Summary
- Merck announced that it would spend $2.7 billion to acquire ArQule, which is a precision-focused biotech targeting indications with high unmet medical need.
- The acquisition brings about ARQ-531 which is being used to avoid the resistance issue found in other BTK inhibitors currently available for patients with B-cell malignancies.
- Besides the targeting of B-cell malignancies with ARQ-531, ArQule has Miransertib being advanced in a potential registration study treating patients with PIK3CA-related Overgrowth Spectrum disorders and Proteus Syndrome.
- Merck's latest acquisition will definitely help diversify its oncology portfolio, but remains in strong shape with $7.2 billion in sales of Keytruda in 2018, with analysts expecting sales of $10.8 billion in 2019.
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Merck (MRK) had announced that it would purchase ArQule (ARQL) for a total of $2.7 billion or $20 per share in cash. The main goal for this acquisition was that Merck could add a precision medicine oncology biotech to its portfolio. This acquisition should help the oncology portfolio of Merck, because ArQule has a differentiated approach to treating B-cell malignancies. I believe this was a good acquisition, especially because the lead product of ARQ 531 has been advancing quite well in the clinic. It can be used to treat wild-type and C481S B-cell malignancies. The acquisition is expected to close next year in Q1 of 2020.
Acquisition Deal Brings Differentiated Value
This acquisition deal is a good one for Merck, especially the focus change in the cancer space. The focus has shifted towards a more personalized or precision approach to treating patients. In essence, meaning that more cancer development biotechs are looking at targeting specific mutations that a patient has. For example, Amgen (AMGN) and Mirati Therapeutics (MRTX) have put an emphasis on targeting KRAS G12C mutant cancers. Amgen is developing AMG 510 to target KRAS tumor types, while Mirati Therapeutics has MRTX849. The targeting of KRAS is important, because it is the most common type of oncogenic driver mutation with no available therapies. Scientists have tried for three decades to get such a target past preclinical studies. That is why for so many decades such a mutation was considered "undruggable." The advancement of targeting KRAS G12C may be happening now as the drug is being advanced through the clinic. The point here is that Merck and many other pharmaceuticals are moving away from primarily a broad approach to treating cancer only and instead looking to go after specific mutation target types. With Merck acquiring ArQule it can definitely achieve such a goal of advancing targeted cancer therapies focused on such targets. For instance, ArQule has ARQ-531 being used against both wild-type and C481S BTK cancer. The ARQ-531 product is an oral drug of reversible dual inhibitor of Bruton’s tyrosine kinase (BTK). What does this item target? In essence, this goes after multiple B-cell malignancies. Such B-cell malignancies include: Chronic Lymphocytic Lymphoma (CLL), mantle cell lymphoma (MCL), diffuse large B-cell lymphoma (DLBCL), and Waldenstrom's Macroglobulinemia. All these B-cell malignancies are part of the B-cell receptor pathway. You may have heard of ibrutinib (marketed as Imbruvica), which was developed by Pharmacyclics. Pharmacyclics was acquired by AbbVie (ABBV) many years ago. Then there is another clinical product that has been approved for treating these types of B-cell cancer known as acalabrutinib (marketed as Calquence). Calquence was developed by Acerta Pharmaceuticals, which was then bought by AstraZeneca (AZN). These current BTK inhibitors work very well in these types of cancer I highlighted above. The problem is that they are irreversible and they form a covalent bond with C481 residue of the targeted protein. The bottomline about this statement is that BTK inhibitors suffer from resistance issues. Which means that some patients don't benefit at all when given Imbruvica or Calquence. Specifically, those with mutations. That's where ARQ-531 can shine for these patients who don't benefit on these other types of BTK drugs. This is good, because it means ArQule won't be necessarily competing against these BTK inhibitors. Instead, its drug will be acting on targeting a specific pool of patients who have resistance. These patients have limited treatment options. The acquisition of ArQule by Merck is expected to close in Q1 of 2020, if certain conditions are met.
