Merck's Dealmaking Intensifies With MoonLake Bid As Keytruda Patent Cliff Nears: Report

US drug giant Merck & Co Inc (NYSE:MRK) reportedly approached Swiss biotech MoonLake Immunotherapeutics (NASDAQ:MLTX) with a bid exceeding $3 billion.

While MoonLake turned down the initial offer, talks may be revived.

The potential deal signals renewed dealmaking activity as investor pressure has mounted on Merck to secure new assets, especially as its blockbuster cancer drug Keytruda faces patent expiration as early as 2028.

MoonLake Immunotherapeutics’ lead development asset sonelokimab is a novel investigational Nanobody for inflammatory diseases.

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Sonelokimab inhibits IL-17A and IL-17F by inhibiting the IL-17A/A, IL-17A/F, and IL-17F/F dimers that drive inflammation.

Merck is also grappling with falling sales of its Gardasil vaccine in China and underwhelming uptake of its new hypertension drug, Winrevair.

Per a Financial Times report on Monday, Merck made a nonbinding offer earlier this year, valuing MoonLake above its $2.6 billion market capitalization.

Founded in 2021 by former McKinsey partner Jorge Santos da Silva, MoonLake has garnered investor interest, with its stock price climbing nearly 50% over the past two years.

The FT report added that the company hired Goldman Sachs and Morgan Stanley to advise on the sale process.

Over the past year, Merck shares have dropped 39%, significantly underperforming the broader S&P 500 pharmaceutical index, which declined by 11%.

In April, MoonLake Immunotherapeutics entered into an agreement with Hercules Capital, Inc. (NASDAQ:HTGC) for up to $500 million in non-dilutive capital, of which $75 million will be drawn down at close and additional tranches will become available upon achievement of certain pre-specified milestones that are aligned with MoonLake’s strategy and funding needs.

In January, MoonLake announced that patients have been screened in three new trials across three new indications to evaluate sonelokimab.

The clinical program for sonelokimab now includes patients with adolescent hidradenitis suppurativa (HS), palmoplantar pustulosis (PPP), and axial spondyloarthritis (axSpA), as well as adult patients with HS and active psoriatic arthritis (PsA).

This increases the number of clinical trials led by MoonLake to ten and aligns with the company’s plan to enroll over 3,000 patients in clinical trials with sonelokimab since its founding in 2021.

Price Action: MLTX stock is trading higher by 21.1% to $49.84 premarket at last check Tuesday.

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