Merck Makes a Big Blood Cancer Bet With $2.7B Deal for ArQule
Merck is acquiring cancer drug developer ArQule for $2.7 billion, a cash deal that brings it a promising early-stage compound that could challenge a blockbuster leukemia drug from AbbVie.
According to terms of the agreement announced Monday, a Merck (NYSE: MRK) subsidiary will pay $20 for each share of ArQule (NASDAQ: ARQL), a 107 percent premium to Friday’s closing stock price. The offer values Burlington, MA-based ArQule at $2.7 billion.
ArQule develops a type of drug called a kinase inhibitor. Kinases are proteins that play a role in the growth and spread of cancers. Lead ArQule drug candidate ARQ 531 is a small molecule currently in Phase 2 dose expansion study in B-cell malignancies, or blood cancers, that have not responded to other treatments. The drug targets Bruton’s tyrosine kinase (BTK), a protein that plays a key role in the expansion of chronic lymphocytic leukemia (CLL), the most common form of leukemia.
At the European Hematology Association meeting in June, ArQule reported early Phase 1 data showing ARQ 531 could potentially treat blood cancers in patients whose disease has become resistant to similar drugs, like ibritinib (Imbruvica) from AbbVie (NYSE: ABBV). Final results from the Phase 1 study were presented Monday at the American Society of Hematology’s annual conference in Orlando, FL. ArQule reported that it has selected 65 mg as the dose it will test in further studies. At that dose or higher, eight of nine patients who have the C481S mutation and could be evaluated at the 65 mg dose showed a partial response to the treatment. In the five patients that could be evaluated after the ninth cycle of treatment, ArQule reported that the partial response continued in all of them, which is a sign that the effects of the treatment are durable. The company also reported a low incidence of toxic effects.
Ibritinib, a once-daily pill, is also a BTK inhibitor. In addition to CLL, the drug has approvals for mantle cell lymphoma, Waldenström’s syndrome, marginal zone lymphoma, and chronic graft versus host disease. Acquired in a $21 billion deal in 2015, ibritinib generated nearly $3.6 billion in global revenue for AbbVie in 2018.
In addition to ARQ 531, ArQule’s pipeline includes three other kinase inhibitors in various stages of development. Merck expects to complete the ArQule acquisition early in the first quarter of 2020. But if another company offers a better price, or if the deal falls through for some other reason, ArQule could be on the hook to pay Merck a $95.3 million termination fee, according to a securities filing.