Merck & Co Inc. Agrees to Buy Peloton Therapeutics

In a $1.05 billion transaction, Merck & Co Inc. has announced this week that it will be buying Peloton Therapeutics.

The drug maker will be gaining access to Peloton’s lead kidney cancer drug candidate with the transaction.
Peloton expects to start studying its lead drug “PT2977”, a kidney cancer treatment, in a late-stage trial in the second half of this year.

“This is a classic bolt-on deal. Peloton has a drug that looks promising in renal cell carcinoma, and there’s actually been a lot of success in the field in recent years,” remarked Brad Loncar, who runs the Loncar Cancer Immunotherapy ETF.

A previous mid-stage trial that tested patients whose cancer had spread even after treatment with at least one therapy, 24% of patients treated with Peloton’s drug showed an at least 30% shrinkage of targeted lesions.

“The deal announced today should also underscore the opportunity for other small and mid cap biotech names in the cancer biology space,” commented Cantor Fitzgerald analyst Louise Chen.

“This acquisition exemplifies Merck’s strategy to pursue novel therapeutic candidates based on exceptionally promising and innovative research,” said Dr. Roger M. Perlmutter, president, Merck Research Laboratories. “Peloton scientists have applied their unique expertise in HIF-2α biology to develop PT2977, which has already shown intriguing activity in the treatment of renal cell carcinoma. We look forward to advancing this late-stage asset as part of our broad oncology R&D program.”

According to the press release, “under terms of the agreement, Merck, through a subsidiary, will acquire all outstanding shares of Peloton in exchange for an upfront payment of $1.05 billion in cash. In addition, Peloton shareholders will be eligible to receive a further $1.15 billion contingent upon successful achievement of future regulatory and sales milestones for certain candidates.”

Disclaimer: We have no position in Merck & Co., Inc. (NYSE: MRK) and have not been compensated for this article.