Merck & Co has recently announced its acquisition of Prometheus Biosciences for $10.8 billion. Experts say this move will broaden Merck’s immunology portfolio, adding an experimental treatment for ulcerative colitis and Crohn’s disease, among other autoimmune conditions. Merck will acquire Prometheus for $200 per share, which is slightly more than 75% above Prometheus’ previous closing price. This acquisition is part of Merck’s larger strategy to diversify its product offering and protect itself from patent loss.
Merck’s CEO, Robert Davis, says that the acquisition is strategic for the company, helping them expand their presence in immunology and further enhancing their pipeline. The company’s recent release of mid-stage trial positive results also drove Merck to acquire Prometheus. Davis believes that the recently-developed treatment drug by Prometheus, PRA023, which is developed to cure inflammation in ulcerative colitis and Crohn’s disease, could result in lucrative sales for Merck.
According to Stifel analyst Annabel Samimy, Merck’s acquisition is significant, and the likelihood of a counter-bid is slim. She says that PRA023 is a “game-changing asset” for Merck. This deal is set to be completed by the third quarter of 2021, and Merck will launch late-stage ulcerative colitis studies by the fourth quarter or the first quarter of 2024.
This acquisition comes as Merck’s patents for its Keytruda cancer immunotherapy begin to expire at the end of the decade. Merck reported $21 billion in Keytruda sales alone last year. Robert Davis says that revenue from the acquisition could start to roll in around the time the patents expire.
Merck has been looking for deals to protect its business but remains open to acquisitions of any size. It can deploy significant capital and bring scale, global reach to the table. Industry experts predict that the acquisition of Prometheus Biosciences is a strong move by the company, and there’s now an expectation that Merck will be announcing more high profile deals over the coming year.
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