Merck KGaA Unit Announces Spin Off - Analyst Blog

By Zacks | October 05, 2012 AAA

Merck Serono, the biopharmaceutical division of Merck KGaA (MKGAF), announced the creation of a new company, Asceneuron. Asceneuron is the third spin-off company of Merck Serono, apart from Prexton Therapeutics and Quartz Bio. The new company will focus on developing therapies for the treatment of Alzheimer's disease and Tau protein-related pathologies. These spin-off companies are the result of the company's Entrepreneur Partnership Program, which was launched in April 2012.

Merck Serono further announced that it will invest ¬5 million as seed fund. Asceneuron is set to employ eight of Merck Serono's current employees. The newly formed company will focus on Merck Serono's neurodegenerative programs. The new company will also look for new partnership and licensing opportunities to develop the programs further.  

Notably, in July this year, Merck KGaA's biopharmaceutical division announced the creation of the first spin-off company, Prexton Therapeutics. Prexton was formed to focus on Merck Serono's programs targeting metabotropic glutamate receptors, mGluR3 and mGluR4.

Then in September, Merck Serono created Quartz Bio, its second spin-off company from its Entrepreneur Partnership Program. Quartz Bio will be offering biomarker data management and exploratory biomarker analysis services for the company's pharmaceutical segment.

Merck Serono Entrepreneur Partnership Program is initiated to divest and start-up companies that will further Merck Serono's activities and compounds in various areas. The motive behind the program is to reduce the impact on employment after the closure of the Geneva headquarters in April this year, due to its restructuring plans.

The Merck Serono division is focused on developing, manufacturing and marketing drugs for the treatment of cardiovascular diseases, cancer, neurodegenerative diseases, infertility and selected metabolic disorders. The division faces competition from Roche Holding AG's (RHHBY) Avastin in the oncology field.

Our Recommendation

Merck KGaA currently carries a Zacks #2 Rank (Buy rating) in the short run.

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