Merck to Acquire Acceleron Pharma for $11 Billion in Historic Move into Rare Diseases

On September 27 ET, The Wall Street Journal reported that MSD is set to complete the acquisition of Acceleron Pharma, Inc., with the deal expected to be announced this week.

Reuters had previously reported on the acquisition, noting that Acceleron Pharma was in advanced negotiations with a major pharmaceutical company for a cash acquisition at approximately $180 per share, representing a total deal value of $11 billion. The report at the time did not disclose the buyer's identity, with several global pharmaceutical companies considered potential acquirers. Merck now appears to have outbid other potential buyers, including Bristol Myers Squibb, which already holds a significant stake in the company.

Acceleron is a clinical-stage biopharmaceutical company focused on the research and development of anti-cancer drugs and orphan drugs for rare diseases. Its current pipeline primarily targets respiratory and hematological indications.

Currently, the pipeline hematology product Reblozyl has received marketing approval in the United States, Europe, and Canada. In the U.S. market, commercialization is managed by Bristol Myers Squibb, which holds an 11.5% stake in the company. Sales reached $240 million in the first half of 2021, generating $48 million in royalty revenue for Acceleron. According to estimates by Bristol Myers Squibb and Acceleron, Reblozyl's peak annual sales across all currently approved and pipeline indications could potentially exceed $4 billion.

Other core investigational drugs include Sotatercept (ActRIIA-Fc) for the treatment of pulmonary arterial hypertension, ACE-1334 for systemic sclerosis-associated interstitial lung disease (SSc-ILD), and Luspatercept (ActRIIB-Fc) for thalassemia.

According to Acceleron's 2020 Annual Report, with respect to sotatercept, if the drug is approved and commercialized for the treatment of pulmonary arterial hypertension, Acceleron is required to pay Bristol-Myers Squibb a royalty of at least 20% on global net sales.

Pulmonary arterial hypertension represents a multi-billion dollar market. Acceleron's investigational drug for pulmonary arterial hypertension is its "crown jewel." Sotatercept is poised to potentially become the first therapy that not only treats symptoms and slows disease progression, but may even offer a cure for the disease.

In the vast pulmonary arterial hypertension market, MSD is not the only company captivated by it. As early as 2017, Johnson & Johnson spent $30 billion to acquire the Swiss pharmaceutical company Actelion, securing its pulmonary arterial hypertension drug portfolio. In the first half of this year, global sales of these medications reached $1.7 billion.

If successful, this acquisition will be MSD's largest deal since its $41.1 billion acquisition of Schering-Plough in 2009, representing a bet on Acceleron Pharma's area of focus—respiratory and hematological disease treatments.

Sources: Pharmaceutical Notes, Acceleron, Reuters, Forbes News