The move is pivotal for Merck as it seeks alternative revenue streams, considering potential pricing pressure on its top-selling medicine, the cancer immunotherapy Keytruda.
In a strategic move to strengthen its position in the oncology sector, Merck is set to acquire cancer drugmaker Harpoon Therapeutics for $680 million. This acquisition, aimed at diversifying Merck's sources of growth, underscores the company's commitment to maintaining leadership in the oncology space.
Merck will pay $23 per share for Harpoon, based in South San Francisco, marking more than double Harpoon's last closing share price on Friday. This deal has been confirmed in a statement released by Merck following an earlier report by Bloomberg News.
Harpoon's stock, which experienced a 41% gain in the past year, soared by a record-breaking 112% in New York, while Merck's shares saw a modest increase of 0.1%.
The move is pivotal for Merck as it seeks alternative revenue streams, considering potential pricing pressure on its top-selling medicine, the cancer immunotherapy Keytruda, towards the end of this decade. Keytruda, with a remarkable performance in 2022, generating $20.9 billion in sales, is currently one of the world's best-selling drugs.
In light of recent deals, Merck has revised its long-term sales outlook for its pipeline of cancer drugs. The company anticipates over $20 billion in annual sales from experimental cancer drugs by the mid-2030s, doubling its previous projection of over $10 billion.
Sharing thoughts, Dr Dean Y Li, president, Research Laboratories, Merck, said, "At Merck, we continue to enhance our oncology pipeline through strategic acquisitions that complement our current portfolio and advance breakthrough science to help address the needs of people with cancer worldwide."
Harpoon Therapeutics specialises in developing drugs that leverage the body's immune system to combat cancer, mainly focusing on lung tumours and multiple myeloma.
The company's technology involves T-cell engagers, designed to eliminate tumour cells using a patient's immune system. Harpoon's lead candidate targets delta-like ligand 3, a molecule found at elevated levels in small-cell lung cancer and neuroendocrine tumours.
The lead drug is currently in an early-stage trial as a single agent for patients with certain advanced cancers. According to Dean Li, it is also being studied with an existing immunotherapy for small-cell lung cancer, addressing a critical area within lung cancer.
This acquisition is part of Merck's ongoing efforts to augment its product portfolio by incorporating external drug candidates.
In October, the company secured the rights to sell Daiichi Sankyo Co's three experimental cancer drugs in a deal worth $4 billion upfront and up to $22 billion, including potential future payments. In April, Merck also announced a $10.8 billion deal for Prometheus, a manufacturer of autoimmune drugs.
The deal with Harpoon is expected to conclude in the first half of 2024, as outlined in the statement. Evercore Inc. provides financial advisory services for Merck, while Centerview Partners advises Harpoon on the transaction.
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