Merck enters lucrative cancer alliance with Pfizer

Germany’s Merck KGaA (MRK: DE) said today that it has entered into a global agreement with US pharma giant Pfizer (NYSE: PFE) to co-develop and co-commercialize MSB0010718C, an investigational anti-PD-L1 antibody currently in development by Merck as a potential treatment for multiple tumor types to accelerate the two companies’ presence in immuno-oncology.

The news has been hailed as a good deal for Merck, whose shares were up 2.85% at 76.41 euros by late afternoon on the Frankfurt exchange, but could be an indication that Pfizer will not pursue its previously thwarted $117 billion takeover attempt of Anglo-Swedish pharma major AstraZeneca (LSE: AZN), whose attraction, apart for tax inversion, was its oncology drug pipeline.

Pfizer's stock fell 1.6% in premarket trade Monday, after the company lowered its 2014 profit outlook following its agreement to team up with Merck to develop new cancer treatments. Pfizer now expects full-year earnings per share of $1.40 to $1.49, down from its previous guidance of $1.50 to $1.59.