(Bloomberg) – Merck & Co. has agreed to buy Acceleron Pharma Inc. for approximately $ 11.5 billion, further strengthening its portfolio of therapies to treat rare diseases.
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Acceleron shareholders will get $ 180 per share in cash, a 34% premium over the price at the end of last month, but below the share’s intraday highs this week. Shares started to soar in mid-September, and Bloomberg reported on September 24 that the company was in advanced sell-off talks.
Merck has come under pressure to expand sales beyond Keytruda, a successful cancer drug that accounts for more than a third of its revenue. He is one of several companies that are looking for future successful drugs through acquisitions, including Sanofi, Pfizer Inc., Amgen Inc., Gilead Sciences Inc. and Roche Holding AG. Earlier this year, AstraZeneca Plc bought rare disease specialist Alexion Pharmaceuticals Inc. in a $ 39 billion mega-deal as the UK drugmaker moves into a lucrative new area of medicine.
“We see this as an important step in diversifying our portfolio and our pipeline,” said Rob Davis, CEO of Merck, in an interview. He sees the potential for multi-billion peak sales “in this important period approaching the end of this decade and continuing well into the next decade.”
Davis took over from longtime Merck CEO Kenneth Frazier in July and is on a list of new leaders to head the company. Davis said he is looking to put the company on a new path through agreements and research and development investments.
The deal is expected to close in the fourth quarter and will be funded by a mix of cash and debt, the companies said in a statement Thursday. Acceleron stock was down 0.3% at 11:06 am New York, while Merck stock was up 1%.
Acceleron’s pipeline focuses on a particular type of protein that plays a central role in the regulation of cell growth, differentiation and repair. The company’s lead candidate is a pulmonary arterial hypertension drug called sotatercept, which is in late development. Acceleron’s portfolio also includes Reblozyl, a treatment for anemia in rare blood disorders that is approved in the United States, Europe, Canada and Australia, and is in development with Bristol Myers Squibb Co.
Wall Street analysts said the deal should help reduce Merck’s reliance on Keytruda.
“This acquisition makes sense for Merck on several levels, including strategic and organizational, as well as from an investment thesis perspective,” said Daina Graybosch, analyst at SVB Leerink. The potential payoff for Merck depends on the success of sotatercept in pulmonary arterial hypertension, where it could cost around $ 180,000 per year in the United States, Graybosch said. It has an “outperformance” rating on Merck shares.
Pulmonary arterial hypertension is expected to represent a $ 7.5 billion market by 2026 and there is a significant need for new treatments, said Frank Clyburn, executive vice president and president of human health at Merck, at ‘a call to investors on Thursday morning.
Davis said Merck must continue to expand its drug pipeline and will pursue deals “of all sizes.” In particular, he said the company is interested in oncology, among other areas. He said he was ready to borrow more and consider lowering the rating if the right opportunity arose.
“At the highest level, we continue to have the capacity and the track record to close deals of all sizes,” he said.
Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. acted as financial advisers to Merck, and Covington & Burling LLP and Gibson, Dunn & Crutcher LLP were its legal advisers. Centerview Partners LLC and JP Morgan Securities LLC were financial advisers to Acceleron and Ropes & Gray LLP its legal counsel.
(Add Merck CEO comment in fourth paragraph, analyst in ninth.)
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