Merck & Co. edged out competitors including AbbVie Inc. and Bristol Myers Squibb Co. to prevail in its $10.8 billion takeover of biotechnology company Prometheus Biosciences Inc, according to people familiar with the matter.
(Bloomberg) — Merck & Co. edged out competitors including AbbVie Inc. and Bristol Myers Squibb Co. to prevail in its $10.8 billion takeover of biotechnology company Prometheus Biosciences Inc, according to people familiar with the matter.
The deal gives Merck access to an immunology treatment that it projects will one day generate billions of dollars in revenue, helping it fill a sales gap as its blockbuster drug Keytruda loses exclusivity later this decade.
Representatives for Prometheus, AbbVie and Bristol didn’t respond to requests for comment.
The competition for Prometheus highlights how biotech dealmaking has heated up as products go off patent, prompting drugmakers to look for ways to replenish revenues.
Astellas Pharma Inc., which co-markets the aging cancer blockbuster Xtandi with Pfizer Inc. made a similar move late Sunday, agreeing to acquire eye-drug maker Iveric Bio Inc. for about $5.9 billion.
Prometheus had last year been exploring potential partnership opportunities with more than a dozen pharmaceutical companies, according to a regulatory filing Friday.
It paused those discussions after its monoclonal antibody treatment for inflammatory bowel disease showed positive results in mid-stage studies in December, prompting shares to more than triple, and allowing it to raise $550 million through a stock offering.
But over the ensuing months, a handful of companies maintained a dialogue with Prometheus’s executives and bankers. The company had drawn attention from biotech investors and large pharmaceutical companies for its portfolio of immunology treatments since going public in 2021.
Merck kicked off the official bidding March 31 with an offer to acquire Prometheus for $150 per share with a targeted signing date of April 21, according to the filing.
Representatives for a company identified as “Party X” in the filing conveyed to Prometheus April 5 that they were “very interested” in a potential deal and planned to submit an acquisition proposal imminently. “Party X” was Bristol Myers, according to people familiar with the matter, who asked not to be identified because the information is private.
On April 12, a Wednesday, a company identified as “Party W” made a written offer to acquire Prometheus for $167.50 per share in cash, according to the filing. “Party W” was AbbVie, the people said.
After learning that a higher offer had come in, representatives for Merck told Prometheus Chief Executive Officer Mark McKenna on April 13 that the pharma company was interested in buying Prometheus for $200 a share and could negotiate a deal by April 15, according to the filing.
That Friday, Prometheus’s board deliberated over the competing offers and concluded that a deal with AbbVie would pose more antitrust risk than one with Merck. They told Merck they would be willing to move quickly over the weekend to negotiate a deal at $200 a share.
As lawyers from the two companies negotiated and traded drafts of the merger agreement, McKenna informed Bristol Myers that the company was nearing a deal with another bidder. Bristol Myers reiterated its interest in Prometheus but didn’t make an offer, according to the filing.
Merck and Prometheus announced their deal the next morning, a Sunday.
Prometheus shares were trading at $194.03 at 12:17 p.m. in New York Monday, giving the company a market value of about $9.3 billion.
–With assistance from Nacha Cattan and Angelica Peebles.
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