Merck Snaps Up ArQule and Its BTK Cancer Drug in $2.7 Billion Deal

Mergers and Acquisitions

Shares of Burlington, Mass.-based ArQule have more than doubled this morning in premarket trading after pharma powerhouse Merck announced it was acquiring the company for $2.7 billion.

To say investors were excited is an understatement. The stock climbed more than 101% in early trading to $19.49. It closed at $9.66 on Friday. Merck is announcing a tender offer for all outstanding shares of ArQule at $20.

ArQule is a company focused on kinase inhibitor discovery and development for the treatment of various cancers. Merck, which is poised to have the best-selling drug in the world with its oncology drug Keytruda, snapped up the company to gain ArQule’s lead investigational candidate, ARQ 531, a novel, oral Bruton’s tyrosine kinase (BTK) inhibitor currently in a Phase II dose-expansion study for the treatment of B-cell malignancies.

Roger M. Perlmutter, president of Merck Research Laboratories, said ArQule’s research focus on precision medicine has “yielded multiple clinical-stage oral kinase inhibitors,” which all have “novel and important properties.” Perlmutter said the acquisition of ArQule provides additional strength to Merck’s pipeline. He specifically noted that ARQ 531 is a “compelling candidate” for the treatment of various B-cell cancers.

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BTK-inhibition is a popular target for companies going after B-cell malignancies. There are already some anti-BTK medicines on the market, particularly Johnson & Johnson's Imbruvica and AstraZeneca’s Calquence, which was recently approved for the treatment of adult patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL).

In B-cells, BTK signaling results in activation of pathways necessary for B-cell proliferation, trafficking, chemotaxis and adhesion. In its announcement, Merck noted that ARQ 531 is 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-stage clinical trials, ARQ 531 posted a “manageable safety profile,” as well as also demonstrating early signs of anti-tumor activity in patients with refractory chronic lymphocytic leukemia (CLL) and Richter’s Transformation. Final Phase I data will be presented later today at the American Society of Hematology meeting in Orlando, Florida.

ArQule Chief Executive Officer Paolo Pucci said he was proud that Merck pinpointed ArQule and ARQ 531 as valuable assets and also touted what the company called a “transformative agreement.”

“With this agreement, ArQule’s pipeline will benefit from Merck’s vast capabilities and determined engagement to benefit the patients who we have always strived to serve,” Pucci said in a statement.

The transaction is expected to close early in the first quarter of 2020. ArQule added that as part of Merck, the development of its pipeline will be “accelerated with the goal of bringing potentially transformative treatments to patients in desperate need.”

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