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Merck buys rights to NGM's insulin sensitizer drug for $20M

Merck & Co. Inc. exercised its option to acquire NGM Biopharmaceuticals Inc.'s investigational medicine to treat liver disease and type 2 diabetes.

South San Francisco, Calif.-based privately held NGM is evaluating NGM313, an insulin sensitizer, to treat nonalcoholic steatohepatitis, or NASH, and type 2 diabetes. NASH is a condition when excess fat builds up in the liver due to causes other than alcohol use and leads to complications such as cirrhosis, liver cancer and liver failure.

Insulin sensitizers work by lowering blood sugar by increasing the muscle, fat and liver's sensitivity to insulin.

In November, NGM reported positive preliminary data from a phase 1b trial, which showed that a single dose of the drug resulted in a significant reduction in liver fat content and improvements in certain metabolic parameters.

Merck plans to conduct a phase 2b study to evaluate the medicine in NASH patients with or without diabetes.

Under the agreement, NGM received $20 million from Merck while the Kenilworth, N.J.-based pharmaceutical giant got exclusive worldwide rights to develop and commercialize NGM313, renamed as MK-3655, and related compounds.

NGM also has an option, at the beginning of a first phase 3 trial for MK-3655, to share up to 50% of the global cost and revenue for the drug. However, if NGM does not exercise the option, it will still be eligible for development and commercial milestone payments along with royalties.