Merck Snaps Up Small Startup in $208M Deal, Seeks to Improve Safety of ADCs

Merck

Pictured: Merck's office in South San Francisco, California/iStock, Sundry Photography

Merck has bought biotech startup Abceutics in a bid to develop safer antibody-drug conjugates and minimize their off-target effects on healthy cells, according to a Friday announcement from the University at Buffalo, whose laboratory created the spin-off company.

The pharma will put up to $208 million on the line for Abceutics’ payload-binding selectivity enhancer (PBSE) technology, which is meant to boost the safety of antibody-drug conjugates (ADCs). The companies did not disclose the specific breakdown of the deal’s overall potential value but said that Merck’s total consideration already includes its upfront payment as well as milestones for the candidates.

Abceutics’ PBSE platform, which was licensed from the University at Buffalo, works synergistically with ADCs, according to the announcement. The agents work by seeking out and neutralizing stray payload molecules from ADCs, which in turn could spare healthy cells from the off-target effects of treatment.

Joseph Balthasar, who launched Abceutics in 2020, in a statement said that PBSEs are designed “to be administered along with ADCs to reduce the risk of side effects.” These molecules could potentially optimize the “therapeutic selectivity and efficacy of ADC therapy.” Balthasar is also the director of the Center for Protein Therapeutics at the University at Buffalo.

Abceutics has collected several institutional backers since its launch, including the National Institutes of Health and the Buffalo Innovation Accelerator Fund, which provided the startup with $110,000 in early funds. It has also received $50,000 from the Empire State Development’s Division of Science, Technology and Innovation.

David Weinstock, vice president of oncology discovery at Merck Research Laboratories, said that Abceutics has already gone a long way in “translating this novel idea into reality.” The startup has generated several candidates for which it has “compelling early evidence.” he said.

“We look forward to further evaluating the potential of this innovative approach in the clinic,” Weinstock added.

Friday’s deal comes amid the biopharma industry’s continued ADC spending spree, with the market projected to reach nearly $30 billion in value by 2028, according to a March 2024 report by market intelligence firm Evaluate.

The sector in recent months has witnessed a flurry of dealmaking activity as industry movers have tried to broaden their ADC portfolios, beat competitors to the market and push the boundaries of the technology. Arguably the biggest turning point came in March 2023, when Pfizer inked one of the industry’s biggest acquisition contracts in the space, dropping $43 billion to buy ADC leader Seagen.

Since then, there have been several other high-value deals including J&J’s $2 billion acquisition of Ambrx in January 2024 and Genmab’s $1.8 billion buyout of ProfoundBio earlier this month. Roche is also investing heavily in the ADC space, signing a $1 billion contract earlier this year with China-based MediLink Therapeutics to develop a next-generation ADC agent.

Tristan Manalac is an independent science writer based in Metro Manila, Philippines. Reach out to him on LinkedIn or email him at tristan@tristanmanalac.com or tristan.manalac@biospace.com.

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