With this development, Prometheus now operates as a fully-owned subsidiary of Merck, and the common stock of Prometheus will no longer be available for listing or trading on the Nasdaq Global Market
Merck Headquarters Rahway Site Entrance. (Credit: Merck & Co., Inc.)
Merck, internationally recognised as MSD beyond the borders of the US and Canada, has officially finalised the acquisition of Prometheus Biosciences.
With this development, Prometheus now operates as a fully-owned subsidiary of Merck, and the common stock of Prometheus will no longer be available for listing or trading on the Nasdaq Global Market.
Merck chairman and CEO Robert Davis said: “The Prometheus acquisition accelerates our growing presence in immunology, augments our diverse pipeline and increases our ability to deliver patient value. This transaction is another example of Merck acting strategically and decisively when science and value align.
“Prometheus brings us a potential best-in-class candidate that creates an opportunity for us to transform treatment for patients with immune-mediated diseases. We are excited to welcome our Prometheus colleagues to Merck and we look forward to working together, driven by our common purpose of saving and improving lives.”
Prometheus, now under the ownership of Merck, has a promising clinical candidate named PRA-023, which will be referred to as MK-7240 going forward. MK-7240 is a humanized monoclonal antibody (mAb) designed to target tumour necrosis factor (TNF)-like ligand 1A (TL1A), a specific marker associated with both intestinal inflammation and fibrosis. The primary focus of its development lies in combating immune-mediated diseases such as ulcerative colitis (UC), Crohn’s disease (CD), and other autoimmune conditions.
In December 2022, Prometheus shared encouraging outcomes from two significant studies involving MK-7240. The first study, called ARTEMIS-UC, was a Phase 2 trial that examined the safety and efficacy of MK-7240 in patients with moderate-to-severely active UC. The second study, named APOLLO-CD, was a Phase 2A open-label trial investigating the safety and efficacy of MK-7240 in patients with moderate-to-severe CD. These positive findings were recently presented at the 18th Congress of the European Crohn’s and Colitis Organisation (ECCO).
Merck Research Laboratories president Dr Dean Y. Li said: “At Merck, we have deep expertise in clinical development with a proven record of implementing precision medicine strategies.
“By combining our strengths, Merck and Prometheus are well-positioned to advance MK-7240 and additional pipeline candidates.”
Under the agreement, Merck has successfully acquired all outstanding shares of Prometheus at a rate of $200.00 per share in cash. This acquisition amounts to a total equity value of approximately $10.8 billion. It’s important to note that Merck’s financial outlook for the full year, as previously shared during the first-quarter earnings call, did not incorporate the proposed acquisition of Prometheus or any other significant potential business development transactions.
Since this transaction is being treated as an asset acquisition, Merck is recording a charge of around $10.3 billion, equivalent to approximately $4.00 per share. As a result, both the second-quarter and full-year 2023 GAAP and non-GAAP results will be impacted by this charge. Furthermore, the transaction is expected to have a negative impact on earnings per share (EPS) of approximately $0.25 in the first 12 months following the transaction’s closure. This is due to investments made to advance pipeline assets and the cost of financing, with about half of these expenses incurred in the latter half of 2023.
Merck follows a policy of providing financial outlook updates every quarter. Therefore, investors and analysts should deduct the expenses mentioned above when considering Merck’s financial outlook issued on April 27, 2023. Merck will provide a comprehensive update to its financial outlook when reporting second-quarter 2023 results on August 1.