Merck and Co Inc. (NYSE: MRK) is in advanced negotiations to purchase Acceleron Pharma Inc. (NASDAQ: XLRN) in a move that will boost the drugmaker’s rare disease operations.
Acceleron valued at $11 billion
According to people familiar with the matter, the deal values Acceleron at $11 billion and could close as soon as this week if the discussions don’t fall through. However, if the transaction materializes, it will be Merck’s largest-ever deal representing the company’s bet on rare blood and respiratory diseases treatments that Acceleron deals with.
Merck appears to have outbid other prospective Acceleron suitors, including Bristol Myers Squibb Co., which holds a significant investment in the company.
Acceleron’s lead product is an investigational treatment for pulmonary arterial hypertension, a disorder characterized by high blood pressure in the blood arteries that connect the heart and lungs. The disorder causes the blood to be depleted of oxygen.
Treatments for pulmonary arterial hypertension are available from companies such as Johnson & Johnson. However, Acceleron’s medicine, sotatercept, has the potential to be the first to cure symptoms and halt the progression of the disease and stop it.
PAH market has massive potential
The market for pulmonary arterial hypertension is worth billions of dollars. J&J acquired Swiss manufacturer Actelion and its pulmonary hypertension treatments for $30 billion in 2017. During the first six months of this year, the medications generated $1.7 billion in worldwide sales.
Acceleron’s stock has risen in value thanks to the promise of sotatercept over the last few years. The shares of the Cambridge-based biotechnology firm soared on Friday after Bloomberg reported about the acquisition talks by an unknown buyer.
Bristol Myers has financial claims on Acceleron’s products because it owns 11.5%of the company. According to Acceleron’s 2020 yearly report, if sotatercept is licensed and marketed to treat PAH, it will pay Bristol-Myers a royalty in the low-20% range of global net sales.