German Merck KGaA has closed a licencing agreement with US-based Threshold Pharmaceuticals Inc. The cooperation centres around the hypoxia-activated drug TH-302, which is currently being studied in a global Phase III study. Merck and Threshold hope that the drug candidate will be a treatment for patients with soft tissue sarcoma and people suffering from advanced pancreatic cancer. The treaty is complex. It contains standard components as well as joint development and exclusive distribution rights. Merck paid a19m in advance, and Threshold could pocket more than €400m long-term. Merck needs a fresh supply of drugs. The pharma giant’s management has announced it is implementing cost-saving measures that could affect all areas of the company.