Merck & Co. (NYSE:MRK) To Acquire OncoImmune For $425 Million For Its COVID-19 Treatment

Merck & Co. (NYSE:MRK) has announced that it will acquire Rockville-based OncoImmune for cash consideration of $425 million to obtain its COVID-19 treatment for severely ill hospitalized patients requiring ventilators.

OncoImmune medicine shows promise in hospitalized COVID-19 patients

OncoImmune’s CD24Fc medicine demonstrated great promise in a late-stage clinical trial in September of its potential to minimize the risk of respiratory failure in hospitalized patients. Merck said that the drug could reduce the risk of death in over 50% of hospitalized COVDI-19 patients requiring supplemental oxygen.

Merck’s research and development head Roger Perlmutter said that the CD24Fc clinical studies have been encouraging, but the company could face a challenge in manufacturing the drug. However, he asserted that once the medicine receives approval regarding its safety and effectiveness, they could still manage to manufacture significant quantities of the drug in 1H 2021.

Patients in the study received the drug intravenously in addition to standard-of-care, which includes dexamethasone and remdesivir compared to the standard-of-care alone. Data from 203 patients showed that those that received CD24Fc had almost a 60% chance of showing improved clinical status. The results are encouraging, considering the number of severely ill hospitalized patients requiring ventilators continues to increase. A drug that can improve the recovery rate and minimize the risk of death or need for ventilation will be a massive difference in the pandemic.

Merck shifting its manufacturing capacity to produce CD24Fc

Perlmutter said that OncoImmune is a small company that cannot manufacture adequate CD24Fc for treating all patients that could benefit from the medicine. He added that Merck decides to address the supply challenge by leaning in with its capabilities. The pharmaceutical giant will shift part of its manufacturing capacity and start producing the drug. However, CD24Fc is a complex drug to manufacture, which will take time, but Perlmutter expects the company to have ample supply by the end of 1H 2021.

Merck will acquire the company in an all-cash transaction, but OncoImmune stockholders will be eligible for sales-based payments and payments subject to attaining some regulatory milestones.