Merck has agreed to purchase Prometheus Biosciences for $10.8bn because the US drugmaker bolsters it pipeline forward of the doable lack of exclusivity over its best-selling most cancers drug later this decade.
The all-cash transaction for Prometheus — a San Diego-based biotech specializing in illnesses attributable to irregular exercise of the physique’s immune system — is the newest signal of a rebound in mergers and acquisitions within the sector following a dip in exercise final 12 months.
Prometheus is growing a monoclonal antibody remedy for ulcerative colitis, a kind of inflammatory bowel illness. It introduced optimistic trial outcomes for its lead drug candidate concentrating on the illness from a mid-stage trial in December and is growing a number of different therapies utilizing machine studying to determine drug targets.
Merck mentioned the deal would strengthen the corporate’s place within the fast-growing area of immunology, the place there may be important unmet affected person want.
“This transaction provides range to our general portfolio and is a vital constructing block as we strengthen the sustainable innovation engine that can drive our progress nicely into the subsequent decade,” mentioned Robert Davis, Merck’s chair and chief government.
Merck has agreed to pay $200 per share for Prometheus, a 75 per cent premium to Friday’s closing worth for the corporate’s shares, that are listed on the Nasdaq.
Merck has been on the hunt for acquisitions over the previous 12 months because it seeks to diversify its pipeline forward of the potential lack of exclusivity on its blockbuster most cancers drug Keytruda. Key patents associated to that drug, which generated virtually $21bn in revenues in 2022, are as a result of expire in direction of the tip of the last decade enabling rivals to launch related merchandise.
The US drugmaker was reportedly in talks with oncology-focused Seagen a couple of potential deal final 12 months however didn’t transfer ahead with a transaction. In March Pfizer swooped on Seagen, asserting a deal for a complete enterprise worth of $43bn, which was the biggest pharmaceutical transaction introduced since AbbVie agreed to purchase Allergan in 2019.
Underneath the phrases of the transaction Merck is buying Prometheus by a subsidiary. The deal, which was first reported by the Wall Avenue Journal, is topic to approval from Prometheus shareholders and regulators. The transaction is anticipated to shut within the third quarter of 2023.
Evan Seigerman, analyst at BMO Capital Markets, mentioned the deal was a significant step for Merck in addressing the looming lack of exclusivity on Keytruda and would broaden the corporate’s comparatively small immunology division.
He mentioned the acquisition might sign a shift in exercise within the pharmaceutical sector in direction of extra aggressive deployment of money to scoop up biotech corporations.
“Prometheus takeout [is] possible a optimistic for Merck and broader Pharma sector, as M&A exercise has begun to thaw,” he mentioned.
