- Best known for its dominant position in immuno-oncology, Merck & Co. announced Tuesday plans to diversify its cancer drug pipeline through a $2.7 billion acquisition of ArQule.
- For Merck, ArQule's most interesting drug inhibits a protein known as Bruton's tyrosine kinase, or BTK, and is in a Phase 2, dose expansion study of hard-to-treat blood cancers. Phase 1 data announced Monday at the American Society of Hematology's annual conference found 8 of 9 heavily pretreated patients with a certain form of leukemia responded to the drug.
- Kinase inhibitors have been a hot area for biopharma dealmaking, with BTK-targeting drugs especially attractive. At least four acquisitions over the past decade revolved around BTK inhibitors, including the $21 billion purchase of Pharmacyclics that gave AbbVie access to Imbruvica, a blood cancer drug that brought in $3.5 billion in revenue last year.
The BTK space is heating up. In addition to Imbruvica (ibrutinib), the Food and Drug Administration has approved AstraZeneca's Calquence (acalabrutinib) and, most recently, BeiGene's Brukinsa (zanubrutinib) as treatments for various hematological malignancies. Eli Lilly is also in the mix, with a BTK inhibitor picked up through its Loxo Oncology acquisition progressing through the clinic.
Despite the competition, ArQule's drug may offer some valuable differentiation. Evercore ISI analyst Umer Raffat points out that ARQ 531, as the drug is known, binds to the BTK protein in a different manner than Imbruvica, Calquence or Brukinsa, and has data showing its benefit in patients whose disease progressed after Imbruvica treatment.
That potential is surely part of the reason Merck is paying a more than 100% premium to bring ArQule under its banner.
Terms of the agreement have Merck, through a subsidiary, paying $20 for every ArQule share, resulting in a deal valued at roughly $2.7 billion. ArQule shares were trading at $9.66 apiece at Friday's market close.
The companies expect their deal to close in the first quarter of 2020.
For ArQule, which was founded in 1993, the acquisition would close out a 25-year rollercoaster ride. Early interest in the biotech's chemistry platform resulted in more than two dozen partnerships, including with pharma heavyweights like Abbott Laboratories, SmithKline Beecham and Pfizer.
Clinical setbacks, however, have dinged ArQule and its share value in recent years. The company's stock was trading at about $1 a pop in August 2017. In July of this year, the value breached its initial public offering level of $12 for the first time in years.