AstraZeneca plc (ADR) (AZN), Merck & Co., Inc. (MRK), Endocyte, Inc. (ECYT): Three Things You Need to Know About This Big Pharma Deal

The drug is advancing to separate phase 3 trials this year in treating melanoma and non-small cell lung cancer.The company also has gastric and breast cancer drug AZD4547 in phase 2 testing.

Olaparib targets BRCA-mutated ovarian cancer. AstraZeneca plc (ADR) (NYSE:AZN) enrolled its first patient in a phase 3 study of olaparib earlier this month. If all goes well in testing for both olaparib and MK-1775, the combination of the two drugs would give the company a strong ovarian cancer product portfolio.

3. Lag for legalities
All of the talk about licensing MK-1775 isn’t done yet. The deal is contingent upon getting past the waiting period enforced by the Hart Scott-Rodino Antitrust Improvement Act. This law requires that the parties wait for the federal government to work through any antitrust concerns.

In this case, there really shouldn’t be any significant hurdles. Licensing of one drug isn’t a major issue for the Federal Trade Commission when there are several companies competing in the cancer drug market. There will be a little big of a lag for the legalities to be reviewed, but this deal seems likely to sail through with flying colors.

Winners all around
This appears to be a win-win scenario. Merck wins by benefiting financially from MK-1775 while getting to focus more on its later-stage drugs. AstraZeneca wins by gaining a new promising drug for its oncology portfolio.

You could actually throw a couple of more winners into the mix as well. Investors win from these types of arrangements that allow pharmaceutical companies to better leverage their resources. The biggest winners of all, though, could be ovarian cancer patients. Any deals that improve the likelihood for more treatment options in the future is a good deal all around.

The article 3 Things You Need to Know About This Big Pharma Deal originally appeared on Fool.com is written by Keith Speights.

Fool contributor Keith Speights and The Motley Fool have no position in any of the stocks mentioned.

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