Merck to pay local biotech Oncothyreon $13 million

German pharmaceutical giant Merck will buy the rights to manufacture Oncothyreon's experimental lung cancer vaccine Stimuvax for $13 million, the Seattle-based company said Thursday.

Merck already holds the commercialization and development rights, and now it will take over Oncothyreon's manufacturing plant in Edmonton, Alberta. The move is sparking a restructuring of Oncothyreon as the company refocuses its resources into its own therapies — potentially benefitting its Seattle operations.

The company, which moved its headquarters from Canada to the Puget Sound area last year, said it would lay off off about 8 employees in Edmonton, and two top executives — chief financial officer Edward Taylor and vice-president of synthetic biologics Rao Koganty — will retire.

Oncothyreon will also close its Tucson facility next year and move it to Seattle or outsource its work.

"Our goal with these changes is to create a sustainable team intensely focused on our clinical development activities," said chief executive Robert Kirkman. "By concentrating our activities in a single location with a team solely focused on clinical development activities, we believe we will position Oncothyreon for success in the current challenging environment."

Kirkman said the company could have about 25 employees in Seattle next year — about double the current number.

The sale raises the company's cash level to about $17 million. Oncothyreon expects to spend about $12 million next year.

"Right now it's exceedlingly difficult for smaller companies to raise funds in the capital markets," said Kirkman.

The transaction brings the company "cash that lets us keep going in this environment," he said.

The company's shares closed at 73 cents, down 8.75 percent.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com