Source: Merck
On June 16, 2023, Merck announced the successful completion of its acquisition of Prometheus Biosciences, making Prometheus a fully-owned subsidiary of Merck. As a result, the common stock of Prometheus will no longer be listed or traded on the Nasdaq Global Market.
“The Prometheus acquisition accelerates our growing presence in immunology, augments our diverse pipeline and increases our ability to deliver patient value. This transaction is another example of Merck acting strategically and decisively when science and value align. Prometheus brings us a potential best-in-class candidate that creates an opportunity for us to transform treatment for patients with immune-mediated diseases. We are excited to welcome our Prometheus colleagues to Merck and we look forward to working together, driven by our common purpose of saving and improving lives.”
– Robert M. Davis, chairman and chief executive officer, Merck
One of the key assets gained from the acquisition is Prometheus’ leading clinical candidate, PRA-023, which will now be known as MK-7240. MK-7240 is a humanized monoclonal antibody targeting tumor necrosis factor-like ligand 1A (TL1A), a factor associated with intestinal inflammation and fibrosis. It is being developed for the treatment of immune-mediated diseases, such as ulcerative colitis (UC), Crohn’s disease (CD), and other autoimmune conditions. Positive results from Phase 2 studies, including ARTEMIS-UC and APOLLO-CD, evaluating the safety and efficacy of MK-7240 in patients with UC and CD, were recently presented at the 18th Congress of European Crohn’s and Colitis Organisation (ECCO).
Under the terms of the agreement, Merck acquired all outstanding shares of Prometheus for $200.00 per share in cash, resulting in a total equity value of approximately $10.8 billion. It’s important to note that Merck’s previous financial outlook did not account for the Prometheus acquisition or any other significant potential business development transactions.
Since the acquisition is being treated as an asset acquisition, Merck will record a charge of around $10.3 billion, or roughly $4.00 per share. This charge will impact both second-quarter and full-year 2023 GAAP and non-GAAP results. Additionally, the transaction is expected to have a negative impact on earnings per share (EPS) of approximately $0.25 in the first 12 months following the acquisition’s completion. This is mainly due to investments in advancing pipeline assets and financing costs, with around half of the impact occurring in the second half of 2023.
Merck follows a policy of providing updates to its financial outlook each quarter. Investors and analysts should take into account the expenses mentioned above when considering the financial outlook issued on April 27, 2023. Merck plans to provide an updated financial outlook when reporting second-quarter 2023 results in August.
“At Merck we have deep expertise in clinical development with a proven record of implementing precision medicine strategies. By combining our strengths, Merck and Prometheus are well-positioned to advance MK-7240 and additional pipeline candidates.”
– Dr. Dean Y. Li, president of Merck Research Laboratories
