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Merck, Pfizer team up to develop diabetes drug

NEW YORK (AP) -- Merck & Co. said Monday that it will work with Pfizer Inc. to develop a new drug designed to treat Type 2 diabetes.

The companies will study Pfizer's experimental pill ertugliflozin, which is expected to move into late-stage testing this year. They will also study the drug combination pills that combine ertugliflozin with Merck's drug Januvia and a combination of ertugliflozin and metformin, an older diabetes drug. Merck said it paid Pfizer $60 million upfront and could make additional payments based on clinical development, regulatory review and sales of the new pill if it is approved.

Merck and Pfizer will split revenue from the product and some of the costs on a 60-40 basis, with Merck getting the larger share of the revenues and expenses.

Shares of Merck added 16 cents to $48.02 in afternoon trading and Pfizer shares gained 46 cents to $30.55.