Merck & Co., Inc. (NYSE: MRK) has been busy this year. After securing a licensing deal with Cocrystal (NASDAQ: COCP) for proprietary influenza A/B antiviral agents in January, the company found two biotechnology start-ups to bolster its cancer treatment portfolio.
First, in February Merck bought Immune Design for $5.85 per share in cash, for an approximate value of $300 million (135.8x trailing 12-month revenue). The target company is a late-stage immunotherapy company employing in-vivo approaches to enable the body’s immune system to fight disease.
Through this acquisition, Merck gained Immune Design’s proprietary technologies, GLAAS and ZVex, which are engineered to activate the immune system’s natural ability to generate and/or expand antigen-specific cytotoxic immune cells to fight cancer and other chronic diseases.
Exactly two months later, Merck announced its acquisition of Peloton Therapeutics, Inc. for $1.05 billion, plus another $1.15 billion contingent on meeting future regulatory and sale milestones.
Peloton is a clinical-stage biopharmaceutical company focused on developing novel small molecule therapeutic candidates targeting hypoxia-inducible factor-2a (HIF-2a) to treat patients with cancer and non-oncology diseases. Its lead development candidate is PT2977, a novel oral HIF-2 alpha inhibitor in late-stage development for renal cell carcinoma (RCC).
Merck isn’t the only company trying to get ahead in the oncology portfolio race. Acquisitions in the biotechnology sector with a cancer treatment focus have been steady so far in 2019. Eli Lilly and Company (NYSE: LLY) posted its largest deal yet to broaden its cancer treatment efforts when it bought Loxo Oncology for $8 billion. AstraZeneca plc (NYSE: AZN) secured a global collaboration agreement with Daiichi Sankyo Company for trastuzumab deruxtecan, a proprietary antibody-drug conjugate (ADC) and potential new targeted medicine for cancer treatment. That deal cost AstraZeneca $1.35 billion upfront, half then and the rest in 12 months, plus an additional $5.55 billion in potential milestone payments.
We don’t expect these types of deals to slow down. Much like 2018, these deals have been a huge focus for the biotech and pharmaceutical industry in 2019.