Merck in Late-Stage Talks to Acquire Prometheus Biosciences
The move could give the big drugmaker promising immune disease treatments
Merck MRK -0.23% & Co. is in late-stage talks to acquire Prometheus Biosciences Inc., RXDX 1.02% according to people familiar with the matter, a move that could give the big drugmaker promising immune disease treatments.
A deal for Prometheus could be announced as soon as Sunday, the people said, cautioning the talks could still fall apart.
A price tag for the acquisition would likely carry a significant premium. Prometheus had a market cap of $5.4 billion as of Friday’s market close. Its shares are up about 4% year-to-date.
Merck, of Rahway, N.J., has been looking for deals to add new products to its pipeline. It is expecting its top-selling product, cancer therapy Keytruda, to lose patent protection later this decade, leaving Merck with a potentially major drop in revenue.
Keytruda sales last year totaled roughly $21 billion of Merck’s $59.3 billion total. The drug’s patent is forecast to expire in 2028.
Prometheus, of San Diego, develops immune treatments and doesn’t have any approved products. Its lead pipeline drug is in development for treating immune diseases including ulcerative colitis and Crohn’s disease.
Autoimmune drugs are some of the industry’s biggest sellers and can command high prices, but companies are searching for next-generation products. Some top-sellers such as AbbVie Inc.’s arthritis treatment Humira recently began experiencing their first competition from cheaper versions.
Prometheus recently reported separate positive study results in mid-stage testing of its drug for ulcerative colitis and Crohn’s disease and said it would advance the treatment into late-stage trials.
Company sales totaled $6.8 million last year. SVB Securities LLC analysts forecast that will grow to more than $1.6 billion in 2029.
Merck Chief Executive Robert Davis has said that Merck would be active in deal making this year.
Merck recently agreed to acquire blood-cancer biotech Imago BioSciences for $1.35 billion.
There has been a flurry of M&A activity lately in the sector. Pfizer Inc. earlier this year agreed to pay $43 billion for biotech Seagen Inc. and its pioneering class of targeted cancer drugs. In January, there were a number of deal announcements from mostly smaller European drug companies paying big premiums to fill their pipelines.
Late last year, Amgen Inc. agreed to pay about $28 billion to purchase Horizon Therapeutics PLC, marking the largest healthcare deal of 2022.
Drug companies have been hunting for acquisitions, facing revenue drops as top-selling products lose patent protection. Healthcare companies as a whole are also largely seen as recession-resistant, which has insulated the industry somewhat from fears of an economic slowdown.