Merck & Co has signed up to make use of technology developed by US firm KineMed to assess compounds that could treat artherosclerosis in a deal that might be worth over $700 million.

The New Jersey-based drugs major has entered into a non-exclusive collaboration with KineMed, giving it access to the latter’s reverse cholesterol transport (RCT) technology. Under the terms of the agreement, KineMed could receive from Merck in excess of $5.5 million in initial and research payments and up to $70 million in milestones for each of up to 10 investigational compounds developed using the RCT technology.

The firms claimed that RCT is the only known metabolic pathway by which excess cholesterol can be removed from tissues “and has therefore received considerable attention from drug developers and the clinical research community as a therapeutic target”. They added that a relevant increase in the rate of RCT “is the goal of approaches that seek to raise high-density lipoprotein levels for the prevention and treatment of atherosclerosis”.

KineMed chief executive David Fineman said “this is a seminal deal” for the firm and added that it hopes the collaboration “will provide important validation for our ability to generate insights in RCT based on physiological phenotyping, an area in which we maintain the freedom to engage in additional relationships”.

Analyst upgrade for Merck

News of the deal came as Merck stock was upgraded by Cowen & Co to ‘outperform’ from ‘neutral’. The brokers stated that important drug franchises, notably Singulair (montelukast)for asthma and Cozaar/Hyzaar (losartan/losartan plus hydrochlorothiazide) for hypertension, are growing and Cowen analyst Steve Scala claimed that the diabetes drug Januvia (sitagliptin) and the human papillomavirus vaccine Gardasil are potential "mega blockbusters”.

He added that "Merck's business momentum is readily apparent, key existing products are performing well, and its novel pipeline is poised to generate news” in the second half of 2007. Mr Scala also forecast that the US Food and Drug Administration will approve Merck's HIV treatment candidate Isentress (raltegravir) in the autumn.