Drug giants Merck & Co and Pfizer have formed a new alliance to jointly develop and commercialise the latter's ertugliflozin for the treatment of type II diabetes.

The drug is an investigational oral sodium glucose cotransporter (SGLT2) inhibitor, which is on the verge of entering Phase III trials, scheduled for later this year. 

Under the terms of the global (except Japan) collaboration agreement, the firms will work together on the clinical development of ertugliflozin, as well as combinations of the drug with Merck's diabetes pill Januvia (sitagliptin) and metformin.

Merck has already handed over $60 million in upfront fees and milestones, but Pfizer also stands to receive additional payments linked to preset future clinical, regulatory and commercial milestones.

The companies said they will share any revenues and some costs on a 60/40% basis.

“Through this collaboration, we believe we can build on Merck’s leadership position in diabetes care with the introduction of ertugliflozin, an innovative SGLT2 inhibitor discovered by Pfizer scientists,” noted John Young, president and general manager, Pfizer Primary Care.