April 16 (Portal) – Merck & Co (MRK.N) announced on Sunday that it will buy Prometheus Biosciences Inc (RXDX.O) for about $10.8 billion to launch a promising experimental treatment for ulcerative colitis and Crohn’s disease and expanding its presence in immunology.
Merck is paying $200 per share for the California-based biotechnology company that specializes in treating autoimmune diseases. That’s a 75% premium to Prometheus’s closing price of $114.01 on Friday.
“This allows us to have a strong entry into immunology and sustainable growth, we believe, given the long patent life well into the 2030s,” said Robert Davis, Merck’s CEO in an interview.
Davis said Prometheus drug PRA023, which is being developed to treat ulcerative colitis, Crohn’s disease and other autoimmune diseases, could be a multibillion-dollar seller for Merck. He said the recent release of encouraging Phase II clinical trial results has caused Merck to pounce.
“We’ve been monitoring their clinical development program for a while,” Davis said.
If the deal closes in the third quarter of this year, as hoped, Merck could start a late-stage ulcerative colitis trial in the fourth quarter or first quarter of 2024, Davis said.
Merck has been scrambling for deals to protect against a possible loss of sales as patents for its blockbuster cancer immunotherapy Keytruda expire later in the decade. The company reported nearly $21 billion in Keytruda sales last year.
Davis said the proceeds from the Prometheus acquisition could materialize around the time the Keytruda patents could potentially expire.
Davis compared the deal to one he struck for Acceleron in 2021, which has allowed Merck to rapidly expand its pipeline of cardiovascular drugs.
“I think we now have a very strong portfolio in the cardiometabolic space. We see this acquisition of Prometheus building a similar portfolio in the immunology space,” Davis said, adding that Merck leverages scale, global reach and significant capital.
Last summer, Merck was reportedly in talks to buy cancer-focused biotech Seagen Inc (SGEN.O), but rival Pfizer Inc (PFE.N) inked a $43 billion deal for Seagen last month.
Davis said Merck will continue to be opportunistic on acquisitions but is agnostic about size.
“We’re looking at where we see the most compelling science, and where that science aligns with the value we’re moving,” Davis said, noting that the company isn’t interested in large transformative or cost-synergy-driven deals.
Merck’s conversations with Prometheus were first reported by The Wall Street Journal.
The company in February forecast 2023 earnings below Wall Street estimates and a sharp drop in sales of its antiviral treatment for COVID-19.
Reporting by Kanjyik Ghosh in Bengaluru; Editing by Tom Hogue
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