What happened
Shares of Prometheus Biosciences (RXDX) were up more than 69% Monday morning after Merck (MRK 0.51%) said Sunday that it had come to an agreement to buy the clinical-stage biotech for $10.8 billion. Prometheus focuses on therapies to treat immune-mediated diseases.
Its shares hit a 52-week high of $193.79 early in the morning and likely could go higher since Merck has agreed to pay $200 a share. The deal is contingent on Prometheus shareholders' approval, but is expected to be completed by the third quarter of 2023, Merck said.
So what
Prometheus' lead therapy, PRA023, which is in trials to treat ulcerative colitis (UC), Crohn's disease, and other autoimmune disorders, is the main attraction, Merck CEO Robert Davis told Reuters, adding that promising phase 2 clinical trial results that Prometheus released in December make Merck think the drug could be a multimillion-dollar seller. Merck is facing a patent cliff for its lead immuno-oncology blockbuster Keytruda by 2030.
Now what
Even if the deal falls through, which is unlikely, it shows the promise of PRA023, which is in phase 2 trials to treat UC, Crohn's disease, and interstitial lung disease associated with systemic sclerosis. Prometheus has another lead therapy, PRA052, that is being tested against UC but also could be useful for a variety of immune-mediated diseases, the company said.
Last year, the company lost $148 million, but Prometheus is in a solid position, with nearly $700 million in cash and cash equivalents. It also had $6.8 million in collaboration revenue in 2022, compared with $3.1 million in the prior year.
