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Merck inks KRAS deal with Taiho, Astex; cases of China's mystery pneumonia rise

Top news

* Merck & Co. Inc. entered an exclusive global research collaboration and licensing deal with Japan's Taiho Pharmaceutical Co. Ltd. and Astex Pharmaceuticals (UK), a unit of Otsuka Pharmaceutical Co. Ltd., to develop small molecule inhibitors against several drug targets, such as the so-called KRAS oncogene. Under the agreement, Merck & Co. will pay Taiho and Astex a total of $50 million up front, together with about $2.5 billion in contingent milestone payments.

According to Merck & Co., KRAS is one of the most frequently mutated oncogenes in cancer and is associated with poorer outcomes.

* Confirmed cases of pneumonia with an unknown cause in China have reached 59 as of Jan. 5, Reuters reported, citing a statement posted on the Wuhan Municipal Health Commission's website. The disease is different from severe acute respiratory syndrome, or SARS; Middle East respiratory syndrome, also known as MERS; or bird flu, Chinese health authorities added.

The World Health Organization said the causal agent of the disease has not yet been identified or confirmed.

* A cadre of Democratic state attorneys general and Democrats in the U.S. House of Representatives want the U.S. Supreme Court to decide the fate of the Affordable Care Act before the 2020 elections. In a Dec. 18, 2019, ruling, the U.S. Court of Appeals for the 5th Circuit in New Orleans declared the ACA's individual mandate unconstitutional.

The group of 20 Democratic attorneys general, led by California's Xavier Becerra, and lawyers for the House of Representatives asked the Supreme Court in Jan. 3 petitions for an expedited review of the 5th Circuit's ruling.

* Attorney General Hector Balderas sued Johnson & Johnson and Bausch Health Cos Inc. in the First Judicial District Court of New Mexico for allegedly misleading consumers regarding the safety of their talc powder products. The lawsuit claims the companies knew of the presence of cancer-causing asbestos in their talc powders for over four decades but continued to market their products as "safe" and "healthful" to minority groups.

* China's National Medical Products Administration approved U.K.-based AstraZeneca PLC's Lokelma for treating adult patients with hyperkalemia, a condition characterized by elevated levels of potassium in the blood. The agency listed Lokelma as one of the urgently needed overseas drugs in 2019.

* Novartis AG completed its tender offer to acquire all outstanding common shares of The Medicines Co. for $85 each, or a total of $9.7 billion. As of 12 midnight New York time on Jan. 3, a total of 60,669,325 shares were tendered and not withdrawn in the buyout offer, equivalent to about 75.0% of The Medicines Co.'s outstanding common stock.

On the policy front

* House Speaker Nancy Pelosi, D-Calif., called on the U.S. Senate to take action to adopt legislation to lower Americans' costs of prescription drugs after a number of companies raised the prices of their medicines at the start of 2020. As of Jan. 3, 102 manufacturers had raised their prices on 445 drugs, with a median increase of 5% and an average increase of 5.2%, according to data reported by the healthcare research company 3 Axis Advisors.

Meanwhile, last week a federal district judge in California denied the generic drug industry's attempt to block the state's new law aimed at deterring agreements in which brand-name manufacturers pay makers of lower-cost medicines to delay entry of their products into the U.S. market. The Association for Accessible Medicines, which lobbies on behalf of the generic drug industry, filed a notice Jan. 2 with the U.S. Court of Appeals for the 9th Circuit in San Francisco of the group's intent to appeal the district court's ruling.

M&A and capital markets

* Precision oncology medicine company Black Diamond Therapeutics Inc. seeks to raise about $100 million gross proceeds in an IPO of its common stock on the Nasdaq Global Market. Black Diamond is a precision oncology medicine company focusing on the discovery and development of small molecule, tumor-agnostic therapies.

* I-Mab, a clinical-stage biopharmaceutical company with principal executive offices in China, plans to offer 7,407,400 American depositary shares at a price between $12 and $15 apiece in its Nasdaq IPO.

Drug and product pipeline

* U.S. pricing watchdog Institute for Clinical and Economic Review will evaluate the cost-effectiveness of BioMarin Pharmaceutical Inc.'s hemophilia A gene therapy valoctocogene roxaparvovec. BioMarin's gene therapy is not yet approved, but the U.S. Food and Drug Administration is expected to make a decision by the middle of the year.

Operational activity

* Elanco Animal Health Inc. will divest the global rights to Osurnia, an ear inflammation therapy for dogs, to Dechra Pharmaceuticals PLC for $135 million in cash. The transaction is Elanco's proactive move to help secure antitrust approval for its $7.6 billion acquisition of Bayer AG's animal health business.

* Leap Therapeutics Inc. agreed to grant BeiGene Ltd. an option to obtain an exclusive license for the development and commercialization of its experimental cancer drug DKN-01 for $3 million up front. Cambridge, Mass.-based Leap will be eligible to receive up to $132 million based on certain development, regulatory and sales milestones.

* Therapix Biosciences Ltd. said it terminated the employment of its entire staff except interim CEO Ascher Shmulewitz due to lack of sufficient funds. CFO Oz Adler and Chief Technologies Officer Adi Zuloff-Shani will remain in their positions until March 30, 2020, as part of their 90-day notice period.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng lost 0.79% to 28,226.19, while the Nikkei 225 was down 1.91% to 23,204.86.

In Europe, around midday, the FTSE 100 slid 0.94% to 7,550.50, and the Euronext 100 fell 1.13% to 1,144.27.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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