Merck Eyes $3B EyeBio Buy, Reenters Ophthalmology

Merck has announced its acquisition of the privately held biotech company EyeBio in a deal valued at up to $3 billion. This strategic move aims to diversify Merck's pipeline and reestablish its presence in the ophthalmology market.

The transaction terms include an upfront payment of $1.3 billion by Merck, with an additional $1.7 billion contingent on achieving developmental, regulatory, and commercial milestones. The EyeBio Board of Directors has unanimously approved the acquisition, which Merck will execute through a subsidiary. The companies anticipate finalizing the deal in the third quarter of 2024, pending regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

Dean Li, President of Merck Research Laboratories, emphasized that this acquisition aligns with Merck's "science-led business development strategy to expand and diversify our pipeline." He noted that EyeBio's promising pipeline, particularly targeting retinal diseases, will enhance Merck's portfolio.

The centerpiece of this acquisition is Restoret, also known as EYE103, an investigational trispecific antibody being developed for diabetic macular edema (DME) and neovascular age-related macular degeneration (NVAMD). Restoret's innovative mechanism involves activating the Wnt signaling pathway, which is often disrupted in these conditions, leading to a weakened endothelial cell barrier and fluid leakage into the retina. By restoring the integrity of the eye's endothelial cells, Restoret aims to prevent vascular leakage. According to both companies, early data suggests that Restoret is poised to enter a pivotal Phase IIb/III study for DME in the latter half of 2024.

This acquisition marks Merck's return to the ophthalmology sector, having exited the market in 2014 when it sold its assets to Akorn Pharmaceuticals and Santen Pharmaceutical. BMO Capital Markets noted that while the EyeBio deal is relatively small, it reflects Merck's consistent efforts to diversify its revenue streams, especially as the patent for the blockbuster drug Keytruda approaches expiration.

The EyeBio acquisition continues a series of strategic deals for Merck in 2024. In April, the company purchased biotech startup Abceutics for $208 million, gaining valuable technology to enhance the safety profiles of antibody-drug conjugates. In March, Merck signed a $1 billion contract with Pearl Bio to develop engineered biologics based on research originating from Yale University. Pearl Bio's technology leverages synthetic amino acids, beyond the 20 naturally occurring ones, to potentially create proteins with enhanced therapeutic efficacy. Earlier in January, Merck acquired Harpoon Therapeutics for $680 million, securing a pipeline of T-cell engagers aimed at various cancer types.

Through these acquisitions, Merck is strategically positioning itself to overcome upcoming challenges, such as the loss of Keytruda's exclusivity, and to expand its capabilities in innovative therapies across multiple therapeutic areas. The move to integrate EyeBio's expertise in retinal diseases signifies Merck's commitment to reinvigorating its ophthalmology research and development, a sector it had previously stepped back from.