Merck has pulled off another acquisition which fits in its “sweet spot,” as described by CEO Rob Davis, paying $10 billion for Verona Pharma and its potential blockbuster Ohtuvayre, a first-in-class treatment for chronic obstructive pulmonary disorder (COPD).
It is the second-largest deal in biopharma this year, ranking behind Johnson & Johnson’s $14.6 billion buyout of Intra-Cellular, and fits Merck’s pattern of striking every other year with a major transaction.
In 2021, Merck spent $11.5 billion for Acceleron and its pulmonary arterial hypertension (PAH) treatment, now known commercially as Winrevair. Then in 2023, the New Jersey company ponied up $10.8 billion for Prometheus and its late-stage bowel disease candidate PRA023.
The acquisitions are designed to compensate for the expected loss of patent protection later this decade for cancer superstar Keytruda, which generated $29.5 billion in sales in 2024, accounting for 46% of the company’s revenue.
“The sweet spot we see is that $1 to $15-billion range,” Davis said in conference call on Wednesday. “As we’ve also consistently indicated, we’re willing to go beyond that for the right opportunity.”
Additionally, Davis said that the company plans to launch roughly 20 “new growth drivers in the coming years, almost all of which have blockbuster potential.” He added that Merck will continue to scout out oncology, immunology and cardiometabolic assets through business development.
As for the buyout of Verona, Merck has agreed to pay $107 per share, which is a 23% markup on their price at market close Tuesday and a 39% premium on their 60-day volume-weighted average price. The companies expect the deal to close in the fourth quarter of this year.
The FDA approved Ohtuvayre 13 months ago as the first novel inhaled treatment for COPD in more than two decades. The drug can be used as a monotherapy or as an add-on medicine with current steroid therapies. As a selective dual inhibitor of the phosphodiesterase 3 (PDE3) and phosphodiesterase 4 (PDE4) enzymes, Ohtuvayre combines two properties in one medicine, setting it apart from COPD competitors for its ability to both open the airways of patients and reduce their inflammation.
Ohtuvayre is off to a solid launch, generating sales of $71 million in the first quarter of this year, good for 95% growth sequentially. During the three months, 25,000 prescriptions were filled, up from 16,000 in 2024.
“Since launching Ohtuvayre in August 2024, we have seen rapid and accelerating uptake in the U.S.,” Verona CEO David Zaccardelli said in a release Wednesday. “We believe Merck’s commercial footprint and industry-leading clinical capabilities will help accelerate the potential of Ohtuvayre to reach more patients living with COPD.”
The treatment has not been approved in Europe.
Some of that advantageous footprint comes through Merck’s commercialization of Winrevair. Although it is a product for a rare lung disease, many of the physicians who prescribe Winrevair will have patients with COPD.
The prescriber base for the disease is 14,500 in the U.S., according to Merck’s human health president Jannie Oosthuizen. Verona reported in April that 5,300 doctors had prescribed Ohtuvayre in the first quarter.
“I think our scale brings a good ability to expand fairly rapidly into that broader prescriber base, educate and get Ohtuvayre to be added to existing background therapies, especially in those patients with persistent symptoms,” Oosthuizen said, adding that the company expects the market to grow from $17 billion this year to $27 billion by 2032.
Meanwhile, other companies are rushing to the COPD space. After a delay, the FDA in May approved GSK's antibody drug Nucala as an add-on maintenance treatment for adults with inadequately controlled COPD and an eosinophilic phenotype. Amgen and AstraZeneca have hopes for their asthma drug Tezspire as a potential COPD treatment.
Last year, Regeneron and Sanofi gained approval for Dupixent to treat COPD exacerbations. The companies also have a second COPD candidate in IL-33 inhibitor itepekimab, which is being tested in two phase 3 trials.