Merck to buy Prometheus for $10.8bn

Merck & Co. will add monoclonal antibody (mAb) candidate PRA023 to its pipeline by acquiring Prometheus Biosciences for $10.8 billion.

Merck & Co. (known as MSD outside North America and Canada) will pay Prometheus, a Californian-based clinical-stage biotechnology firm that focuses on treatments for autoimmune diseases, $200 per share in cash to acquire the firm.

Merck will gain Prometheus’ lead asset PRA023, which is a humanized mAb targeted to tumor necrosis factor (TNF)-like ligand 1A (TL1A) to treat immune diseases like ulcerative colitis (UC) and Crohn’s disease (CD).

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“The agreement with Prometheus will accelerate our growing presence in immunology where there remains substantial unmet patient need. This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable innovation engine that will drive our growth well into the next decade,” said Robert Davis, CEO of Merck.

“Prometheus’ lead candidate is PRA023, which works via a novel mechanism of action and has demonstrated strong proof-of-concept results in ulcerative colitis and Crohn’s disease. PRA023 has the potential to be a foundational treatment and transform standard of care for these patients, including through a precision medicine approach.”

The transaction is anticipated to close in the third quarter of 2023 but is subject to specific closing conditions.

Evercore ISI analyst Umer Raffat said, “the deal is rich on valuation, but a good asset.” Raffat also noted that with the financials of the deal nearly reaching $11 billion, Merk is “paying [a] 75% premium for Prometheus.”

Merck bolstered its presence in the immunology space in February 2021 with its acquisition of Pandion Therapeutics for $1.85 billion. Under the terms of the deal, the firm gained Pandion’s lead candidate, bispecific antibody PT101, for the treatment of UC and systemic lupus erythematosus.