Merck to Acquire Investigational B-Cell Depletion Therapy, CN201, from Curon Biopharmaceutical

Rhea-AI Summary

Merck (NYSE: MRK) has announced a definitive agreement to acquire CN201, a novel investigational clinical-stage bispecific antibody, from Curon Biopharmaceutical for an upfront payment of $700 million in cash. The deal includes potential milestone payments of up to $600 million. CN201 is a next-generation CD3xCD19 bispecific antibody currently in Phase 1 and Phase 1b/2 clinical trials for treating relapsed or refractory non-Hodgkin's lymphoma and B-cell acute lymphocytic leukemia.

Preliminary data suggests CN201 has activity in patients with relapsed or refractory B-cell hematologic malignancies and is well-tolerated. Merck plans to evaluate CN201 for B-cell malignancies and autoimmune diseases. The transaction is expected to close in Q3 2024, subject to regulatory approval. Merck anticipates recording a pre-tax charge of approximately $750 million, or $0.28 per share, in non-GAAP results upon closing.

Positive

• Acquisition of CN201 expands Merck's pipeline in B-cell malignancies and autoimmune diseases
• Preliminary data shows CN201's potential in treating relapsed or refractory B-cell hematologic malignancies
• Deal structure includes $700 million upfront payment and up to $600 million in milestone payments
• CN201 has shown to be well-tolerated in early clinical trials

Negative

• Merck expects to record a pre-tax charge of $750 million ($0.28 per share) in non-GAAP results
• Transaction is subject to regulatory approval, which could potentially delay or prevent closing

Insights

Financial Analyst

Merck's acquisition of CN201 from Curon Biopharmaceutical for an upfront payment of $700 million and potential milestone payments of up to $600 million is a significant investment in expanding their pipeline. This deal structure, with a substantial upfront payment, indicates Merck's confidence in CN201's potential.

The transaction, expected to close in Q3 2024, will be accounted for as an asset acquisition. Merck anticipates a pre-tax charge of approximately $750 million ($0.28 per share) in non-GAAP results. This charge suggests minimal immediate impact on Merck's financials, given its $59 billion revenue in 2022.

Investors should note the long-term potential of this acquisition in diversifying Merck's portfolio, particularly in the lucrative markets of B-cell malignancies and autoimmune diseases. However, the full financial impact will depend on CN201's success in clinical trials and eventual commercialization.

Oncology Doctor

CN201, a novel CD3xCD19 bispecific antibody, shows promising potential in treating B-cell malignancies. Early clinical data indicate its ability to deplete circulating and tissue B cells, which is important for addressing diseases like non-Hodgkin's lymphoma (NHL) and B-cell acute lymphocytic leukemia (ALL).

The preliminary data suggesting CN201's activity in relapsed or refractory B-cell hematologic malignancies is particularly noteworthy. If further validated, this could provide a new treatment option for patients who have exhausted other therapies. The reported tolerability is also encouraging, as it could potentially allow for broader patient eligibility.

Merck's plan to evaluate CN201 for both B-cell malignancies and autoimmune diseases highlights its versatility. This dual potential could significantly expand treatment options across multiple disease areas, potentially revolutionizing our approach to B-cell-mediated disorders.

Market Research Analyst

Merck's acquisition of CN201 strategically positions the company in the rapidly growing market for targeted cancer therapies and autoimmune disease treatments. The global B-cell NHL market alone is projected to reach $9.2 billion by 2027, with a CAGR of 7.9%.

This move aligns with the industry trend of big pharma companies acquiring promising biotech assets to bolster their pipelines. It also reflects the growing interest in bispecific antibodies, which are seen as a next-generation approach in immunotherapy.

The potential application of CN201 in both oncology and autoimmune diseases could significantly expand Merck's market reach. However, investors should be aware that success is contingent on positive clinical trial outcomes and regulatory approvals. The competitive landscape in these therapeutic areas is intense, with several other major players developing similar therapies.

CN201 is a next generation CD3xCD19 bispecific antibody that augments and diversifies Merck’s pipeline, with potential applications in B-cell malignancies and autoimmune diseases

RAHWAY, N.J.--(BUSINESS WIRE)-- Merck (NYSE: MRK), known as MSD outside of the United States and Canada, and Curon Biopharmaceutical (Curon), a privately held biotechnology company, today announced that the companies have entered into a definitive agreement under which Merck, through a subsidiary, has agreed to acquire CN201, a novel investigational clinical-stage bispecific antibody for the treatment of B-cell associated diseases.

“We continue to identify opportunities to expand and diversify our pipeline,” said Dr. Dean Y. Li, president, Merck Research Laboratories. “Early clinical data have provided robust evidence for the potential of CN201 to target and deplete circulating and tissue B cells with the potential to treat a range of malignant and autoimmune diseases.”

Under the terms of the agreement, Merck through a subsidiary will acquire full global rights to CN201 for an upfront payment of $700 million in cash. Curon is also eligible to receive up to $600 million in milestone payments associated with the development and regulatory approval of CN201.

CN201 is currently being evaluated in Phase 1 and Phase 1b/2 clinical trials for the treatment of patients with relapsed or refractory non-Hodgkin’s lymphoma (NHL) and relapsed or refractory B-cell acute lymphocytic leukemia (ALL), respectively. Preliminary data suggest CN201 has activity in patients with relapsed or refractory B-cell hematologic malignancies and is well tolerated, with the potential to induce significant and sustained reductions in B-cell populations. Merck plans to evaluate CN201 as a treatment for B-cell malignancies as well as investigate its potential to provide a novel, scalable option for the treatment of autoimmune diseases.

“This agreement reflects the drive and dedication of the Curon team,” said Zhihong Chen, president and chief executive officer, Curon. “As a pioneer in immuno-oncology, Merck is well positioned to build upon the work done to-date and investigate the wide-ranging, first-in-class potential of CN201.”

Closing of the proposed transaction is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions. The transaction is expected to close in the third quarter of 2024 and be accounted for as an asset acquisition. Merck expects to record a pre-tax charge of approximately $750 million (reflecting the upfront payment and other related costs), or approximately $0.28 per share, to be included in non-GAAP results in the quarter that the transaction closes. As a matter of policy, Merck provides updates to its financial outlook once each quarter and will provide an update to its full-year financial outlook when it reports third-quarter 2024 results.

Advisors
Hogan Lovells is serving as Merck’s legal advisor in this transaction. Centerview Partners LLC acted as financial advisor to Curon and Goodwin Procter LLP as the company’s legal advisor.

About CN201
CN201 is a novel CD3xCD19-targeting T-cell-engager bispecific antibody, designed to target B cells for elimination by T cells. CN201 is currently being evaluated in Phase 1 and Phase 1b/2 clinical trials for the treatment of relapsed or refractory non-Hodgkin’s lymphoma and relapsed or refractory acute lymphocytic leukemia, respectively.

About Curon Biopharmaceutical
Curon Biopharmaceutical is a clinical-stage company developing bispecific antibodies and antibody-drug conjugates for the treatment of cancer, from both internal research and external collaborations. The company is a Cayman Islands incorporated company with operations in Australia, Hong Kong and Shanghai, China.

About Merck
At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. For more information, visit www.merck.com and connect with us on X (formerly Twitter), Facebook, Instagram, YouTube and LinkedIn.

Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA
This news release of Merck & Co., Inc., Rahway, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808638055/en/

Merck Media:

Robert Josephson

(203) 914-2372

Justine Moore

(347) 281-375

Merck Investor:

Peter Dannenbaum

(732) 594-1579

Source: Merck & Co., Inc.

FAQ

What is the value of Merck's acquisition of CN201 from Curon Biopharmaceutical?

Merck (MRK) has agreed to acquire CN201 for an upfront payment of $700 million in cash, with potential additional milestone payments of up to $600 million.

What is CN201 and what diseases does it target?

CN201 is a next-generation CD3xCD19 bispecific antibody targeting B-cell associated diseases. It's being evaluated for relapsed or refractory non-Hodgkin's lymphoma and B-cell acute lymphocytic leukemia, with potential applications in autoimmune diseases.

When is Merck's acquisition of CN201 expected to close?

The transaction is expected to close in the third quarter of 2024, subject to regulatory approval and other customary conditions.

How will the CN201 acquisition impact Merck's (MRK) financial results?

Merck expects to record a pre-tax charge of approximately $750 million, or $0.28 per share, to be included in non-GAAP results in the quarter that the transaction closes.