Merck KGAA's Rare Tumor Strategy Formed with a Spring Acquisition of $3.9B
Merck KGAA is building its portfolio and pipeline and obtaining Springworks Therapeutics through a $3.9 billion deal to acquire Springworks Therapeutics, a company with two FDA-approved rare oncology drugs, both of which have the potential to extend their uses to the possibility of treating several types of cancer.
Merck KGAA will pay $47 per share for Springworks, under financial terms announced Monday. While this is Friday's Springworks closing price premium of 4.6%, Biotech's stock price was 26% before speculation emerged about the price of the Merck acquisition in early February. When Springworks went public in 2019, the Biotech stake was priced at $18.
Springworks, based in Stanford, Connecticut, launched two brilliant drugs in 2017, which Pfizer initially developed in cancer. Springworks transfers the development of these two small molecules to non-malignant tumors with little treatment (if any). One of the drugs is Ogsiveo, a small molecule designed to block enzymes that activate receptors associated with tumor growth.
In 2023, Ogsiveo became a FDA-approved drug for deviscotic tumors, a tumor that affects connective tissue. Springworks reported revenue from the product at $172 million in 2024. The drug is also in the mid-stage clinical development of ovarian granule cell tumors, a rare ovarian cancer that currently has no FDA-approved therapy. Through partnerships, pills were evaluated twice a day as part of BCMA-targeted therapy for multiple myeloma.
The second drug licensed from Pfizer is Gomekli, a small molecule inhibitor of two MEK proteins. In February, the FDA approved Gomekli, a rare genetic disease that causes neurotoma formation. By covering both adults and children, Gomekli has an advantage over AstraZeneca’s Koselugo, which is approved only for pediatric NF1 patients. Gomekli is also in the mid-stage clinical development of lower-grade glioma in children.
Ogsiveo and Gomekli are under regulatory scrutiny in Europe. Ogsiveo is expected to receive decisions from European pharmaceutical agencies in Desmoid tumors this quarter. The wider commercialization of the two drugs will increase Pfizer spending, which pays $232.5 million for Ogsiveo's commercialization milestone, while Gomekli's payments are as high as $232.5 million, according to Springworks regulatory filings.
Darmstadt, Germany, said the Springworks acquisition is in line with the strategic goal of strengthening the U.S. presence. The company added that Springworks drugs complement its own portfolio, which includes Pimikotinib, a drug from Abbisko Therapeutics, which has risen to the late clinical development of a giant cell tumor that forms in and around the joints. Apart from surgery, the only FDA-approved drugs for these rare tumors are products from Ono Pharmaceuticals and Daiichi Sankyo. Last month, Merck paid $85 million to exercise its global commercialization rights option for Abisco drugs.
“We have the unique opportunity for Springworks to establish leadership in rare tumors and build a strong foundation for further investment in this area where there is a huge unmet medical need,” said Peter Guenter, CEO of Merck KGAA Healthcare Division, in a prepared statement.
Merck said this is providing available cash and new debt for Springworks acquisitions. The company added that it retains the financial ability to engage in large-scale transactions, and life science transactions are a priority. Merck and Springworth Board boards approved the acquisition, which is expected to close in the second quarter of this year. The deal still requires approval from Springworks shareholders and regulators.
Photos of Springworks Therapeutics
