Just months after striking its $11.5 billion deal for Acceleron Pharma, Merck & Co. has telegraphed its plans to cut back at its newly acquired unit.
Merck is laying off a clutch of Acceleron staffers in Cambridge, Massachusetts, according to a Worker Adjustment and Retraining (WARN) notice published by the state this week. The job cuts, which will affect 143 employees, will occur between May 31 and Nov. 18, a Merck spokesperson confirmed via email.
Acceleron is headquartered in the Boston suburb at 128 Sidney Street, the company says on its website.
“On Tuesday, March 15, Merck issued a Worker Adjustment and Retraining Notification Act (“WARN”) notice to 143 legacy employees of Acceleron Pharma who will be separating from the company in a phased manner through November 18, 2022," Merck's spokesperson said.
Around the time of the buyout, employees were either offered a full-time role or asked to stick around to support the integration for a preset period of time, the spokesperson said.
"As part of the ongoing integration of Acceleron, we have extended more than 160 offers since November 2021, of which 75% have accepted positions since the acquisition was announced," she said.
Merck’s $11.5 billion Acceleron buyout was one of the largest M&A deals of 2021—and it was also among the most contentious. The deal wrapped up in November despite antitrust concerns and protests from rebel Acceleron investors.
The takeover let Merck get its hands on Acceleron’s lead clinical candidate sotatercept, a potential first-in-class therapy for pulmonary arterial hypertension (PAH) that could hit $2 billion to $3 billion in peak sales, as well as marketed anemia med Reblozyl (luspatercept), which generated $551 million in full-year 2021 sales. Reblozyl owner Bristol Myers Squibb will pay low- to mid-20% royalties to Merck based on Reblozyl sales now that Acceleron is flying Merck’s flag.
Last fall, some of Acceleron’s shareholders pushed back against the transaction, arguing it offered a premium well below previous deals within the sector and significantly undervalued the company. They recommended Merck and Acceleron wait until after the FDA’s review of sotatercept in PAH.
In addition, the takeover faced antitrust concerns tied to sotatercept. Merck already has a Bayer-partnered drug for PAH dubbed Adempas, and it’s developing an inhaled follow-up that’s now in phase 2/3 trials. As a result, the New Jersey-based drugmaker had to refile its premerger notification with the Federal Trade Commission in November to give the agency extra time for review. The deal closed on Nov. 22.
Since then, Reblozyl has hit a delay in an expansion bid. The FDA's new decision date for the drug's application to treat anemia in adults with non-transfusion-dependent (NTD) beta thalassemia is in late June.
Meanwhile, just last week, Merck told Fierce Pharma it was shutting down production at its Cherokee manufacturing facility in Danville, Pennsylvania, sometime in 2024. The decision will ultimately affect about 300 full-time jobs, with layoffs set to occur in phases “over a number of years,” the company said.
Editor's note: This story has been updated with comments from Merck & Co. Additionally, the article originally cited a Worker Adjustment and Retraining Notification Act notice that incorrectly stated the layoffs would affect 170 employees. The number of employees is actually 143, Merck confirmed.