USA — Pharmaceutical giant Merck & Co has revealed its intentions to purchase Prometheus Biosciences Inc. for around US$10.8 billion.
This move will provide Merck with a promising experimental treatment for Crohn’s disease and ulcerative colitis, and enhance its standing in the field of immunology.
Prometheus, based in California, is a biotechnology firm that focuses on developing treatments for autoimmune diseases. Merck will pay US$200 per share, which is 75.4% higher than Prometheus’ last closing price.
Merck CEO, Robert Davis, stated in an interview that the acquisition will enable the company to move into immunology in a strong way and will offer sustainable growth into the 2030s.
He believes that the long patent life of the acquired drug will help Merck achieve long-term success. The experimental drug PRA023, being developed by Prometheus, is a potential multibillion-dollar seller for Merck.
The drug is being tested for two inflammatory bowel diseases (IBD), ulcerative colitis and Crohn’s disease, as well as other autoimmune conditions. Merck’s decision to acquire Prometheus was driven by the release of promising mid-stage trial results.
The likelihood of a counter-bid is low because other large drugmakers already have significant exposure to IBD or immunology, and Merck represents the cleanest acquirer from an antitrust perspective.
If the deal closes as expected in the third quarter of this year, Merck could initiate a late-stage ulcerative colitis study of the drug in the fourth quarter or first quarter of 2024.
Merck has been looking for deals to protect itself from eventual revenue loss as patents on its blockbuster cancer immunotherapy Keytruda begin to expire toward the end of the decade.
The company reported nearly US$21 billion in Keytruda sales last year. Davis noted that revenue from the Prometheus acquisition could start to come in around the time Keytruda patents are set to expire.
The acquisition of Prometheus is similar to the deal Merck struck in 2021 for Acceleron, which enabled the company to quickly expand its pipeline of cardiovascular drugs.
In the summer of 2022, Merck was in talks to acquire cancer-focused biotech Seagen Inc., but Pfizer ultimately struck a US$43 billion deal for Seagen last month.
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