Merck’s search for its next blockbuster product continues to go beyond cancer. The pharmaceutical giant has agreed to pay $10.8 billion to acquire Prometheus Biosciences, a biotech with a Phase 3-ready drug candidate that could be the first in a new class of immunology therapies.
While Merck frames the Prometheus drug, PRA-035, as a potential blockbuster in ulcerative colitis and Crohn’s disease, the company says the acquisition is about more than those two inflammatory bowel disorders (IBD). The antibody drug’s potential extends to other autoimmune indications as well. Going further, Merck executives point to the technology that fuels Prometheus’s drug research, a platform that links genetics and biology to guide a precision medicine approach. Merck sees that technology as a way to build on an approach it took in cancer immunotherapy.
“The fact that they have this extraordinary biomarker database and having already identified a very important biomarker for ulcerative colitis really will serve to change the way in which immunologists think about their patients and think about these diseases,” Eliav Barr, head of global development and chief medical officer, said during a Monday conference call. “We’ve done that revolution in immuno-oncology and anticipate similar things in the immunology space.”
According to terms of the acquisition agreement, Merck will pay $200 cash for each Prometheus share, a 75.4% premium to the stock’s closing price on Friday. When San Diego-based Prometheus went public in 2021, it priced its shares at $19 apiece. Merck’s Prometheus acquisition is expected to close in the third quarter of this year.
Merck is looking to expand the breadth of its drug portfolio as it faces expected revenue declines in cancer. The cancer immunotherapy Keytruda continues to be the pharma giant’s top-selling product with $20.9 billion in 2022 revenue, a nearly 22% increase over drug’s sales in the prior year. But sales will decline as the drug’s patents expire in coming years. In 2021, Merck acquired Acceleron Pharma in an $11.5 billion deal that brought pulmonary arterial hypertension drug candidate sotatercept, a potential blockbuster product. Immunology represents a wide open area for Merck growth. The company’s immunology portfolio is currently represented by two anti-inflammatory products, Simponi and Remicade. Sales for both antibody drugs have been declining.
Despite the availability of drugs for IBD, it’s a large indication with large unmet medical need. Standard treatments include anti-inflammatory drugs and immune system suppressing therapies, but these products don’t work for all patients. Newer options include small molecule and biologic drugs. Nevertheless, the available IBD therapies come with side effect risks, some of them potentially fatal.
PRA023 was designed to block tumor necrosis factor-like ligand 1A (TL1A), a protein associated with both intestinal inflammation and fibrosis. Last December, Prometheus reported positive data from separate Phase 2 tests of PRA023 in ulcerative colitis and Crohn’s disease. In addition to hitting trial goals for efficacy, the drug was well-tolerated and no safety problems were identified. In February, Prometheus presented results from both studies at the annual meeting of the European Crohn’s and Colitis Organisation. Based on those data, the company planned to advance the drug to Phase 3 testing in both intestinal disorders. Merck says it expects to begin that study late this year or in early 2024.
Prometheus has said that PRA023’s ability to address both inflammation and fibrosis offers the potential for expanding the drug to other indications. In its 2022 annual report, the company notes the drug’s ability to bind to TL1A and activate the DR3 receptor, a pathway that modulates many types of immune cells and pathways. Last year, Prometheus began a Phase 2 study enrolling patients whose systemic sclerosis, an autoimmune disorder also known as scleroderma, has led to interstitial lung disease. This lung condition is characterized by fibrosis, the formation of scar tissue that causes damage that diminishes the organ’s function. Preliminary data from the study are expected in the first half of 2024. Prometheus has said it expects to disclose a fourth potential indication for the drug later this year.
In 2021, Merck revealed its immunology ambitions with the $1.8 billion acquisition of Pandion Therapeutics and a lead drug candidate that at the time had recently posted encouraging Phase 1 data in ulcerative colitis. The drug pairs a signaling molecule called IL-2 with a mutated protein (mutein). The Pandion candidate is intended to selectively activate regulatory T cells in the body to counteract inflammation. But some IL-2 efforts have hit setbacks. Last year, Bristol Myers Squibb ended its alliance with Nektar Therapeutics after that company’s drug failed a Phase 3 test in melanoma, followed by trial failures in kidney and bladder cancers. Last October, Sanofi took a €1.6 billion writedown after the IL-2 drug from its Synthorx acquisition posted lower than projected efficacy.
The Pandion drug, since renamed MK-6194, is still in Merck’s pipeline but no longer in ulcerative colitis. Dean Li, president of Merck Research Laboratories, said the company tries to understand how other drugs succeed and fail, while also understanding the ways that these molecules are different from its own pipeline candidates. Barr said that as a mutein, MK-6194 is different than IL-2-targeting agents. Based on Phase 1b testing, he said Merck plans to advance this drug to mid-stage testing in vitiligo, alopecia areata, lupus, and atopic dermatitis. Neither Li nor Barr specified why Merck did not decide to test the drug in ulcerative colitis.
If TL1A offers a better way to treat ulcerative colitis than an IL-2 drug, Merck faces competition for the target. A new Roivant Sciences subsidiary formed late last year with rights to a TL1A-targeting antibody from Pfizer. Results from a Phase 2b test of the drug are expected in the first half of this year.
Merck faces additional IBD competition. Last year, the FDA approved AbbVie drug Rinvoq for treating moderate-to-severe ulcerative colitis. The drug, a small molecule that belongs to a class of drugs called JAK inhibitors, has also been submitted for FDA review in Crohn’s disease. However, JAK inhibitors are associated with serious side effect risks. Eli Lilly aims to treat ulcerative colitis with mirikizumab, an antibody that blocks a protein called IL-23. The FDA rejected the mirizumab last week citing manufacturing issues. But the regulator did not flag any safety or efficacy problems with the Lilly drug and manufacturing problems usually amount to a delay for a drug’s approval.
Though PRA032 was designed specifically to address patients whose IBD was characterized by higher levels of TL1A, Barr said there’s potential for the drug to be used more broadly. The Phase 3 study will enroll all patients with ulcerative colitis and will be sufficiently powered to assess whether being positive for the TL1A biomarker affects the overall efficacy of the drug. While citing the usual caveats of making cross-trial comparisons, Barr said the Phase 2 results of PRA023 showed efficacy that was comparable to available ulcerative colitis drugs.
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