Merck & Co. entered into an up to $430 million collaboration with Abide Therapeutics to discover, develop, and commercialize small molecule therapies designed to treat type 2 diabetes and other metabolic diseases by targeting serine hydrolases.

Abide said today the $430 million will consist of an up-front payment, research funding, and potential milestone payments for three products. Merck will have worldwide commercialization rights to any products that may be developed through the collaboration, with Abide entitled to receive royalty payments on global sales of any such products.

Serine hydrolases comprise a family of enzymes that play a role in human physiological processes. They include regulating CNS signaling, digestion, metabolism, inflammation, blood clotting, and life cycle of viruses and pathogens.

“We are eager to validate unique targets that we hope will lead to the development of novel therapeutics that will benefit patients with diabetes and metabolic diseases,” Alan Ezekowitz, D.Phil., co-founder, president and CEO of Abide Therapeutics, said in a statement. Dr. Ezekowitz had headed the head, bone, respiratory, immunology, endocrine, dermatology, and urology franchises as a senior vp for Merck Research Laboratories during a five-year stint there from 2006–2011.

Abide was co-founded by two professors at the Scripps Research Institute: Dale Boger, Ph.D., Richard and Alice Cramer professor of chemistry; and Benjamin Cravatt, Ph.D., professor and chair of the department of chemical physiology. Abide was funded by Cardinal Partners, where Dr. Ezekowitz has been an entrepreneur-in-residence since April 2011.

The deal with Abide is the second research collaboration announced by Merck this week, and the second announced by Roger Perlmutter since he joined the company as head of its research and development effort. Merck is scrambling to reverse years of R&D setbacks—and thus improve its prospects for recouping sales it has started to lose to patent-cliff expirations of blockbusters.

Merck on Wednesday cut its earnings guidance to investors for 2013 after releasing disappointing first-quarter results that included a 75% year-to-year drop in first-quarter sales of asthma treatment Singulair (montelukast) due to generic competition (down to $337 million), and a 4% decline year-over-year in Q1 sales of diabetes drug Januvia® (sitagliptin) (to $884 million). Perlmutter is carrying out a three- to six-month review of Merck’s R&D operations, with the expectation that they will be restructured.

Diabetes is much on Merck’s mind of late. On Monday, the company announced a collaboration with Pfizer to commercialize its ertugliflozin (PF-04971729), an investigational oral sodium glucose cotransporter (SGLT2) inhibitor being evaluated for type 2 diabetes. Merck agreed to pay Pfizer up to $60 million in undisclosed upfront and milestone payments, plus possible additional payments tied to also undisclosed future clinical, regulatory, and commercial milestones. However, Merck and Pfizer would share potential revenues and certain costs on a 60%/40% basis.

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