- Merck & Co. plans to grow its immuno-oncology pipeline through a nearly $400 million acquisition of Australian drugmaker Viralytics Ltd.
- Viralytics uses oncolytic viruses to create targeted cancer therapies. Its main asset, Cavatak, is a unique formulation of a common cold virus in early- and mid-stage clinical investigations for a variety of cancer types, including lung, prostate and skin. Viralytics has also teamed up with Merck previously to test Cavatak in combination with the big pharma's flagship immuno-oncology drug Keytruda.
- The deal has Merck paying AUD 1.75 (about $0.79) per Viralytics share, reflecting a 160% premium to the target's one-month volume weighted average price per share. Viraltyics' board of directors unanimously supports the takeover, and the companies expect to start implementing the acquisition in June.
Drugmakers can't seem to get enough of immuno-oncology. But the widespread interest has brought with it intense competition, as well as high expectations from investors. Non-small cell lung cancer (NSCLC) has been a particularly tough battleground, with heavyweights like Merck, Bristol-Myers Squibb Company, Roche AG and AstraZeneca plc now wrestling for market share for their respective PD-1/L1 inhibitors.
Amid the tussle, Merck has been able to gain headway against its rivals — boosted especially by a 2016 approval for Keytruda (pembrolizumab) in first-line NSCLC.
Last year, the New Jersey-based company closed much of the gap separating its drug from Bristol's Opdivo (nivolumab). Keytruda sales reached $3.81 billion, up 172% from the $1.40 billion it fetched the year prior. Opdivo sales came in at $4.95 billion, up 31% from the $3.77 billion raked in during 2016.
Not eager to lose its newfound momentum, Merck has tapped into the power of combination therapies to further elevate the Keytruda franchise.
In July, the company struck an $8.5 billion deal with AstraZeneca that allows it to develop and commercialize the British pharma's PARP inhibitor Lynparza (olaparib) as a combo treatment with Keytruda. Merck has also inked several smaller agreements — acquiring German biotech Rigontec GmbH, entering a $374 million research collaboration with Cue Biopharma, Inc. — to build out its immuno-oncology portfolio.
What's more, there are roughly 700 active or recruiting clinical studies of Keytruda currently underway, according to clinicaltrials.gov. The deal with Viralytics may ultimately lift that number even higher.
"Viralytics’s approach of engaging the innate immune system to target and kill cancer cells complements our immuno-oncology strategy, which is focused on the rapid advancement of innovative monotherapy approaches and synergistic combinations to help the broadest range of cancer patients,” Roy Baynes, chief medical officer at Merck Research Laboratories, said in a Feb. 21 statement.