Merck & Co. and Sanofi today announced separate multi-billion-dollar acquisitions signaling their intent to bolster their respective oncology pipelines with clinical-phase candidates that have shown promising results so far.
Merck said it would spend about $2.7 billion to buy ArQule, a kinase inhibitor developer based in Burlington, MA. Its lead candidate ARQ 531 is a novel, oral Bruton’s tyrosine kinase (BTK) inhibitor now in a Phase II dose-expansion study for the treatment of B-cell malignancies (NCT03162536).
ARQ 531 is a highly selective, reversible inhibitor designed to block both wild-type BTK and the C481S mutant form of the enzyme, which is commonly associated with resistance to other BTK inhibitors. In early clinical trials, ARQ 531 has shown early signs of anti-tumor activity for the treatment of patients with relapsed or refractory chronic lymphocytic leukemia (CLL) and Richter’s Transformation, as well as a manageable safety profile.
On Tuesday at the 61st American Society of Hematology (ASH) Annual Meeting & Exposition in Orlando, FL, ArQule is set to present final data from the Phase I portion of the ARQ 531 trial.
“ArQule’s focus on precision medicine has yielded multiple clinical-stage oral kinase inhibitors that have novel and important properties,” Roger M. Perlmutter, MD, PhD, president, Merck Research Laboratories, said in a statement. “This acquisition strengthens Merck’s pipeline with the addition of these strategic assets.”
Added ArQule CEO Paolo Pucci: “With this agreement, ArQule’s pipeline will benefit from Merck’s vast capabilities and determined engagement to benefit the patients who we have always strived to serve.”
Investors responded to the acquisition with a buying surge that more than doubled the price of ArQule shares from Friday’s close of $9.66, to $19.58 in premarket trading as of 9:15 a.m. Merck shares inched up 0.39% from Friday’s $88.85 close, to $89.20 in premarket trading.
Through a subsidiary, Merck plans to launch a tender offer to acquire all outstanding shares of ArQule at $20 a share. The closing of that offer will be conditions that include the tender of shares representing at least a majority of the total number of ArQule’s outstanding shares, and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Merck said its acquisition subsidiary will be merged into ArQule, which is based in Burlington, MA, and any remaining shares of common stock of ArQule will be canceled and converted into the right to receive the same $20 per share price payable in the tender offer. The transaction is expected to close early in the first quarter of 2020.
Sanofi pursues I/O platform
Also today, Sanofi said it will shell out $2.5 billion for Synthorx, in a deal the buyer said will give it a proprietary immuno-oncology platform that is synergistic with Sanofi’s existing therapeutic platforms.
San Diego-based Synthorx focuses on developing treatments for cancer and autoimmune disorders. The company’s lead immuno-oncology product candidate, THOR-707, is a variant of interleukin-2 (IL-2) that is being assessed in a Phase I/II trial (NCT04009681) in multiple solid tumor types as a single agent and in combination with immune checkpoint inhibitors.
“This acquisition fits perfectly with our strategy to build a portfolio of high-quality assets and to lead with innovation,” Sanofi’s new CEO Paul Hudson said in a statement, a day before he will lead executives in informing investors how they plan to strengthen the company’s pipeline and performance at its Capital Markets Day.
Sanofi and Synthorx said THOR-707 has the potential to become a best-in-class IL-2 therapeutic for solid tumors by showing improved pharmacology, less frequent dosing, and therapeutic superiority when compared to other IL-2 compounds. As a result, the companies said, THOR-707 is envisioned as a foundation of future IO-IO combinations as well as offering multiple combination opportunities with Sanofi’s clinical and preclinical oncology assets, including with PD-1, CD-38, and molecules that modulate effector T-cells and natural killer cells.
“By selectively expanding the numbers of effector T-cells and natural killer cells in the body, THOR-707 can be combined with our current oncology medicines and our emerging pipeline of immuno-modulatory agents for treating cancer,” stated John Reed, MD, PhD, global head of research & development at Sanofi. “Moreover, Synthorx’s pipeline of engineered lymphokines has great promise not only for oncology but also for addressing many autoimmune and inflammatory diseases.”
The companies reason that Synthorx’s Expanded Genetic Alphabet platform can be used alone and in combination with other existing Sanofi platforms, including Nanobody® technology, to produce a variety of novel biologics, including drug conjugates, protein fusions, and multi-specific biologics, with applications beyond oncology and extending to other therapeutic areas.
Sanofi agreed to commence a cash tender offer to acquire all outstanding shares of Synthorx common stock for $68 per share in cash for a total enterprise value of approximately $2.35 billion. The $68 per share acquisition price represents a nearly triple (172%) premium to Synthorx’s closing price of $25.03 on Friday.
Shares of Synthorx traded at $67.43 in premarket trading as of 9:26 a.m., while Sanofi shares on Euronext Paris dipped 0.81% to €82.88 ($91.77).
“We are grateful that Sanofi has acknowledged the value of our Expanded Genetic Alphabet platform and the potential of our pipeline of optimized therapeutics for cancer and autoimmune disorders,” added Synthorx president and CEO Laura Shawver, PhD. “Importantly, Sanofi has a portfolio of therapeutics that holds incredible promise for combining with our cytokine Synthorins to benefit patients around the world.”
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