UPDATE 1-Merck, Portola in pact to develop blood thinner

* Merck to pay Portola $50 mln as initial fee

* Portola eligible for payments up to $420 mln

* Merck shares fell 1 pct in light premarket trading

CHICAGO, July 9 (Reuters) - Merck & Co Inc MRK.N said on Thursday it bought exclusive rights from Portola Pharmaceuticals to develop and commercialize an oral blood thinner used to prevent stroke in patients with atrial fibrillation, one of the most common abnormal heart rhythms.

The drug, betrixaban, an investigational oral Factor Xa inhibitor anticoagulant, is currently in Phase II clinical development.

Several drugmakers are developing anticoagulant drugs in the Factor Xa inhibitor class. This class is under development to help address the limitations of current blood thinners such as warfarin, the most frequently prescribed anticoagulant in North America. Warfarin is associated with risks of bleeding, as well as drug and food interactions.

Under the terms of the deal, Merck will pay Portola an initial fee of $50 million. Portola is eligible for additional cash payments of up to $420 million upon achievement of certain milestones. Portola is also eligible to receive double-digit royalties on worldwide sales.

Merck will assume all development and commercialization costs, including the costs of Phase III clinical trials.

Portola has an option to co-fund Phase III clinical trials in return for additional royalties.

Merck shares fell 27 cents to $27.77 in light premarket trading. (Reporting by Debra Sherman; Editing by Derek Caney)