Merck MRK announced that it has entered into a definitive agreement with Cayman Islands-based privately-held biotech company Curon Biopharmaceutical to acquire the latter’s next-generation CD3xCD19 bispecific antibody candidate, CN201.
Per the terms of the agreement, Merck, through a subsidiary, will acquire worldwide rights to CN201. In return, Curon will get an upfront cash payment of $700 million. In addition, Merck will also be entitled to pay up to $600 million in milestone payments to Curon.
Currently, Curon is evaluating CN201 in a phase I study for relapsed or refractory (r/r) non-Hodgkin’s lymphoma (NHL) and a phase Ib/II study for r/r B-cell acute lymphocytic leukemia (ALL). While early data from these studies has shown that the drug is effective against both these hematologic malignancies, Merck believes that the drug has potential as a novel treatment for autoimmune diseases.
The transaction with Curon is expected to close by the end of this quarter. MRK anticipates a pre-tax charge of about $750 million, which includes the upfront payment and other transaction costs when the deal closes. Per management, this transaction will impact non-GAAP earnings by 28 cents per share in the quarter in which the deal closes.
Year to date, Merck’s shares have risen 5.1% compared with the industry’s 19.4% growth.
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In the past couple of years, the company has been quite active on the merger and acquisition front. Among more recent acquisition deals, last month, it closed two acquisitions — privately-held EyeBio and the aqua business of Elanco Animal Health Incorporated ELAN.
The Eyebio buyout added novel Wnt agonist antibody Restoret, which is being developed in a phase Ib/IIa study for treating retinal diseases like diabetic macular edema (DME) and neovascular age-related macular degeneration. The acquisition of Elanco’s aqua business strengthened MRK’s position in the aqua industry, adding innovative products like Clynav (a vaccine for Atlantic salmon against pancreas disease) and Imvixa (an anti-parasitic sea lice treatment).
Earlier in March, Merck closed its previously announced agreement to acquire Harpoon Therapeutics. This acquisition added its lead pipeline candidate, HPN328, a T-cell engager targeting delta-like ligand 3, to Merck’s portfolio. HPN328 is currently being evaluated in a phase I/II study in certain patients with small-cell lung cancer and other neuroendocrine tumor types.
Last year, Merck acquired Prometheus Biosciences, which added MK-7240 to its pipeline. MK-7240, a novel TL1A inhibitor, is being developed for treating immune-mediated diseases, including ulcerative colitis, Crohn’s disease and other autoimmune conditions.
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Zacks Rank & Key Picks
Merck currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the overall healthcare sector include Entrada Therapeutics TRDA and Fulcrum Therapeutics FULC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Entrada Therapeutics’ 2024 loss per share have improved from 14 cents to 13 cents. Estimates for 2025 have improved from $3.44 to $3.21 during the same period. Year to date, shares of Entrada Therapeutics have lost 7.1%.
Earnings of Entrada Therapeutics beat estimates in two of the last four quarters while missing the mark on two other occasions. Entrada delivered a four-quarter average earnings surprise of 42.18%.
In the past 60 days, estimates for Fulcrum Therapeutics’ 2024 loss per share have improved from $1.24 to 48 cents. Estimates for 2025 have improved from $1.71 to $1.51 during the same period. Year to date, shares of Fulcrum Therapeutics have risen 31.2%.
Earnings of Fulcrum Therapeutics beat estimates in each of the last four quarters. Fulcrum delivered a four-quarter average earnings surprise of 393.18%.
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