Merck to Acquire Acceleron for $ 11.5 Billion; Cardio drug could cushion the fall from Keytruda Cliff

Keytruda is Merck’s best-selling product by far, but its cancer immunotherapy patents will expire in seven years and the pharmaceutical giant is looking for drugs that could follow suit. Acceleron Pharma’s lead cardiovascular drug candidate has blockbuster prospects, and Merck sees enough promise in the science and addressable market to provide $ 11.5 billion to acquire the company.

The Acceleron drug Sotatercept is in late-stage clinical trials for the treatment of pulmonary arterial hypertension (PAH). Although drugs are available for the rare disease, the disease continues to progress despite treatment, resulting in hospitalization and, in many cases, death. The drug Acceleron has shown signs of effectiveness in treating PAH, and the company believes it has the potential to treat other types of pulmonary hypertension as well.

“There is much progress in cardiovascular disease,” said Dean Li, president of Merck Research Labs, during a conference call Thursday. “We’re a great cancer company. We have a long history of cardiovascular disease. Cardiovascular disease is still a very important unmet need, no unlike cancer. So we see many possibilities. “

According to financial terms announced Thursday, Merck, headquartered in Kenilworth, New Jersey, will pay $ 180 for each Acceleron share. This amount corresponds to a premium of 12.6% compared to the closing price of the company last Thursday and a premium of almost 36% compared to the previous month. Acceleron’s shares had risen sharply as rumors of a possible takeover began to circulate.

Pulmonary arterial hypertension is a rare type of high blood pressure that develops in the blood vessels that carry blood from the heart to the lungs. The cause is unknown, but as it develops it just keeps getting worse. Symptoms are shortness of breath, tiredness, and chest pain. Treatments approved for PAH are vasodilators – they widen blood vessels. One of the available PAH drugs is one from Merck. The company has the rights to commercialize Bayer’s PAH drug riociguat (Adempas) outside of the United States. The Merck pipeline also includes a PAH drug candidate, MK-5475. This inhalable drug, a soluble guanylate cyclase stimulator, is currently in phase 2/3 testing.

Research from Acceleron, based in Cambridge, Massachusetts, focuses on TGF beta, a family of proteins that play a role in regulating cell growth and repair. Li said genetic and preclinical research suggests that PAH results from an imbalance in cell signals, which leads to thickening of the pulmonary vessel. This thickening narrows the blood vessel, puts pressure on the lungs, and increases the workload on the heart. Sotatercept is a man-made protein that is given by subcutaneous injection. Li said the drug rebalances signaling from the TGF-beta family, which has the potential to modify the underlying disease. The drug Acceleron can not only stop the progression of PAH but also reverse it, Li said.

Targeting TGF-beta to treat disease has a precedent. In 2019, the FDA approved Reblozyl, Acceleron’s drug for the treatment of anemia in patients with the rare blood disease beta-thalassemia. This drug was developed in collaboration with Celgene, now part of Bristol Myers Squibb. BMS holds the development and commercialization rights for Reblozyl and pays Acceleron royalties from the sale of the drug. In 2020, Reblozyl had sales of $ 275 million.

Sotatercept was also developed as part of the Celgene partnership that BMS inherited. With the acquisition of Acceleron, Merck retains the rights to Sotatercept to PAH and pays BMS a license fee from the sale of the drug when it hits the market.

During the conference call, Evercore ISI analyst Umer Raffat asked Merck executives how conveniently they would buy Acceleron at a price biotech partner BMS refused to pay. CEO Rob Davis responded that the value attached to Acceleron was based on the specificity of the drug, the confidence that Merck would receive the drug through late development, and the multi-billion dollar commercialization potential.

Davis added that he doesn’t see this takeover being rejected by the Federal Trade Commission. As the agency stepped up its merger and acquisition activities in the pharmaceutical sector, Davis said that sotatercept is an add-on therapy that builds on the current standard of care for PAH. In addition, most PAH patients progress and need additional therapy, and these patients have an unmet need. Sotatercept meets that need with a drug that takes a different approach that is potentially disease-modifying.

“All of these factors are unique to sotatercept,” said Davis. “There are no other drugs in development that fit this profile, either inside or outside Merck. That’s why we have the feeling that this is something unique. “

Citing figures from EvaluatePharma, Merck said the PAH market was $ 5.7 billion in 2019 and is expected to reach $ 7.5 billion by 2026. Merck has a modest cardiovascular portfolio, with none of its current drugs achieving blockbuster status. The company no longer owns the largest cardiovascular products, cholesterol-lowering drugs. Zetia and the combination of Zetia and Zocor marketed as Vytorin generated sales of $ 664 million for Merck last year, but those older products were among the drugs included in the spin-off from Organon earlier this year. In contrast, Keytruda alone had sales of $ 14.4 billion last year. Sotatercept has even more time before it tackles the “patent cliff” that Keytruda is approaching. The patents will expire in 2036 and 2037.

In addition to Sotatercept and Reblozyl, Acceleron has another TGF superfamily program in its pipeline. ACE-1334 is being developed for the treatment of systemic sclerosis-associated interstitial lung disease. Last month, in its report on its second quarter financial results, the company said it expects to start a Phase 1b / 2 study in this indication by the end of 2021.

Patients are still being enrolled in the phase 3 study, which could support a registration application for sotatercept. Further clinical trials that could extend the use of the drug are also ongoing. Merck expects to complete the Acceleron acquisition in the fourth quarter of this year. If a better offer arises and Acceleron accepts it, the biotech owes Merck a termination fee of $ 345 million under the merger agreement. In the meantime, Davis said Merck will continue to look for more deals to expand its pipeline. The drugs and companies Merck is considering could be at any stage of development, and Merck’s search is not tied to any specific therapeutic area, Davis said.

Photo by Flickr user Raul AB under a Creative Commons license


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