Merck (MRK) to Strengthen Cancer Pipeline With Harpoon Buyout
Merck MRK announced a definitive agreement to acquire Harpoon Therapeutics HARP for an approximate total equity value of $680 million.
The acquisition will strengthen Merck’s oncology pipeline by adding south San Francisco-based Harpoon Therapeutics’ novel class of T cell engagers, which it is developing by leveraging its proprietary Tri-specific T cell Activating Construct platform. The T cell engagers are designed to remain inactive till they reach the tumor.
The company has made significant progress in the development of its lead pipeline candidate, HPN328, a T cell engager targeting delta-like ligand 3 (DLL3).
HPN328 is currently being evaluated in a phase I/II study in certain patients with small cell lung cancer (SCLC) and other neuroendocrine tumor types. The DLL3 ligand is expressed at high levels in SCLC and neuroendocrine tumors.
In October, Harpoon Therapeutics presented positive interim data from the phase I/II study. This was the largest data set so far for HPN328, showing compelling activity of HPN328 with the potential for best-in-class efficacy. The clinical benefit observed in the study, particularly the response data in the 1 mg priming dose cohorts, was encouraging. Merck plans to develop HPN328 in combination with its other pipeline candidates.
Harpoon’s other important pipeline candidate is HPN217, which is being developed in a phase I study for relapsed, refractory multiple myeloma. In September, HPN217 demonstrated early and durable responses at the target dose of 12 mg.
For the acquisition, Merck has offered to pay a price per share of $23.00 in cash, which represents a premium of 118% to Harpoon’s adjusted closing price of $10.55 on Jan 5. Harpoon’s stock was up 111% on Monday.
Harpoon’s stock has risen 179.4% in the past year against a decrease of 1.2% for the industry.
Image Source: Zacks Investment Research
Merck’s stock is up 5.9% in the past year compared with an increase of 13.4% for the industry.
Image Source: Zacks Investment Research
The transaction is expected to be closed in the first half of 2024. The boards of both the companies have approved the transaction.
There have been quite a few merger and acquisition (M&A) deals in the pharma and biotech sector in the past year. Generally, the drug and biotech sector is characterized by aggressive M&A activity. Given that it takes several years and millions of dollars to develop new therapeutics from scratch, large pharmaceutical companies, sitting on huge piles of cash, regularly buy innovative small/mid-cap biotech companies to build out their pipelines. Fast-growing and lucrative markets such as oncology, rare diseases and cell and gene therapy are mostly the focus areas for M&A activities.
On Monday, J&J JNJ also announced a definitive agreement to acquire Ambrx Biopharma AMAM for a total equity value of approximately $2.0 billion. The acquisition will also strengthen J&J’s oncology pipeline by adding the Ambrx’s lead pipeline candidate, ARX517, a prostate-specific membrane antigen targeting antibody drug conjugate, being developed for metastatic castration-resistant prostate cancer.
Similar to the M&A deals of 2023, J&J and Merck’s latest buyout deals show that there is an increasing interest of drugmakers in companies making innovative cancer treatments.
Among the more recent deals, Bristol Myers offered to buy Karuna Therapeutics in December for a total equity value of $14 billion to strengthen its neuroscience portfolio. In October, Bristol Myers said it is acquiring cancer drugmaker Mirati Therapeutics for a total equity value of $4.8 billion-plus contingent value right of approximately $1.0 billion.
AbbVie announced two acquisitions in the month of December, one of neuroscience drugmaker Cerevel Therapeutics for $8.7 billion and the other of cancer biotech ImmunoGenfor for $10.1 billion.
Zacks Rank
Merck has a Zacks Rank #3 (Hold) currently, while Harpoon sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Merck & Co., Inc. Price and Consensus
Merck & Co., Inc. price-consensus-chart | Merck & Co., Inc. Quote
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
Harpoon Therapeutics, Inc. (HARP) : Free Stock Analysis Report
Ambrx Biopharma Inc. (AMAM) : Free Stock Analysis Report
