$2.7B Merck Acquisition of ArQule: to Possess the Precision-based, Biomarker-defined Rare Disease Drug Pipeline

Dec 10, 2019 | Cancer, M&A, Oncology, Precision Medicine

$2.7B Merck Acquisition of ArQule to Possess the Precision-based, Biomarker-defined Rare Disease Drug Pipeline

Merck entered a definitive agreement to purchase publicly traded biotech company ArQule for $2.7 billion. ArQule focuses on kinase inhibitor discovery and development for the treatment of patients with cancer and other diseases. Their lead investigational candidate, ARQ 531, is a novel, oral Bruton’s tyrosine kinase (BTK) inhibitor currently in a Phase 2 expansion study for the treatment of B-cell malignancies.

Why did Merck buy ArQule?

Merck found itself in a position where it is not producing enough investigational assets at the velocity and of the level sufficient to not make a purchase. They selected ArQule based on its focus on novel, clinical-stage oral kinase inhibitors possessing novel and important properties as noted by Merck’s President of Research Dr. Roger M. Perlmutter. This position’s Merck to immediately tap into a fairly robust, precision medicine-based pipeline.

What is the Significance of BTK inhibition?

BTK inhibition as been shown to prevent B-cell receptor signaling that is critical for the survival and proliferation of leukemic cells in many B-cell malignancies.

Why is ARQ 531 Special?

ARQ 531, a highly selective, reversible inhibitor that blocks both wild-type BTK and the C481S mutant form of the enzyme that is commonly associated with resistance to other BTK inhibitors. In early clinical trials, ARG 531 evidenced a manageable safety profile and early signs of anti-tumor activity for the treatment of patients with relapsed or refractory chronic lymphocytic (CLL) and Richter’s Transformation. Final data from the Phase I study of ARQ 531 was presented December 9, 2019 at the 61st American Society of Hematology (ASH) Annual Meeting& Exposition in Orlando, Florida.

Merck continues to invest in Cancer pipeline

Their goal is to translate breakthrough science into innovative oncology medicines to help people with cancer worldwide. Merck is committed to exploring the potential of immuno-oncology with one of the largest development programs in the industry across more than 30 tumor types. They also continue to strengthen their portfolio through strategic acquisitions and are prioritizing the development of several promising oncology candidates with the potential to improve the treatment of advanced cancers. For more information about our oncology clinical trials, visit here.

What is the Acquisition Process?

Merck, via a subsidiary will initiate a tender offer to acquire all outstanding shares of ArQule. The closing of the tender will be subject to certain conditions, including the tender of shares representing at least a majority of the total number of ArQule outstanding shares, the expiration of the waiting period under the Hart-Scott- Rodino Antitrust Improvements Act and other customary conditions. Thereafter Merck the Merck subsidiary set up for the transaction will merge into ArQule and the remaining shares of common stock of ArQule will be cancelled and converted into the right to receive the same $20 per share price payable in the tender offer.

When will the Transaction Close?

It is expected to close in the first quarter of 2020.

Who were the Professionals that advised this transaction?

BofA Securities served Merck as financial advisor and Covington & Burling LLP as the big pharma’s legal counsel. Centerview Partners acted as financial advisor to ArQule and Skadden, Arps, Slate, Meagher & Flom served as its legal advisor.

ArQule Profile

ArQule is a biopharmaceutical company engaged in the research and development of targeted therapeutics to treat cancers and rare diseases. ArQule’s mission is to discover, develop and commercialize novel small molecule drugs in areas of high unmet need that will dramatically extend and improve the lives of their patients. Their clinical-stage pipeline consists of four drug candidates, all of which are in targeted, biomarker-defined patient populations, making ArQule a leader among companies our size in precision medicine. ArQule’s pipeline includes: ARQ 531, an orally bioavailable, potent and reversible dual inhibitor of both wild type and C481S-mutant BTK, in phase 2 for patients with B-cell malignancies refractory to other therapeutic options; miransertib (ARQ 092), a potent and selective inhibitor of the AKT serine/threonine kinase, in a registrational trial with cohorts in Proteus syndrome and PROS; ARQ 751, a next generation highly potent and selective AKT inhibitor, in phase 1 for patients with solid tumors with AKT1 and PI3K mutations; and derazantinib, a multi-kinase inhibitor designed to preferentially inhibit the fibroblast growth factor receptor (FGFR) family, in a registrational trial for iCCA in collaboration with Basilea and Sinovant. ArQule’s current discovery efforts are focused on the identification and development of novel kinase inhibitors, leveraging the Company’s proprietary library of compounds.

Source: BusinessWire

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