Merck to Acquire Prometheus Biosciences for $10.8 Billion, Bolstering Presence in Immunology

Merck & Co has agreed to acquire Prometheus Biosciences Inc for about $10.8 billion to bolster its presence in immunology. Through one of its subsidiaries, Merck will pay $200 per share for the biotech company that specializes in products for the treatment of immunological diseases. The deal represents a 75% premium to the $114.01 closing price for Prometheus shares on Friday.

The acquisition comes as Merck has been looking for deals to protect itself from eventual revenue loss as patents on its cancer immunotherapy Keytruda begin to expire towards the end of the decade. Merck Chairman and CEO, Robert Davis, says that “the agreement with Prometheus will accelerate our growing presence in immunology where there remains substantial unmet patient need. This transaction adds diversity to our overall portfolio.”

The deal, which was first reported by the Wall Street Journal, is expected to close in the third quarter of the year, subject to Prometheus Biosciences shareholder approval and other customary conditions.

In February, Merck forecasted 2023 earnings below Wall Street estimates and an expected steep decline in sales of its COVID-19 antiviral treatment.

Merck’s acquisition of Prometheus Biosciences is part of the pharmaceutical company’s strategy to diversify its product portfolio and expand its presence in immunology, which is an area of high unmet medical need. Prometheus Biosciences is known for its research and development of precision therapeutics for patients with inflammatory bowel disease (IBD) and other immunological diseases.

Merck’s Keytruda, a cancer immunotherapy, has been a major revenue generator for the company. However, the patent on the drug is set to expire towards the end of the decade, and Merck has been actively seeking to acquire companies and assets that can help offset the expected revenue loss.

The $10.8 billion acquisition of Prometheus Biosciences is one of the largest deals Merck has made in recent years and follows the company’s acquisition of Pandion Therapeutics for $1.85 billion in February. The deal is also expected to strengthen Merck’s position in the immunology market, which is projected to grow at a compound annual growth rate of 9.2% from 2021 to 2028, according to a report by Grand View Research.

The acquisition of Prometheus Biosciences is expected to close in the third quarter of 2023, subject to regulatory approvals and other customary conditions.