April 16 (Reuters) – Merck & Co (MRK.N) stated on Sunday it should purchase Prometheus Biosciences Inc (RXDX.O) for about $10.8 billion, selecting up a promising experimental remedy for ulcerative colitis and Crohn’s illness and increase its presence in immunology.
Merck pays $200 per share for the California-based biotechnology firm that focuses on therapies for autoimmune illnesses, representing a 75.4% premium to Prometheus’ final closing value.
Shares of Prometheus had been buying and selling at $194.49 earlier than the bell on Monday.
“That is permitting us to maneuver into immunology in a powerful manner and can enable us sustainable progress, we predict, properly into the 2030s given the lengthy patent life,” Merck Chief Govt Robert Davis stated in an interview.
Davis stated the Prometheus drug, PRA023, being developed to deal with two inflammatory bowel illnesses (IBD) – ulcerative colitis and Crohn’s illness – and different autoimmune situations, could possibly be a multibillion-dollar vendor for Merck. He stated the latest launch of encouraging mid-stage trial outcomes drove Merck to pounce.
“We have been watching their medical growth program for some time,” Davis stated.
The probability of a counter-bid is slim as different giant drugmakers have already got a significant publicity to IBD or immunology, and Merck represents the cleanest acquirer from an antitrust perspective, stated Stifel analyst Annabel Samimy.
“Merck has acquired a game-changing asset in PRA023,” stated Samimy.
If the deal closes within the third quarter of this yr as hoped, Merck may launch a late-stage ulcerative colitis examine of the drug within the fourth quarter or first quarter of 2024, Davis stated.
Merck has been on the lookout for offers to guard itself from eventual income loss as patents on its blockbuster most cancers immunotherapy Keytruda start to run out towards the top of the last decade. The corporate reported almost $21 billion in Keytruda gross sales final yr.
Davis stated income from the Prometheus acquisition may begin to roll in across the time Keytruda patents probably expire.
Davis in contrast the deal to at least one he struck in 2021 for Acceleron, which allowed Merck to shortly construct out its pipeline of cardiovascular medicine.
“I consider now we’ve a really sturdy portfolio within the cardiometabolic house. We see this acquisition of Prometheus constructing out an analogous portfolio within the immunology house,” Davis stated, including that Merck brings scale, international attain and vital capital to deploy.
Final summer season, Merck was reportedly in talks to purchase most cancers centered biotech Seagen Inc (SGEN.O), however rival Pfizer Inc (PFE.N) ended up putting a $43 billion deal for Seagen final month.
Davis stated Merck would proceed to be opportunistic on acquisitions, however is agnostic about measurement.
Merck’s talks with Prometheus had been first reported by the Wall Avenue Journal.
The corporate in February forecast 2023 earnings under Wall Avenue estimates and a steep decline in gross sales of its COVID-19 antiviral remedy.
Reporting by Kanjyik Ghosh in Bengaluru; Modifying by Tom Hogue
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