Merck Plans to Acquire Prometheus Biosciences in a $10.8 Billion Deal

On April 16, 2023, Merck announced plans to expand its immunology portfolio by acquiring Prometheus Biosciences, a biotechnology company focused on immune-mediated diseases. The deal, valued at $10.8 billion, focuses on the benefits of acquiring the company as it develops a new therapy for ulcerative colitis (UC) and Crohn’s disease (CD).

“At Merck, we are committed to delivering on our purpose to save and improve lives and continue to identify and secure opportunities where compelling science and value creation align,” said Robert M. Davis, chairman, and chief executive officer of Merck, in the press release. “The agreement with Prometheus will accelerate our growing presence in immunology where there remains a substantial unmet patient need. This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable innovation engine that will drive our growth well into the next decade.”

According to the press release from Merck, the company has proposed plans to acquire Prometheus for $200 per share through a subsidiary, accounting for nearly $11 billion in total equity value. While the deal has not been finalized, the announcement states that a definitive agreement has been made between the two companies.

Prometheus uses biotechnology and precision medicine to discover and develop new treatments and diagnostic tools for immune-mediated diseases. As mentioned in the press statement, the company’s most valuable asset to date is its latest therapy for UC and CD, PRA023.

PRA023 is a monoclonal antibody (mAb) that targets tumor necrosis factor (TNF)-like ligand 1A (TL1A) to minimize intestinal fibrosis and inflammation. Study data announced in December 2022 revealed that the drug reduced inflammation and fibrosis in patients with UC and CD.

The phase 2 studies, APOLLO-CD and ARTEMIS-UC, found that PRA023 was safe and tolerable across all the patient populations. Additionally, they determined that the drug pushed 49.1% of CD trial participants into clinical remission.

With this data and the growing need for UC and CD treatments, Merck believes this acquisition will be a valuable addition to its portfolio. Although the deal is pending shareholder approval from Prometheus, Merck believes it will close during the third quarter of 2023.