Merck & Co is acquiring a portfolio of follow-on biologics from fellow US firm Insmed as well as the latter’s manufacturing plant in Boulder, Colorado.

Under the terms of the deal, Insmed will receive initial payments of up to $10 million for its two lead generic biologic candidates, INS-19 and INS-20, and another $120 million once the agreement is finalised, targeted for March 31. After fees, Insmed expects to net $123 million from the deal and is not entitled to any royalties or further milestone payments.

INS-19 is a follow-on of Amgen’s Neupogen (filgrastim), an investigational recombinant granulocyte-colony stimulating factor (G-CSF) drug that will be evaluated in Phase III trials to see if it prevent infections in cancer patients receiving chemotherapy. INS-20, is a pegylated recombinant G-CSF designed to allow for less frequent dosing, and is in Phase I.

Insmed's pipeline “presents the opportunity to expedite Merck's entry into the biologics marketplace as well as providing unique manufacturing resources and an experienced team of protein experts," said Frank Clyburn, general manager of the firm’s new Merck BioVentures unit. The latter was set up at the end of last year as part of the New Jersey-based major’s strategy of becoming a big player in the generic biotech marketing place.

As for Insmed, it said that the initial $10 million payments will allow the company “to maintain its normal business operations” to the end of March “without the need for dilutive financing”. Chief executive Geoffrey Allan added that the deal “will transform and strengthen our balance sheet” and it “provides us with substantial financial flexibility in a market where cash, especially for small biotech companies, is scarce".