As per the agreement, Merck, through a subsidiary, will gain worldwide rights to develop and commercialize vintafolide.
Endocyte will receive a $120m upfront payment and is eligible for milestone payments of up to $880m based on the successful achievement of development, regulatory and commercialization goals for vintafolide for a total of six cancer indications.
Up on the regulatory approval of vintafolide, Endocyte is eligible to receive an equal share of the profit in the US as well as a double digit percentage royalty on sales of the product in the rest of the world.
Endocyte has retained the right to co-promote vintafolide with Merck in the US and Merck has the exclusive right to promote vintafolide in the rest of world.
Merck will be responsible for all other development activities and costs and have all decision rights for vintafolide, where as Endocyte will be responsible for the majority of funding and completion of the PROCEED trial.
Closing of the transaction is contingent upon obtaining Hart-Scott Rodino clearance from the Federal Trade Commission.
Vintafolide is also currently being evaluated in a Phase II trial for non-small cell lung cancer (NSCLC).
Merck Research Laboratories executive vice president and president Peter Kim said: "Vintafolide is a promising and innovative late-stage cancer drug candidate. In addition to pursuing the lead indication of platinum-resistant ovarian cancer, Merck plans to further evaluate its potential for treatment of multiple other cancer types."