Rumor Alert: Merck KGaA to Buy Madrigal and Roche to Acquire Tesaro?


Investors love their takeover rumors, and with biopharma having a good year for mergers and acquisitions, there’s been plenty to keep them busy. Here’s two takeover rumors that came out of Spanish media group Intereconomia.

Germany’s Merck KGaA is rumored to be acquiring Madrigal Pharmaceuticals in the next week. Madrigal is headquartered in West Conshohocken, Pennsylvania. It is a clinical-stage biopharma company focused on drugs that target a specific thyroid hormone pathway in the liver. This pathway is a key regulatory pathway linked to various cardio-metabolic and fatty liver diseases with high unmet medical need.

Madrigal’s lead product is MGL-3196, an orally administered, small-molecule, liver-directed, truly beta-selective thyroid hormone receptor (THR) agonist. In preclinical and Phase I trials it has shown a broad range of beneficial effects, improving metabolic syndromes, such as insulin resistance and dyslipidemia, and fatty liver disease, including lipotoxicity and inflammation. As a result, the company has launched Phase II clinical trials of the drug for non-alcoholic steatohepatitis (NASH) and familial hypercholesterolemia (FH).

On May 31, Madrigal announced positive top-line data from 36-week results from its Phase II trial in NASH. NASH is similar to cirrhosis of the liver, but occurs in individuals with little or no alcohol consumption. Aside from diet and exercise, there are no approved treatments, and many companies, such as Allergan, Takeda Pharmaceuticals, and Gilead Sciences are placing a lot of resources on developing treatments for the disease.

“The degree of NASH resolution, an approved FDA endpoint, in patients who received MGL-3196 for nine months we believe suggests a high likelihood of success in a larger trial with a somewhat longer treatment period in a Phase III study designed similarly to this Phase II study, pending regulatory agreement with such a design,” said Paul Friedman, Madrigal’s chief executive officer, in a statement at the time. “Further, considering what we have learned regarding drug exposure and dosing, we believe there is potential to resolve NASH in as little as nine months in 30 to 40 percent of patients receiving only MGL-3196, a well-tolerated once a day oral therapy.”

According to Intereconomia, there was a competitive process involving three companies to acquire Madrigal, with Merck KGaA coming out on top. Madrigal has a market cap of about $4.38 billion. Reportedly the bid has been made, but not yet announced.

Intereconomia also reports that Roche is rumored to acquire Tesaro soon. This rumor has actually been floating around for about a month. At least one analyst, Kennen MacKay with RBC, thinks it’s unlikely “given what we see as a lack of a compelling strategic rationale.”

Tesaro markets Zejula to treat ovarian cancer, but has competition from AstraZeneca and Clovis Oncology. Tesaro’s 2018 guidance suggests Zejula sales are sagging, which MacKay thinks would make any possible buyer think twice.

Intereconomia’s initial rumor report came out shortly after Roche acquired Foundation Medicine for $2.4 billion. Foundation Medicine is a molecular information company focused on cancer care, specifically developing and offering comprehensive genomic profiling assays that help match up the patient’s cancer with the best drugs to treat it.

The Intereconomia article (translated from Spanish) noted, “According to sources close to the operation, it could announce the acquisition of Tesaro in the coming days, with which it already has strategic alliances. Roche has commissioned the negotiations of this acquisition to the U.S. bank Citibank. This step is undoubtedly a consolidation in the oncology sector and would significantly strengthen this division in the Swiss pharmaceutical industry, further strengthening its position as world leader in the pharmaceutical sector.”

It seems possible that the Merck KGaA-Madrigal deal is a real thing, but the Roche-Tesaro deal seems more speculative, with the rumor having been swirling for the last month. Stay tuned.

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