UPDATED: Merck Emerges as Frontrunner in Potential $11 Billion Acceleron Buyout
28 Sep 2021
Orphan DrugVaccineFast TrackAcquisition
A Bloomberg report published late on September 24 accelerated rumors that Cambridge, Massachusetts-based Acceleron Pharma is in advanced talks to be acquired in a deal estimated to be worth $11 billion.
Merck & Co.. has now emerged as the frontrunner in the race, apparently having beaten out Bristol Myers Squibb, which currently owns more than 11.5% of Acceleron in company stock. BMS picked up the shares as part of its 2019 purchase of Celgene.
The Wall Street Journal reported Monday that Merck is in advanced talks to acquire Acceleron, citing sources familiar with the matter. Merck appears to be looking to diversify a portfolio that is largely dominated by blockbuster cancer drug Keytruda.
The same people said that an announcement could come this week, providing talks do not fall apart. In its original report, WSJ said that the pricepoint for Acceleron would be about $180-a-share in cash.
Merck previously went on a buying spree that spread from late in 2020 into 2021, acquiring OncoImmune in November, and picking up autoimmune disease drug developer Pandion Therapeutics in February in a 1.85 billion deal. Other acquisitions ncluded VelosBio and Themis.
If the deal for Acceleron goes through, it would be one of Merck's largest and signal an increasing focus on the rare disease space, particularly in the treatments for respiratory and blood diseases where Acceleron focuses.
The rumors had already been percolating as Acceleron’s stock has risen over the past 10 days from $130-a-share in mid-September to $167.65 as the market closed on Friday. The company currently has a market value of $10.2 billion. Shares of the company have climbed 60% in the past year.
The biotech, which went public in 2013, is focused on developing protein therapies to treat certain types of cancer and rare diseases. Of prime attraction value is sotatercept, an investigational reverse-remodeling agent in phase III development for the treatment of pulmonary arterial hypertension (PAH).
In May, Acceleron presented preliminary interim data from its Phase II study of sotatercept at the American Thoracic Society 2021 International Conference showing that the drug was associated with improvements in resting and exercise hemodynamics at week 24. The outcomes were obtained from the first 10 patients evaluated among a total of 21 trial participants.
On Monday, Raymond James analyst Danielle Brill wrote that she thinks most investors would prefer Acceleron wait until Phase III data is available, which is due later in 2022, rather than accept a deal at the $180-per-share pricepoint.
According to Ziad Bakri, a vice president and health care investor at T. Rowe Price, the drug has “a ton of value in it.” Acceleron was recently highlighted by Barron’s as one of “5 biotech names ready for a comeback.”
Acceleron has been on an upward trend the past two years. The company’s one approved drug, Reblozyl, which is part of a global collaboration with BMS, was authorized by the U.S. Food and Drug Administration (FDA) in 2019 for the treatment of anemia in adults with beta thalassemia who require regular red blood cell (RBC) transfusions. This was followed just months later in April 2020 by an approval for the drug in the treatment of anemia in adults with lower-risk myelodysplastic syndromes. Reblozyl netted Acceleron approximately $25.6 million in royalty revenue for Q2 2021 from approximately $128 million in net sales.
A third candidate, ACE-1334, is being developed to treat fibrotic disease. The drug has been granted FDA Fast Track designation in patients with systemic sclerosis-associated interstitial lung disease (SSc-ILD), a rare, progressive autoimmune connective tissue disorder, and Orphan Drug designation for the treatment of systemic sclerosis.
For Merck, the acquisition of Acceleron would be another part of its transition to focus on growth areas that include cancer, vaccines and animal health. The pivot was enabled by the spinoff of slower-growth assets including women's health products and cholesterol treatments into Organon & Co.
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