Merck nears $9.2bn deal for flu-prevention biotech Cidara – Financial Times
Merck has agreed a $9.2bn takeover of Cidara Therapeutics, a drugmaker pioneering a long-acting antiviral that protects against flu, after overcoming rival pharmaceutical groups in a bidding war that went down to the wire.
The acquisition, valuing Cidara at more than double its Thursday closing share price, was announced on Friday, confirming an earlier Financial Times report.
Merck was still vying with another pharmaceutical group for the biotech late on Thursday before the seller favoured its offer, according to people familiar with the matter.
The biotech’s sale was the latest instance of a competitive auction process with pharma companies scrapping over a promising drug in development.
Earlier this month, a public bidding war broke out between Pfizer and Novo Nordisk for weight-loss biotech Metsera, which ultimately sold to the US drugmaker for up to $10bn after a week of back-and-forth offers.
Robert Davis, Merck’s chief executive, said in a statement that Cidara’s lead drug, an antiviral that protects against the two most common strains of flu, “has the potential to be another important driver of growth through the next decade”.
The deal will boost Merck’s efforts to grapple with the loss of revenue from its blockbuster cancer drug Keytruda, which comes off patent from 2028 onwards. Merck in July struck a $10bn deal to buy respiratory biotech Verona Pharma as it accelerates its dealmaking to contend with an imminent patent cliff.
Merck said it would pay Cidara’s investors $221.50 a share in cash, implying a total transaction value of $9.2bn. The deal is expected to close by the first quarter of next year.
A recent surge in biotech deals highlights renewed hunger among large drugmakers for new medicines to make up for incoming patent cliffs. The SPDR S&P Biotech ETF, known as the XBI, is up 46.5 per cent over the past six months as investors are emboldened by the hope of good clinical data spurring more acquisitions.
Cidara’s lead drug, known as CD388, is pitched as a possible alternative to vaccines to better protect vulnerable patients. The drug is being studied in phase-three trials on immunosuppressed patients, people who cannot take vaccines and healthy individuals aged 65 and over. By the end of the month, more than 6,000 patients worldwide will be enrolled in the trials.
The preventive treatment, expected to launch as early as 2028, would come after the northern hemisphere this year experienced one of the fiercest flu seasons in the past decade. The inclusion of healthy over-65s in Cidara’s late-stage trials could expand the drug’s target market to as many as 100mn people in the US, analysts at Cantor Fitzgerald said in a note earlier this month.
Shares in Cidara were up more than 105 per cent shortly after Wall Street’s opening bell on Friday. The stock had already quadrupled since July following positive clinical safety data and the US Food and Drug Administration granting the biotech breakthrough designation, easing its path to approval.
Guggenheim Securities analysts said in a note following the FT report that Cidara was a “great strategic fit” for Merck, whose market capitalisation stands at $230bn, down 6 per cent so far this year.
Bank of America and Gibson Dunn advised Merck on the deal. Cidara was advised by Goldman Sachs, Evercore and Cooley.
