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In a move to solidify its leadership in the lucrative oncology space, pharmaceutical giant Merck & Co. has entered into advanced talks to acquire cancer drugmaker Harpoon Therapeutics Inc. for $680 million.
The acquisition underscores Merck’s commitment to seeking new sources of growth, especially as its flagship cancer immunotherapy, Keytruda, faces potential pricing pressures in the coming decade.
The deal, which has been confirmed by both companies, involves Merck paying $23 per share for Harpoon Therapeutics, representing more than double Harpoon’s closing share price on the preceding Friday.
The South San Francisco-based biotech firm, with its stock having gained an impressive 41% in the past year, experienced a staggering 111% surge in early trading on the announcement day.
Harpoon Therapeutics specializes in developing innovative drugs that leverage the body’s immune system to combat cancer, with a particular focus on lung cancer and multiple myeloma.
The company’s proprietary technology involves T-cell engagers, a class of drugs designed to utilize the patient’s own immune system to eliminate tumor cells.
The lead candidate in Harpoon’s pipeline targets a molecule known as delta-like ligand 3, which is expressed at elevated levels in small-cell lung cancer and neuroendocrine tumors.
Currently undergoing an early-stage trial as a single agent for patients with specific advanced cancers, it is also being investigated in combination with an existing immunotherapy for small-cell lung cancer.
Evan David Seigerman, an analyst at BMO Capital Markets, sees Merck’s move as a strategically sound investment, stating, “While data for Harpoon is early, it is promising and allows Merck to expand its pipeline into a promising target.”
The acquisition aligns with Merck’s broader strategy of actively bolstering its product portfolio through agreements with external drug candidates.
Merck has recently engaged in similar endeavors to enhance its product offerings. In October, the company finalized an agreement to acquire the rights to sell Daiichi Sankyo Co.’s three experimental cancer drugs, involving a substantial upfront payment of $4 billion and potential future payments reaching up to $22 billion.
Additionally, in April, Merck announced a $10.8 billion deal for Prometheus, a notable autoimmune drug manufacturer.
The Harpoon Therapeutics acquisition is anticipated to conclude in the first half of 2024, according to the official statement released on Monday. Financial advisory for Merck is provided by Evercore Inc., while Centerview Partners is advising Harpoon on the transaction.
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