Dive Brief:
- Merck & Co. is beefing up its cancer pipeline, announcing Monday it will pay $680 million to buy Harpoon Therapeutics for its armory of dual-acting immunotherapies targeting lung, abdominal and blood cancers.
- Merck agreed to pay $23 per Harpoon share, a 118% premium to the company’s $10.55 closing price Friday. Harpoon went public four years ago at $14 a share. Shares rose as high as $228 apiece in mid-2020, but, like many biotechs, the company’s valuation tumbled as investor enthusiasm for biotech waned.
- Harpoon has had a difficult few years, laying off nearly half of its employees as cash ran low, briefly suspending enrollment in a study of its lead experimental drug because of safety concerns and consolidating shares to meet Nasdaq requirements. A $150 million private share sale in October extended its funding into 2026.
Dive Insight:
In 2028, Merck faces the possible loss of market exclusivity for its biggest product, Keytruda, which accounted for nearly half of its pharmaceutical revenue over the first nine months of 2023. Aiming to maintain its market share, Merck has been developing a subcutaneous formulation and testing the drug in new combinations.
But the New Jersey-based drugmaker must also rely on new products to sustain revenue growth. That will require finding next-generation products to build on drugs like Keytruda, which turn the body’s immune system onto diseased tumor cells.
Merck reportedly discussed a possible buyout of antibody-drug conjugate pioneer Seagen before Pfizer won out with a $43 billion offer. That hasn’t deterred Merck from seeking deals for antibody-drug conjugates, which combine the tumor-targeting capabilities of man-made antibodies with the cell killing power of chemotherapies. In October, it announced an alliance worth up to $22 billion with Japan-based Daiichi Sankyo, which developed the AstraZeneca-marketed ADC Enhertu.
The buyout of Harpoon involves another rapidly developing class of drugs called “bispecific” antibodies. These biologic drugs turn immune cells onto tumor cells by binding to proteins on both, and so far have gained approval in blood cancers.
However, there is strong interest in applying them to solid tumors like lung cancer. In Harpoon’s case, the company has advanced an experimental drug in small cell lung cancer, which now can be treated with chemotherapies and immunotherapies like Roche’s Tecentriq.
Harpoon’s drug, HPN328, homes in on a protein called DLL-3, which was the same target used by AbbVie’s drug rova-T, an ADC shelved after disappointing trial results. HPN328 is looking more promising, having shrunk tumors in 48% of treated small cell lung cancer patients. The company also has been testing it in combination with Tecentriq.
The company paused trial enrollment of patients with a type of cancer called neuroendocrine tumors after two severe cases of an immune response that’s common in patients given bispecific drugs, one of which resulted in a patient death from respiratory failure. The trial was revised to lower a priming dose in these patients and to exclude any patient requiring oxygen support.