a Phase 2b study to evaluate the effect of NGM313 on liver histology and glucose control in NASH patients with or without diabetes.

MK-3655 (formerly known as NGM313) is a proprietary, investigational agonistic antibody that selectively activates the β-Klotho/FGFR1c receptor complex.

NGM313 binds to a unique epitope of β-Klotho, resulting in the selective activation of FGFR1c and signaling through one of the metabolic pathway utilised by FGF21-based ligand therapies. It does not trigger signaling through other FGF receptors, such as FGFR2c, FGFR3c or FGFR4.

In Phase 1 studies, NGM313 has demonstrated potential as a once-monthly injectable insulin sensitizer.

Insulin resistance has been implicated as a key condition leading to hepatic steatosis and, subsequently, NASH, a life-threatening form of liver disease.

An estimated 65% of type 2 diabetes patients have NASH.

The presence of type 2 diabetes is associated with worse liver disease and, in patients with NAFLD and NASH, type 2 diabetes is associated with more severe hepatic and adipose tissue insulin resistance, and more advanced liver steatosis, inflammation and fibrosis by liver histology.

In addition, administration of insulin may increase steatosis, making the treatment of patients with type 2 diabetes and NASH challenging.

The role of insulin resistance and hyperglycemia in the pathogenesis of NAFLD suggests that improving insulin sensitivity and normalizing glucose levels could prevent the development of NASH and progression of disease.

In 2015, Merck and NGM entered into a broad multi-year strategic collaboration to research, discover, develop and commercialize novel biologic therapies across a wide range of therapeutic areas.

In addition to a USD 94m upfront payment and purchase of USD 106m of NGM's preferred stock, Merck committed up to USD 250m to fund NGM's research and development efforts under the initial five-year term of the collaboration, with the potential for additional funding if certain conditions are met.

Merck has the option to extend the research agreement for two additional two-year terms.

The collaboration includes an exclusive worldwide license to NGM's growth differentiation factor 15, or GDF15, programme.

Merck has a one-time option to license all resulting collaboration programs following human proof of concept trials.

Upon exercising such options, Merck will lead global product development and commercialization for the resulting products, if approved.

Prior to Merck initiating a Phase 3 study for a licensed program, NGM may elect to either receive milestone and royalty payments or, in certain cases, to co-fund development and participate in a global cost and revenue share arrangement of up to 50%.

The agreement also provides NGM with the option to participate in the co-promotion of any co-funded program in the United States.

NGM's fibroblast growth factor 19, or FGF19, program, including NGM282, is excluded from the agreement and remains wholly owned by NGM.