Merck has signed a definitive agreement for the acquisition of Viralytic’s Limited. The U.S drug maker is to pay $502 million to buy the Australian public company, focused on oncolytic immunotherapy treatments for a range of cancers.
Merck $502 Million Acquisition
Merck is to pay 1.75 Australian dollars per share, for the biotech company, representing a premium of 160%, to the average stock price over the past month. Once the transaction closes, Viralytic is to become a wholly-owned subsidiary of Merck.
Viralytic’s board has recommended shareholders to unanimously vote in favor of the Merck offer, subject to there being no superior offer from other parties. The merger comes at a time of increased merger and acquisition activities in the biotechnology space. In January alone, deals worth $27.5 billion were signed as company’s explored ways of strengthening their pipelines.
The acquisition presents Merck an opportunity to gain full rights to CAVATAK, an investigational oncolytic immunotherapy that is based on Viralytic proprietary formulation for the oncolytic virus. The candidate drug is currently being evaluated in multiple Phase 1 and Phase 2 clinical trials as an intravenous agent in combination with Merck’s KEYTRUDA.
“Viralytic’s approach of engaging the innate immune system to target and kill cancer cells complements our immuno-oncology strategy, which is focused on the rapid advancement of innovative monotherapy approaches and synergistic combinations to help the broadest range of cancer patients,” said Dr. Roy Baines, chief medical officer, Merck Research Laboratories.
Merck is overly dependent on Keytruda as it is set to account for 14% of its total revenue this year and 25% by 2022. KEYTRUDA is on course to become sales leader among FDA approved drugs in the immuno-oncology space.
The acquisition of Viralytic according to Evercore ISI analyst, Umer Raffat, comes at an interesting time given that the biotech company is set to report clinical tests of its oncolytic virus in combination with KEYTRUDA. Trial results should be out in the second quarter as the company continues to evaluate it for the treatment of melanoma, prostate, lung and bladder cancers.
The acquisition is also set to compliment Merck’s immuno-oncology strategy at a time when it is in dire need of new drugs to strengthen its portfolio. The merger should go a long way in opening up the possibility of new synergistic drug combinations.
Merck’s previous massive deal was the $137 million acquisition of Rigontec GmbH last year. It also has a licensing deal for AstraZeneca’s cancer drug Lynparza