Merck Nears $10bn Acquisition of Lung Disease Biotech Verona Pharma

Merck is on the verge of finalizing a $10 billion deal to acquire Verona Pharma, a biotech company specializing in respiratory diseases. This would mark Merck’s largest acquisition in two years as it seeks to strengthen its presence in respiratory medicine.

The deal would bring Verona’s key asset, Ohtuvayre, into Merck’s pipeline. Approved in the U.S. last year for treating chronic obstructive pulmonary disease (COPD), the drug has already exceeded expectations, with 25,000 prescriptions filled by the end of the first quarter. Analysts project the drug could reach peak annual sales of nearly $4 billion by the mid-2030s. Ohtuvayre is also being tested for other lung conditions like asthma, bronchiectasis, and cystic fibrosis, as well as in combination therapies.

Merck’s Largest Deal

If completed, the acquisition would be Merck’s largest since it bought Prometheus Biosciences for $10.8 billion in 2023. Like other major pharma companies, Merck is targeting biotech firms with revenue-generating, approved products to help offset future losses from blockbuster drugs going off-patent.

One major concern is Keytruda, Merck’s cancer drug and the world’s top-selling medicine with nearly $30 billion in annual revenue. Keytruda is expected to face competition from generics and U.S. government price controls starting in 2028.

As part of the proposed deal, Merck would pay $107 per American Depository Share, a 23% premium over Verona’s closing price on Tuesday, valuing the company at approximately $10 billion. Sources close to the negotiations said an announcement could come as early as Wednesday, though nothing is finalized. Merck declined to comment, and Verona has yet to respond.

Verona, headquartered in London and founded in 2005, developed Ohtuvayre as the first new inhaled maintenance therapy for COPD in over 20 years. Unlike traditional steroid-based treatments, it works by targeting two enzymes to open airways and reduce inflammation.

The acquisition would also accelerate Ohtuvayre’s international rollout, complementing Merck’s growing portfolio in respiratory medicine, including Winrevair, a treatment for a rare lung and heart condition acquired through Merck’s $11.5 billion purchase of Acceleron Pharma in 2021.

Since CEO Rob Davis took over in 2021, Merck has been one of the most active big pharma companies in terms of acquisitions and licensing deals. Still, investors have pushed for even more strategic moves to soften the blow of Keytruda’s looming patent expiration.

 

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