It’s official. Days after market rumors, Merck unveiled Thursday that it will shell out $11.5 billion to acquire Acceleron.
The crown jewel of the deal—with $180 per share—is Acceleron’s lead clinical candidate and potential first-in-class pulmonary arterial hypertension (PAH) med sotatercept, for which industry watchers have pegged peak sales at $2 billion.
While analysts have flagged potential antitrust scrutiny ahead given Merck’s existing PAH programs, the company’s newly minted CEO Rob Davis dismissed the threat based on sotatercept’s novel mechanism of action.
Davis cast the takeover as an opportunity to grow the company’s cardiovascular portfolio with a special interest in Acceleron’s expertise in the TGF-beta family of proteins, which is known to play a critical role in cell metabolism.
The Acceleron buyout follows Merck’s $773 million purchase of Tilos Therapeutics in 2019, which came with a pipeline of TGF-beta programs for cancer, fibrosis and autoimmune disease. The deal also comes as Merck has been busy striking deals to diversify its offerings beyond immuno-oncology and top-seller Keytruda.
Compared with the heavy investment poured into Keytruda and oncology more broadly, Merck’s heart disease department—which once had legacy cholesterol meds Zetia and Vytorin until the Organon spinoff—has stayed largely quiet until recently. Through a 2014 deal with Bayer, Merck has oral sGC stimulator Adempas for PAH. The two companies in January won an FDA nod for Verquvo to treat chronic heart failure with reduced ejection fraction.
Besides Adempas, Merck also has an inhaled sGC program coded MK-5475 in phase 2/3 development. Pointing to that PAH business overlap, analysts at SVB Leerink have suspected that the Acceleron deal might face pushback from U.S. Federal Trade Commission (FTC). The antitrust review process might be protracted, potentially leading to a forced divestment of MK-5475, the analysts said.
During a conference call Thursday, Davis, while acknowledging the FTC is increasing its antitrust scrutiny into biopharma M&As, said he believes the Acceleron deal is safe. Sotatercept is meant to be an add-on therapy to current standard of care, he noted.
The drug also bears a novel mechanism of action, Davis said. By targeting BMPR-II signaling, it could potentially address the underlying disease of PAH, while other approved treatments target symptoms by dilating blood vessels. In addition, sotatercept could be given as an under-the-skin injection.
“All of those factors are unique to sotatercept; there are no other drugs in development that’s that same profile either within Merck or outside,” Davis said. "While we're excited about it, we see it as complementary, we don't see it as overlapping in a way that would create concern."
Merck said it expects to close the transaction in the fourth quarter.
Sotatercept is in three phase 3 studies, with a potential first approval in 2024. The registrational STELLAR trial evaluates the drug’s ability to improve a PAH patient’s exercise capacity as measured by the six-minute walk distance. Among the trial’s secondary endpoints, time to clinical worsening is important for Merck to seek potential reimbursement of sotatercept, Roy Baynes, Ph.D., chief medical officer of Merck Research Laboratories, said during the call.
Besides sotatercept, Merck also gains Bristol Myers Squibb-partnered anemia drug Reblozyl for certain rare blood disorders. BMS would pay low- to mid-20% royalties to Merck based on Reblozyl sales once Acceleron joins Merck.
As Keytruda rapidly grows—it hit $14.4 billion in 2020—so does Merck’s reliance on the PD-1 inhibitor. So the New Jersey pharma has been turning outside for diversification. In February, Merck put down $1.85 billion for Pandion Therapeutics to gain control of an IL-2 drug for autoimmune diseases. The company also recently acquired VelosBio in a $2.8 billion deal that centers on a ROR1-targeting antibody-drug conjugate for cancer.
As Davis put it during Thursday’s call, Merck will continue to look for external R&D deals. “We are well-positioned financially to complete this transaction or maintaining our ability to pursue additional opportunities,” he said. “Business development remains an important priority for Merck.”