Merck & Company Inc MRK on Wednesday announced a GLP-1 agreement with Chinese biopharmaceutical company Hansoh Pharma.

What Happened: Merck and Hansoh entered into an exclusive global license agreement for HS-10535, an investigational preclinical oral small molecule GLP-1 receptor agonist.

Hansoh Pharma granted Merck an exclusive global license to develop, manufacture and commercialize HS-10535. The Chinese biopharmaceutical company will receive an upfront payment of $112 million and up to $1.9 billion in milestone payments. Hansoh will also receive royalties on sales.

“We continue to leverage science-driven business development to augment and complement our robust pipeline,” said Dean Li, president of Merck Research Laboratories.

“Through this agreement, we aim to build on our experience targeting incretin biology to evaluate HS-10535 and its potential to provide additional cardiometabolic benefits beyond weight reduction.”

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As a result of the agreement, Merck said it expects to record a fourth-quarter pre-tax charge of $112 million, or 4 cents per share.

Merck is not due to report its fourth-quarter financial results until February. Analysts currently expect the company to report earnings of $1.83 per share and revenue of $15.43 billion, according to estimates from Benzinga Pro.

MRK Price Action: Merck shares were up 0.83% at $100.89 at the time of writing Wednesday, according to Benzinga Pro.

Photo: courtesy of Merck.