Merck (NYSE:MRK) has announced a definitive agreement to acquire Eyebiotech Limited (EyeBio), a London-based private biotech company specializing in therapies for retinal diseases. This acquisition aims to expand Merck’s footprint in the growing ophthalmology market.

Key Details of the Acquisition

Lead Pipeline Candidate: The acquisition will bring EyeBio’s lead pipeline candidate, Restoret, into Merck’s portfolio. Restoret is a novel Wnt agonist antibody being developed to treat retinal diseases such as diabetic macular edema (DME) and neovascular age-related macular degeneration. It is currently in a phase Ib/IIa study named AMARONE.

Clinical Data: In February, EyeBio announced promising first-in-human data from the AMARONE study, showing strong visual and anatomic outcomes. This data established proof of concept by demonstrating that activating the Wnt pathway in the retina reduces vascular leakage, providing the first clinical evidence validating the Wnt pathway in the eye.

Future Plans: Based on the positive results, EyeBio plans to advance Restoret to a pivotal phase IIb/III study for DME in the second half of 2024. Additionally, the acquisition will add several preclinical candidates for retinal diseases to Merck’s pipeline.

Financial Terms and Impact

Payment Structure: Merck will make an upfront payment of $1.3 billion for EyeBio. The deal also includes up to $1.7 billion in future milestone payments, potentially bringing the total value of the transaction to $3 billion.

Approval and Timeline: The transaction, which has been approved by the boards of both companies, is expected to close in the third quarter of 2024. Merck will record a charge of 50 cents per share for the acquisition in the quarter in which the deal closes.

Merck’s Recent Acquisition Activity

Merck’s stock has risen 15.5% this year, outperforming the industry’s 14.5% increase. In recent years, Merck has been active in mergers and acquisitions:

Harpoon Therapeutics: In March, Merck completed its acquisition of Harpoon Therapeutics, adding HPN328, a T cell engager targeting delta-like ligand 3, to its portfolio. HPN328 is being evaluated in a phase I/II study for small-cell lung cancer and other neuroendocrine tumors.

Prometheus Biosciences: In 2023, Merck acquired Prometheus Biosciences, adding MK-7240, a novel TL1A inhibitor for immune-mediated diseases like ulcerative colitis and Crohn’s disease, to its pipeline.

Industry Context

Merck’s announcement follows another significant deal in the biotech industry. Johnson & Johnson (JNJ) recently agreed to acquire global rights to NM26, a phase II-ready bispecific antibody for atopic dermatitis, from Numab Therapeutics for $1.25 billion.

Regulatory Update

In a separate announcement, Merck revealed that the FDA has granted priority review to a supplemental biologics license application (sBLA) for its PD-1 inhibitor, Keytruda. The application seeks approval for Keytruda as a first-line treatment for unresectable advanced or metastatic malignant pleural mesothelioma. This sBLA is based on data from the phase II/III KEYNOTE-483 study, which showed that Keytruda significantly improves overall survival compared to chemotherapy alone. The FDA’s decision is expected by September 25, 2024.

This series of strategic acquisitions and regulatory advances underscores Merck’s commitment to expanding its therapeutic capabilities and maintaining a strong growth trajectory in the biopharmaceutical sector.

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