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Tuesday, Apr 16, 2024
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Merck to buy SD’s Prometheus Biosciences for $10.8B

Merck will buy San Diego-based Prometheus Biosciences for about $10.8 billion, picking up a promising experimental treatment for ulcerative colitis and Crohn’s disease and building up its presence in immunology.

Reuters reported on Sunday (April 16) that Merck will pay $200 per share for the biotechnology company that specializes in treatments for autoimmune diseases, representing a 75.4% premium to Prometheus’ last closing price.

In early trading on Wall Street on Monday, shares of Prometheus Bio stock (NASDAQ: RXDX) soared nearly 70 percent to $193.

“This is allowing us to move into immunology in a strong way and will allow us sustainable growth, we think, well into the 2030s given the long patent life,” Merck Chief Executive Robert Davis said in an interview with Reuters.

Davis said the Prometheus drug, PRA023, being developed to treat two inflammatory bowel diseases (IBD) – ulcerative colitis and Crohn’s disease – and other autoimmune conditions, could be a multibillion-dollar seller for Merck. He said the recent release of encouraging mid-stage trial results drove Merck to pounce.

“We’ve been watching their clinical development program for a while,” Davis said.

If the deal closes in the third quarter of this year as hoped, Merck could launch a late-stage ulcerative colitis study of the drug in the fourth quarter or first quarter of 2024, Davis said.

Merck reportedly has been looking for ways to protect itself from eventual revenue loss as patents on its blockbuster cancer immunotherapy Keytruda begin to expire toward the end of the decade. The company reported nearly $21 billion in Keytruda sales last year.

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