Merck & Co. has agreed to acquire Acceleron Pharma for $11.5 billion, the companies said today, in a deal designed to bolster the buyer’s cardiovascular and blood drug portfolios with a Phase III pulmonary arterial hypertension (PAH)drug and a marketed anemia treatment.

Acceleron focuses on developing drugs based on the transforming growth factor (TGF)-beta superfamily of proteins, which has been shown to play a central role in the regulation of cell growth, differentiation and repair.

The company’s lead therapeutic candidate, sotatercept, is a reverse-remodeling agent designed to rebalance TGF-beta superfamily signaling. Sotatercept is in Phase III studies as an add-on to current standard of care for the treatment of PAH, as well as in a Phase II trial in patients with combined post- and pre-capillary pulmonary hypertension in heart failure with preserved ejection fraction.

In an earlier Phase II trial, PULSAR (NCT03496207), sotatercept in combination with approved PAH-specific medicines met its primary endpoint of improvement in pulmonary vascular resistance in patients with PAH. In study results published in April in The New England Journal of Medicine, 24 weeks of treatment with sotatercept resulted in a reduction in pulmonary vascular resistance that was significantly greater than the reduction seen with placebo in patients with pulmonary arterial hypertension. Higher degrees of reduced pulmonary vascular resistance vs. placebo were seen at both dose levels of sotatercept, with the higher dose resulting in a 34% reduction from baseline.

In preclinical models of PAH, sotatercept reversed pulmonary arterial wall and right ventricular remodeling, characteristics associated with the disease. The FDA has granted sotatercept its Orphan Drug and Breakthrough Therapy designations for the treatment of PAH, while the European Commission and European Medicines Agency (EMA) have granted Orphan and Priority Medicines (PRIME) designations.

“Acceleron’s innovative research has yielded an exciting late-stage candidate that complements and strengthens our growing cardiovascular portfolio and pipeline and holds the potential to build upon Merck’s proud legacy in cardiovascular disease,” Rob Davis, Merck’s CEO and president, said in a statement. “Strategic business development is a top priority for Merck as we look to drive sustainable growth and further bolster and balance our pipeline with breakthrough science.”

In addition to sotatercept, Acceleron’s portfolio includes REBLOZYL® (luspatercept-aamt), a first-in-class erythroid maturation recombinant fusion protein approved in the U.S., as well as in Europe, Canada, and Australia for the treatment of anemia in certain rare blood disorders. REBLOZYL is being developed and commercialized through a global collaboration with Bristol Myers Squibb, which has an 11.5% stake in Acceleron.

Days of speculation

The acquisition agreement ends days of speculation touched off when Bloomberg News reported Friday that Acceleron was in talks to be bought by an unnamed acquirer. On Tuesday, The Wall Street Journal reported that Merck was in “advanced talks” to acquire Acceleron, citing unnamed sources.

“The announcement is not surprising given the multiple leaks from the negotiation process but suggests that other bids have not been forthcoming,” Geoffrey C. Porges, MBBS, director of therapeutics research and a senior research analyst with SVB Leerink, wrote this morning in a research note. The firm increased its price target for Acceleron shares to $180 from $148, and reiterated its Market Perform rating for the company.

Merck agreed to acquire Acceleron for $180 a share—about 3% above the company’s closing price yesterday of $175.36, but down 4% from Tuesday’s close. Shares of Acceleron dipped 0.2% to $175.01 in pre-market trading as of 9:06 a.m. ET.

Through a subsidiary, Merck, plans to begin a tender offer to acquire all outstanding shares of Acceleron. The closing of the tender offer will be subject to conditions that include the tender of shares representing at least a majority of the total number of Acceleron’s outstanding shares, receipt of applicable regulatory approvals, and other customary conditions.

Upon the successful completion of the tender offer, Merck’s acquisition subsidiary will be merged into Acceleron, and any remaining shares of common stock of Acceleron will be canceled and converted into the right to receive the same $180 per share price payable in the tender offer.

The acquisition deal is expected to close in the fourth quarter of 2021.

“This agreement with Merck represents the culmination of decades of work by Acceleron researchers successfully leveraging our company’s deep scientific expertise in the biology of the TGF-beta superfamily and driven by an unwavering dedication to delivering life-changing medicines for patients,” added Habib Dable, Acceleron’s CEO and president. “We believe Merck is well-positioned to apply its industry-leading clinical and commercial capabilities to harness the potential of sotatercept as we join together to help make an impact on cardiopulmonary disease for the benefit of patients.”

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