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January 3, 2019 6:30 am ET

KENILWORTH, N.J. & SOUTH SAN FRANCISCO, Calif.–(BUSINESS WIRE)–Merck (NYSE:MRK), known as MSD outside the United States and Canada, and
NGM Biopharmaceuticals, Inc. (NGM) today announced that Merck has
exercised its option to license NGM313, an investigational monoclonal
antibody agonist of the β-Klotho/FGFR1c receptor complex that is
currently being evaluated for the treatment of nonalcoholic
steatohepatitis (NASH) and type 2 diabetes. This is part of the
companies’ broad strategic collaboration to discover, develop and
commercialize novel biologic therapeutics announced in 2015.

“We are pleased with the progress of this collaboration and look forward
to future developments with NGM that build upon Merck’s industry-leading
position in metabolic diseases,” said Dr. Joe Miletich, senior vice
president, preclinical and early development, Merck Research
Laboratories. “Merck is committed to advancing candidates with the
potential to have a meaningful impact in the treatment of metabolic
diseases, including NGM313 for NASH.”

With the exercise of this one-time option, which was triggered by NGM’s
completion of a proof-of-concept clinical study of NGM313, Merck gains
exclusive worldwide rights to develop, manufacture and commercialize
NGM313, now renamed MK-3655, and related compounds. In connection with
the option exercise, NGM received a $20 million payment from Merck. NGM
retains an option, at the initiation of the first Phase 3 clinical trial
for MK-3655, to participate in up to 50 percent of a global cost and
revenue sharing arrangement for MK-3655. If NGM does not exercise its
option, NGM is eligible for further payments associated with the
progress of MK-3655 development, as well as commercial milestone
payments and tiered royalties ranging from low double digit to mid-teen
percentage rates on product sales.

“Merck’s decision to exercise its option for NGM313 provides a strong
endorsement of NGM’s powerful drug discovery engine and our ability to
translate our novel biologic insights in the clinic,” said Dr. David
Woodhouse, chief executive officer of NGM. “The Phase 1b data we
presented last year demonstrate NGM313’s potential as a potent,
once-monthly insulin sensitizer for the treatment of both NASH and type
2 diabetes. We look forward to Merck’s advancement of this program
through clinical development to potentially address the substantial
unmet medical need for a single treatment that addresses
pathophysiological states common to both diseases.”

In November 2018, NGM presented positive findings from a Phase 1b
proof-of-concept clinical trial of NGM313 in obese, insulin resistant
subjects with nonalcoholic fatty liver disease (NAFLD) at AASLD’s The
Liver Meeting^® 2018. In the study, preliminary data indicated
that a single dose of NGM313 resulted in a statistically significant
reduction in liver fat content (LFC) and improvements in multiple
metabolic parameters after five weeks. Based on these data, Merck
intends to advance NGM313 into a Phase 2b study to evaluate the effect
of NGM313 on liver histology and glucose control in NASH patients with
or without diabetes.

About MK-3655 (NGM313)

MK-3655 (formerly known as NGM313) is a proprietary, investigational
agonistic antibody that selectively activates the β-Klotho/FGFR1c
receptor complex. NGM313 binds to a unique epitope of β-Klotho,
resulting in the selective activation of FGFR1c and signaling through
one of the metabolic pathways utilized by FGF21-based ligand therapies.
It does not trigger signaling through other FGF receptors, such as
FGFR2c, FGFR3c or FGFR4. In Phase 1 studies, NGM313 has demonstrated
potential as a once-monthly injectable insulin sensitizer.

Type 2 Diabetes, Insulin Resistance and NASH

Insulin resistance has been implicated as a key condition leading to
hepatic steatosis and, subsequently, NASH, a life-threatening form of
liver disease. An estimated 65% of type 2 diabetes patients have NASH.
The presence of type 2 diabetes is associated with worse liver disease
and, in patients with NAFLD and NASH, type 2 diabetes is associated with
more severe hepatic and adipose tissue insulin resistance, and more
advanced liver steatosis, inflammation and fibrosis by liver histology.
In addition, administration of insulin may increase steatosis, making
the treatment of patients with type 2 diabetes and NASH challenging. The
role of insulin resistance and hyperglycemia in the pathogenesis of
NAFLD suggests that improving insulin sensitivity and normalizing
glucose levels could prevent the development of NASH and progression of
disease.

About Merck and NGM’s Collaboration

In 2015, Merck and NGM entered into a broad multi-year strategic
collaboration to research, discover, develop and commercialize novel
biologic therapies across a wide range of therapeutic areas. In addition
to a $94 million upfront payment and purchase of $106 million of NGM’s
preferred stock, Merck committed up to $250 million to fund NGM’s
research and development efforts under the initial five-year term of the
collaboration, with the potential for additional funding if certain
conditions are met. Merck has the option to extend the research
agreement for two additional two-year terms.

The collaboration includes an exclusive worldwide license to NGM’s
growth differentiation factor 15, or GDF15, program. Merck has a
one-time option to license all resulting collaboration programs
following human proof of concept trials. Upon exercising such options,
Merck will lead global product development and commercialization for the
resulting products, if approved. Prior to Merck initiating a Phase 3
study for a licensed program, NGM may elect to either receive milestone
and royalty payments or, in certain cases, to co-fund development and
participate in a global cost and revenue share arrangement of up to 50
percent. The agreement also provides NGM with the option to participate
in the co-promotion of any co-funded program in the United States.

NGM’s fibroblast growth factor 19, or FGF19, program, including NGM282,
is excluded from the agreement and remains wholly owned by NGM.

About Merck

For more than a century, Merck, a leading global biopharmaceutical
company known as MSD outside of the United States and Canada, has been
inventing for life, bringing forward medicines and vaccines for many of
the world’s most challenging diseases. Through our prescription
medicines, vaccines, biologic therapies and animal health products, we
work with customers and operate in more than 140 countries to deliver
innovative health solutions. We also demonstrate our commitment to
increasing access to health care through far-reaching policies, programs
and partnerships. Today, Merck continues to be at the forefront of
research to advance the prevention and treatment of diseases that
threaten people and communities around the world – including cancer,
cardio-metabolic diseases, emerging animal diseases, Alzheimer’s disease
and infectious diseases including HIV and Ebola. For more information,
visit www.merck.com
and connect with us on Twitter, Facebook, Instagram,
YouTube
and LinkedIn.

About NGM Biopharmaceuticals, Inc.

NGM Bio is a clinical stage biopharmaceutical company focused on
developing novel therapeutics based on scientific understanding of key
biological pathways underlying cardio-metabolic, liver, oncologic and
ophthalmic diseases. The company leverages its biology-centric drug
discovery approach to uncover novel mechanisms of action and generate
proprietary insights that enable it to move rapidly into
proof-of-concept studies and deliver potential first-in-class medicines
to patients. NGM aspires to operate one of the most productive research
and development engines in the biopharmaceutical industry, with multiple
programs in clinical development. Visit www.ngmbio.com
for more information.

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the
“company”) includes “forward-looking statements” within the meaning of
the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements are based upon the current beliefs
and expectations of the company’s management and are subject to
significant risks and uncertainties. There can be no guarantees with
respect to pipeline products that the products will receive the
necessary regulatory approvals or that they will prove to be
commercially successful. If underlying assumptions prove inaccurate or
risks or uncertainties materialize, actual results may differ materially
from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry
conditions and competition; general economic factors, including interest
rate and currency exchange rate fluctuations; the impact of
pharmaceutical industry regulation and health care legislation in the
United States and internationally; global trends toward health care cost
containment; technological advances, new products and patents attained
by competitors; challenges inherent in new product development,
including obtaining regulatory approval; the company’s ability to
accurately predict future market conditions; manufacturing difficulties
or delays; financial instability of international economies and
sovereign risk; dependence on the effectiveness of the company’s patents
and other protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or otherwise. Additional factors that could cause results
to differ materially from those described in the forward-looking
statements can be found in the company’s 2017 Annual Report on Form 10-K
and the company’s other filings with the Securities and Exchange
Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

Merck Media:
Pam Eisele
(267) 305-3558

Claire Gillespie
(267) 305-0932

Merck Investors:
Teri Loxam
(908) 740-1986

Michael DeCarbo
(908) 740-1807

NGM Media:
Liz Melone
(617) 256-6622
media@ngmbio.com

NGM Investors:
ir@ngmbio.com