Glenmark, Merck ink euro 190mn drug deal

Darmstadt, Germany, and Mumbai, India, October 17, 2006 "� Merck KGaA and Glenmark Pharmaceuticals S.A (Switzerland), a wholly owned subsidiary of Glenmark Pharmaceuticals India (GPL), have entered into an agreement for Glenmark's DPPIV inhibitor GRC 8200, a treatment for type 2 diabetes in Phase II of clinical development. The transaction is expected to close this year upon approval of the exclusive license to GRC 8200 by the US antitrust agencies under the HSR act.

Under the agreement, Merck KGaA will develop, register and commercialize GRC 8200 for markets in North America, Europe and Japan, while Glenmark will retain commercialization rights for India. The partners will share commercialization rights for other markets in the remainder of the world. Merck KGaA will bear the cost of all ongoing studies and will be responsible for planning, managing and sponsoring all development activities in the future.

The value of all payments to Glenmark could total up to EUR 190 million, including a EUR 25 million up-front payment and various milestone payments upon successful development and launch of mono-therapy and combination products based on GRC 8200. Upon commercial launch, Glenmark will supply the active ingredient to Merck and will receive royalties on net sales of the product.

"Merck has been a world leader in the fight against diabetes and this agreement shows that we remain committed to the battle," said Elmar Schnee, Merck Executive Board Member responsible for Pharmaceuticals. "Our long-term expertise in research, development and marketing of products for type 2 diabetes makes us the perfect partner for GRC 8200."

Merck's Glucophage® (metformin) has been on the market for nearly 50 years and still remains the global gold standard for the oral treatment of type 2 diabetes.

According to Glenn Saldanha, MD and CEO of GPL, "This deal is in line with our strategy to collaborate with global partners for our new chemical entities program. The DPPIV inhibitor market is expected to be highly competitive and we are delighted to partner with Merck, a global market leader in oral diabetes medications. Within the scientific community it is widely expected that DPPIV inhibitors will be used in combination with other anti-diabetics. Existing and pipeline drugs from Merck KGaA are excellent candidates for the development of combinations and this would prove a significant advantage for both partners."

About DPPIV inhibitors:

DPPIV inhibitors are a class of drugs that work by inhibiting the activity of the DPP-IV enzyme, thereby stimulating the secretion of higher levels of insulin. Several DPPIV inhibitors are in development or under review for the US market. When approved, these drugs are expected to constitute a significant part of diabetes therapy by managing blood-glucose levels without the associated risk of hypoglycaemia that may be experienced with other diabetes medication. Analysts' estimates project peak annual sales for the DPPIV inhibitor class of products in excess of EUR 9 billion.

About GRC 8200:

GRC 8200, Glenmark's lead DPPIV inhibitor, is a novel, oral DPPIV inhibitor in development for type 2 diabetes. It is currently in Phase II clinical trials in South Africa and India. Phase I studies were conducted by Parexel in the UK and were designed to study the safety and bioavailability of GRC 8200 in humans using single and multiple oral doses on 88 healthy volunteers. The compound was very well tolerated by the subjects at all dosage levels and there were no significant adverse events reported. The study design included eight single-dose regimens with 800mg as the highest dose.

The pharmacokinetic profile of GRC 8200 was linear across the dosage range studied and was found to be favourable to support a once-daily regimen. More than 90% inhibition of the DPP-IV enzyme was observed within 1 hour at all doses tested. The study also included three multiple-dose [10 days] regimens with 300mg/day as the highest dose.

In preclinical studies, the compound appears to be effective and well tolerated when given at pharmacological doses. Patent applications have been filed for GRC 8200.

About Diabetes

Globally, type 2 diabetes is one of the most common chronic diseases. The pathological manifestations of the disease include obesity, hypertension, hyperlipidemia and cardiovascular diseases. Diabetes causes significant morbidity and mortality due to long-term micro and macro vascular complications. Based on current estimates, the global prevalence of type 2 diabetes will double from 171 million patients in 2000 to 334 million patients in 2025. The incidence of type 2 diabetes in the US is estimated to be 7% of the population while expenditures on related treatments account for as much as 10% of all healthcare dollars in the US. Furthermore, the incidence of type 2 diabetes is increasing globally at a rapid rate, especially in Africa, South America and Asia, leading to the disease now being considered a worldwide epidemic.