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February 23, 2015 7:00 am ET

Partnership Combines NGM’s Unique Biology-focused Research Platform with Merck’s Late-stage Clinical and Commercialization Strengths to Discover Medicines for Serious Diseases

NGM Biopharmaceuticals, Inc., a privately-held biotechnology company and
Merck (NYSE:MRK), known as MSD outside the United States and Canada,
today announced they have entered into a multi-year collaboration to
research, discover, develop and commercialize novel biologic therapies
across a wide range of therapeutic areas. This agreement will become
effective upon the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act.

“We are very pleased to establish this alliance with Merck, which will
be transformational for NGM, providing us with the resources and
flexibility to pursue our ambitious research and development goals while
preserving our unique drug discovery culture,” said William J. Rieflin,
Chief Executive Officer of NGM. “We look forward to working with Merck
to generate a robust pipeline of therapies with the potential to make a
significant difference in the lives of patients.”

“NGM has developed a uniquely powerful research program that has
permitted identification of novel, and quite consequential, pathways for
metabolic regulation,” said Dr. Roger M. Perlmutter, President of Merck
Research Laboratories. “Through this new collaboration, we hope to apply
Merck’s well-established translational capabilities to advance
innovative biologics that address the needs of patients suffering from
diabetes, metabolic dysregulation, and malignancy.”

The collaboration includes multiple drug candidates currently in
preclinical development at NGM, including NP201, which is being
evaluated for the treatment of diabetes, obesity and nonalcoholic
steatohepatitis (NASH). NGM will lead the research and development of
the existing preclinical candidates and have the autonomy to identify
and pursue other discovery stage programs at its discretion. Merck will
have the option to license all resulting NGM programs following human
proof of concept trials. If Merck exercises this option, Merck will lead
global product development and commercialization for the resulting
products, if approved.

Under the terms of the agreement, Merck will make an upfront payment to
NGM of $94 million and will purchase a 15 percent equity stake in NGM
for $106 million at a price per share that represents a 20 percent
premium to NGM’s most recent financing. Merck will commit up to $250
million to fund all of NGM’s efforts under the initial five-year term of
the collaboration, with the potential for additional funding if certain
conditions are met.

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. Merck will have the option to
extend the research agreement for two additional two-year terms.

“This collaboration brings together our biology-driven research and
development product platform with Merck’s late-stage development and
commercialization expertise, while also enabling NGM to explore exciting
new drug targets,” commented Dr. Jin-Long Chen, Founder and Chief
Scientific Officer of NGM. “Both companies’ commitment to scientific
excellence and willingness to creatively combine our strengths was key
to establishing this relationship.”

NGM’s lead program, NGM282, currently in clinical development for
primary biliary cirrhosis (PBC) and NASH, as well as programs that are
the focus of NGM’s pre-existing collaboration agreements, are not
subject to the option under the Merck collaboration.

NGM Conference Call Information

NGM will host a conference call and live audio webcast today at 9:30
a.m. ET. To participate in the conference call, please dial
1-877-930-8423 (domestic) or 1-253-642-1003 (international) and refer to
conference ID 89756919. The live webcast can be accessed via http://edge.media-server.com/m/p/x7uj3857.

The archived webcast will be available on the Company’s website, www.ngmbio.com,
beginning approximately two hours after the event.

About NGM Biopharmaceuticals

NGM Biopharmaceuticals is a private biopharmaceutical company using a
biology-centric approach to create novel biologics for the treatment of
a broad spectrum of life-threatening diseases. NGM’s lead compound,
NGM282, is in a Phase 2b study for the treatment of PBC. NGM282 has
received Orphan Drug Designations in the U.S. and EU, and has been
granted Fast Track Designation for PBC by the U.S. Food and Drug
Administration. NGM has established collaborations with Merck,
MedImmune, Daiichi Sankyo and JDRF. NGM is financed by The Column Group,
Prospect Ventures, Rho Ventures, Tichenor Ventures, Topspin Ventures and
other leading investors around the world. For more information, please
visit www.ngmbio.com.

About Merck

Today’s Merck is a global healthcare leader working to help the world be
well. Merck is known as MSD outside the United States and Canada.
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 healthcare through
far-reaching policies, programs and partnerships. For more information,
visit www.merck.com
and connect with us on Twitter,
Facebook
and YouTube.

Merck Forward-Looking Statement

This news release 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 Merck’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; Merck’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 Merck’s patents and other protections
for innovative products; and the exposure to litigation, including
patent litigation, and/or regulatory actions.

Merck 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 Merck’s 2013 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).

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Merck
Media Relations:
Pamela Eisele, 267-305-3558
or
Kim Hamilton, 908-740-1863
or
Investor Relations:
Justin Holko, 908-740-1879
or
NGM Biopharmaceuticals
Media Relations:
Tony Plohoros, 908-940-0135
6 Degrees
tplohoros@6degreespr.com
or
Investor Relations:
Beth DelGiacco, 212-362-1200
Stern Investor Relations
beth@sternir.com