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Merck to Buy Australian Firm to Boost Immunotherapy Pipeline
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Merck & Co., Inc. (MRK - Free Report) has proposed to buy Viralytics Limited, an Australian pharmaceutical company that develops oncolytic immunotherapies for a range of cancers, for $394 million (502 million Australian dollars).
We believe the deal makes strategic sense and strengthens Merck’s presence in the fast growing immuno-oncology market. Immuno-oncology or immunotherapy is a new class of cancer therapy that utilizes certain parts of the immune system to fight the disease. This can be done by stimulating the immune system to attack cancer cells or by introducing immune system components into the body. Immuno-oncology drugs and their combinations are in great demand
With the deal, Merck will gain Viralytics’s lead pipeline candidate Cavatak, an oncolytic virus, which engages the innate immune system to attack and kill cancer cells.
Cavatak is being evaluated in several phase I/II cancer studies including a combination study with Merck’s PD-1 inhibitor, Keytruda. The Cavatak/Keytruda combination is being studied in melanoma, prostate, lung and bladder cancers, per a deal signed by the companies in November 2015.
Early clinical data on Cavatak demonstrated robust potential in a wide variety of tumor types, both as a monotherapy or in combination studies.
In the past year, Merck’s shares have underperformed the industry. Merck’s shares have declined 16.4% in the period against an 11.6% increase for the industry.
Merck has offered to pay 1.75 Australian dollars for each share of the Sydney-based company, which represents a premium of 160% to Viralytics average stock price over the past month. Merck will acquire Viralytics through a subsidiary. The transaction is expected to be completed by the second quarter of 2018, contingent on Viralytics shareholder approval.
Importantly, Cavatak complements Merck’s pipeline efforts for Keytruda, its second largest drug.
Keytruda is already marketed for many types of cancers and treatment settings including lung cancer, melanoma, head and neck cancer, classical Hodgkin’s lymphoma and bladder cancer.
It is also being studied for more than 30 types of cancer in more than 700 studies, including more than 400 combination studies.
The latest offer by Merck is one of the many mergers and acquisitions expected this year now that the tax reforms are in place. The new tax law, which cuts corporate tax rate from 35% to 21% and encourages companies to bring back huge cash held overseas at a one-time tax rate of 10%, is expected to spur merger activity this year.
Biotech/pharma M&A activity has started to gain steam with Sanofi (SNY - Free Report) and Celgene announcing two deals each.
Sanofi, earlier this year, announced deals to buy Belgian biotech company, Ablynx and haemophilia focused biotech, Bioverativ. Celgene also announced deals to buy Juno Therapeutics, Inc. , which focuses on the development of CAR-T therapies and Impact Biomedicines, which will add a late-stage JAK2 kinase inhibitor, to Celgene’s pipeline.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Merck to Buy Australian Firm to Boost Immunotherapy Pipeline
Merck & Co., Inc. (MRK - Free Report) has proposed to buy Viralytics Limited, an Australian pharmaceutical company that develops oncolytic immunotherapies for a range of cancers, for $394 million (502 million Australian dollars).
We believe the deal makes strategic sense and strengthens Merck’s presence in the fast growing immuno-oncology market. Immuno-oncology or immunotherapy is a new class of cancer therapy that utilizes certain parts of the immune system to fight the disease. This can be done by stimulating the immune system to attack cancer cells or by introducing immune system components into the body. Immuno-oncology drugs and their combinations are in great demand
With the deal, Merck will gain Viralytics’s lead pipeline candidate Cavatak, an oncolytic virus, which engages the innate immune system to attack and kill cancer cells.
Cavatak is being evaluated in several phase I/II cancer studies including a combination study with Merck’s PD-1 inhibitor, Keytruda. The Cavatak/Keytruda combination is being studied in melanoma, prostate, lung and bladder cancers, per a deal signed by the companies in November 2015.
Early clinical data on Cavatak demonstrated robust potential in a wide variety of tumor types, both as a monotherapy or in combination studies.
In the past year, Merck’s shares have underperformed the industry. Merck’s shares have declined 16.4% in the period against an 11.6% increase for the industry.
Merck has offered to pay 1.75 Australian dollars for each share of the Sydney-based company, which represents a premium of 160% to Viralytics average stock price over the past month. Merck will acquire Viralytics through a subsidiary. The transaction is expected to be completed by the second quarter of 2018, contingent on Viralytics shareholder approval.
Importantly, Cavatak complements Merck’s pipeline efforts for Keytruda, its second largest drug.
Keytruda is already marketed for many types of cancers and treatment settings including lung cancer, melanoma, head and neck cancer, classical Hodgkin’s lymphoma and bladder cancer.
It is also being studied for more than 30 types of cancer in more than 700 studies, including more than 400 combination studies.
The latest offer by Merck is one of the many mergers and acquisitions expected this year now that the tax reforms are in place. The new tax law, which cuts corporate tax rate from 35% to 21% and encourages companies to bring back huge cash held overseas at a one-time tax rate of 10%, is expected to spur merger activity this year.
Biotech/pharma M&A activity has started to gain steam with Sanofi (SNY - Free Report) and Celgene announcing two deals each.
Sanofi, earlier this year, announced deals to buy Belgian biotech company, Ablynx and haemophilia focused biotech, Bioverativ. Celgene also announced deals to buy Juno Therapeutics, Inc. , which focuses on the development of CAR-T therapies and Impact Biomedicines, which will add a late-stage JAK2 kinase inhibitor, to Celgene’s pipeline.
Merck carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>