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Merck to Acquire Prometheus Biosciences for $10.8B

Merck headquarters in Rahway, New Jersey

NEW YORK – Merck on Sunday announced its plan to buy precision medicine firm Prometheus Biosciences in a deal worth $10.8 billion.

Merck plans to acquire all outstanding shares of Prometheus through a subsidiary at a cash price of $200 per share — a 75 percent premium on the $114.01 per share price of Prometheus' stock at market closing on Friday. Prometheus' shareholders have yet to approve the acquisition; Merck expects to close the deal in Q3 2023.

In purchasing San Diego-based Prometheus, the drug giant is hoping to accelerate its presence in immunology, Merck CEO and Chairman Robert Davis said in a statement. Prometheus develops precision therapeutics and companion diagnostics for immune-mediated diseases like ulcerative colitis, Crohn's disease, and other autoimmune conditions. The company pinpoints novel therapeutic targets through Prometheus360, a platform it developed to apply machine learning to a gastrointestinal bioinformatics dataset.

Prometheus' lead candidate is PRA023, a monoclonal antibody that targets tumor necrosis factor-like ligand 1A, which is associated with intestinal inflammation and fibrosis. The firm shared results last year from the Phase II ARTEMIS-UC study of PRA023 in patients with moderate to severely active ulcerative colitis and from the APOLLO-CD study in patients with moderate to severe Crohn's disease. Within ARTEMIS-UC, Prometheus is using a companion diagnostic to identify best responders to PRA023. In an interim analysis, the firm showed that 37.5 percent of ulcerative colitis patients in the subset identified by the companion diagnostic achieved a clinical remission on PRA023 versus 25 percent in the all-comer population.

The Merck acquisition "allows Prometheus to maximize the potential for PRA023, while continuing to apply our technology and expertise to fuel further discoveries to address the needs of patients with immune disorders," Prometheus Chairman and CEO Mark McKenna said in a statement.

In 2022, Prometheus posted $6.8 million in revenue and $141.8 million in net loss. The firm ended the year with $695.8 million in cash, cash equivalents, and short-term investments. 

Prometheus' stock price surged on the news of the acquisition. On Monday morning, Prometheus' stock price had increased 69 percent and was trading at around $193.00 per share on the Nasdaq.