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Merck’s reported $11B Acceleron buy could help it diversify beyond Keytruda, but antitrust hurdles loom

Merck has emerged as a finalist to acquire Acceleron for around $11 billion. The deal dovetails with the Big Pharma company’s plan to diversify beyond its immuno-oncology megablockbuster Keytruda, but overlapping businesses could attract antitrust scrutiny, two analysts say.

Merck is in advanced talks to buy Acceleron in what could be one of the New Jersey drugmaker’s biggest deals, The Wall Street Journal reported Monday, citing people familiar with the matter. The price tag would land around $180 per share for a total of over $11 billion, Bloomberg reported Friday.

If successful, the deal would give Merck the FDA-approved anemia drug Reblozyl, which Acceleron markets with partner Bristol Myers Squibb. But the real focus is sotatercept, an experimental drug for pulmonary arterial hypertension (PAH), and that med could spell trouble for the deal with regulators, SVB Leerink analysts Daina Graybosch, Ph.D., and Geoffrey Porges said in separate notes Tuesday.

Merck entered the PAH space in 2014 through a licensing deal with Bayer on first-in-class sGC modulator Adempas. And Merck recently pushed an inhaled sGC agent, MK-5475, into a phase 2/3 trial in PAH.

Sotatercept does have a different mechanism of action: It is designed to restore BMPR-II signaling, a driver of PAH. While keeping both sotatercept and MK-5475 would strengthen Merck’s PAH presence, doing so would likely “cause regulatory scrutiny and slow deal close,” Graybosch said in her note. The U.S. Federal Trade Commission might require Merck to divest MK-5475, Porges wrote in his note. Another explanation? It’s possible “that program has run into obstacles promoting this overture,” he added.

Acceleron’s PAH candidate could reach over $2 billion in peak sales by Porges’ estimate, constituting about two-thirds of Acceleron’s current value, he said. Assuming sotatercept is successful, Porges put Acceleron’s share price at $182, which makes the reported deal price a fair offer, he figured.

Merck has long been under investor pressure to reduce its reliance on Keytruda, even as the PD-1 inhibitor expands its lead across a range of cancer types. About half of Merck’s 2026 sales will come from Keytruda, and the addition of Acceleron would reduce that percentage to 48% if sotatercept successfully launches by 2024, Graybosch predicts.

Beyond the obvious injection of additional revenues, “Merck could realize significant cost synergies with the transaction, as it absorbs the program teams and cuts overhead,” Graybosch said.

What’s more, Merck is moving from a strengthened balance sheet after its $9 billion spinoff of Organon, Porges noted. As of the second quarter, the New Jersey pharma had $8.6 billion in cash and a relatively low debt-to-EBITDA ratio of 1.4x.

Merck may look like a reasonable new home for Acceleron, but other companies with interests in cardiovascular disease and enough cash could throw their hats in the ring, Porges suggested.

BMS would be a natural bidder, and the best fit in Porges’ view, given its existing 11.5% stake in Acceleron, which it got from the Celgene acquisition. BMS CEO Giovanni Caforio, M.D., has confirmed the company’s intention to secure its growth path for the second half of the decade by seeking out deals.

Cardiovascular disease is also a core focus area at BMS, as evident in its recent $13.1 billion acquisition for Myokardia, developer of obstructive hypertrophic cardiomyopathy candidate mavacamten. Sotatercept could “contribute to a cadence of launches in the cardiovascular space” for BMS, Porges said.

Pfizer, which has largely been quiet on the M&A front in recent years, could also be a potential acquirer. Pfizer’s experience in pulmonary hypertension includes Revatio, which is marketed by Viatris, and Viagra, plus a CDK4/6 inhibitor dubbed PF-06842874 in phase 1 development for PAH, Porges noted.

As for PAH bigwig Johnson & Johnson, it’s unlikely to make a move, Porges said, despite having plenty of financial firepower to pull off such a deal. J&J claims over 50% of the PAH market thanks to its 2017 acquisition of Actelion. That would make an Acceleron acquisition difficult to get past antitrust regulators.