Merck expands ophthalmology with $3B EyeBio acquisition

Merck & Co. (MSD) has announced its acquisition of the ophthalmology-focused biotech firm Eyebiotech Limited (EyeBio). This significant deal, valued at up to $3 billion, will see Merck expand its reach within the field of ophthalmology and enhance its drug development pipeline. The acquisition will be executed through a subsidiary of Merck, which will purchase all outstanding shares of EyeBio. The financial terms include a $1.3 billion upfront cash payment, with an additional potential $1.7 billion contingent on achieving specific developmental, regulatory, and commercial milestones.

The strategic acquisition is set to bolster Merck's presence in the ophthalmology sector, particularly in addressing vision loss linked to retinal vascular leakage. This condition is a prominent risk factor for various retinal diseases, making EyeBio's research and development efforts highly relevant to Merck's objectives.

A pivotal element of this deal is EyeBio's leading candidate, Restoret. This drug is a novel tetravalent, tri-specific antibody that functions as an agonist of the Wingless-related integration site (Wnt) signaling pathway. Merck plans to advance Restoret into a pivotal phase 2b/3 clinical trial targeting patients with diabetic macular edema by the latter half of 2024. This trial marks a significant step forward for Merck in addressing serious retinal conditions.

Merck's acquisition strategy comes as a response to impending challenges, particularly the anticipated revenue decline from its top-selling cancer immunotherapy drug, Keytruda. Keytruda is expected to lose its patent protection in 2028, which would open the market to generic competitors and significantly impact Merck's earnings.

To mitigate this, Merck has engaged in several high-value deals aimed at diversifying and strengthening its drug portfolio. In 2022, Merck acquired Acceleron Pharma, a Massachusetts-based company, for $11.5 billion. This acquisition was aimed at expanding Merck's offerings in the rare disease sector.

Additionally, in 2022, Merck completed the acquisition of Prometheus Biosciences, a California-based biotech firm, for $10.8 billion. This move was intended to enhance Merck's capabilities in the immune disease space, highlighting the company's broader strategy to secure its market position through targeted acquisitions.

In conclusion, Merck & Co.'s acquisition of Eyebiotech Limited for up to $3 billion underscores the company's commitment to expanding its influence in ophthalmology and addressing unmet medical needs in retinal diseases. Through the development and potential approval of novel treatments like Restoret, Merck aims to establish itself as a leader in combating vision loss. The acquisition also reflects Merck's proactive measures to counteract potential revenue losses from the impending patent expiration of Keytruda, ensuring the company's sustained growth and innovation in the pharmaceutical industry.