Merck & Co. (NYSE:MRK) is in the final stages of negotiations to acquire Harpoon Therapeutics Inc., a cancer drug manufacturer, for $680 million. This strategic move aims to strengthen Merck’s position in the lucrative field of oncology.
In an official statement released on Monday, Merck disclosed its intention to purchase Harpoon at a rate of $23 per share, confirming an earlier report by Bloomberg News. This offer represents more than a twofold increase over Harpoon’s closing stock price on the preceding Friday. Following this announcement, Harpoon’s shares, which had already experienced a 41% gain in the past year, surged by 111% during early trading in New York, while Merck’s shares remained relatively stable.
As Merck’s top-selling drug, Keytruda, faces potential pricing challenges by the end of the decade, the pharmaceutical giant is actively seeking new avenues for growth. Keytruda, a cancer immunotherapy, generated a substantial $20.9 billion in revenue in 2022, solidifying its status as one of the world’s best-selling drugs.
Harpoon Therapeutics specializes in developing drugs that utilize the body’s immune system to combat cancer, focusing on types such as lung cancer and multiple myeloma. The company’s innovative technology involves T-cell engagers, drugs designed to leverage a patient’s immune system to eliminate tumor cells. Harpoon’s lead candidate targets delta-like ligand 3, a molecule expressed at elevated levels in small cell lung cancer and neuroendocrine tumors. Currently in an early-stage trial as a standalone treatment for certain advanced cancers, it is also being studied in combination with an existing immunotherapy for small cell lung cancer.
Analysts, including Evan David Seigerman from BMO Capital Markets, view Merck’s acquisition of Harpoon as a strategic move with significant value. While Harpoon’s data is in the early stages, it shows promise and provides Merck with an opportunity to expand its pipeline into a promising therapeutic target.
Merck has been actively diversifying its product portfolio through external collaborations. In October, the company secured the rights to sell three experimental cancer drugs from Daiichi Sankyo Co. in a deal worth $4 billion upfront and up to $22 billion in potential future payments. Additionally, in April, Merck announced a $10.8 billion agreement to acquire Prometheus, a company specializing in autoimmune drugs.
The acquisition of Harpoon is anticipated to conclude in the first half of 2024, according to Monday’s statement. Merck has enlisted Evercore Inc. as its financial adviser, while Centerview Partners is advising Harpoon on the deal.
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