In the second biggest acquisition of the year, Merck gains the commercial COPD drug Ohtuvayre, which could help offset the loss of revenue when Keytruda’s patent expires later this decade.
Merck is dropping $10 billion to acquire Verona Pharma and its commercial chronic obstructive pulmonary disease drug Ohtuvayre in a move that builds out the Big Pharma’s respiratory pipeline and shores up its revenues ahead of Keytruda’s impending loss of exclusivity.
“The decision to acquire Verona clearly reflects a management’s intent to work to replace commercial revenues now, ahead of Keytruda’s upcoming [loss of patent exclusivity] in the back half of the decade,” analysts at BMO Capital Markets told investors in a Wednesday note.
Under the terms of Wednesday’s acquisition, Merck will pay $107 for each of Verona’s American Depository Share, each of which represents eight ordinary shares of the company, for a total transaction value of approximately $10 billion. Boards of both companies have unanimously signed off on the deal, which is expected to close in the fourth quarter of this year, pending antitrust and regulatory clearances as well as other customary conditions.
The $10 billion price tag makes the Verona acquisition the second largest M&A deal of the year, only trailing Johnson & Johnson’s buy of Intra-Cellular in January.
The Verona buy brings into the Merck fold an already-approved asset in Ohtuvayre. The drug “could immediately add to Merck’s top line,” BMO said, noting that estimates put 2025 sales for Ohtuvayre at around $400 million, with peak sales forecasts reaching some $3.4 billion.
The FDA cleared Ohtuvayre in June last year as a maintenance COPD treatment. In the first quarter, Verona estimates it filled some 25,000 prescriptions for the drug, recording $71.3 million in sales. Ohtuvayre will help Merck continue to evolve its respiratory portfolio, which recently saw a potentially big-ticket approval: the respiratory syncytial virus antibody Enflonsia last month. Within two weeks of its approval, Enflonsia scored a recommendation from the CDC’s vaccine advisory council for children less than eight months old who weren’t protected by maternal antibodies.
Ahead of Keytruda losing key patent protections in 2028, Merck in recent years has gone on a shopping spree, snapping up subsidiaries. In April 2023, for instance, the pharma shelled out $10.8 billion to take over Prometheus Biosciences, gaining a pipeline of therapies for inflammatory and immune-mediated diseases. A few years earlier, in September 2021, Merck dropped $11 billion to buy rare disease player Acceleron Pharma.
The Big Pharma has also secured some smaller buys. In November 2022, Merck dished out $1.36 billion to acquire Imago Biosciences and its collection of therapies for bone marrow malignancies. And in May last year, the pharma bought EyeBio for up to $3 billion, making its comeback in the ophthalmology space after divesting from that area in the U.S., Japan and some European markets in 2013 and 2014.