Deal hungry Merck plans more phase 3 launches than in 2023
After more than 20 phase 3 trials got underway in 2023, Merck is planning for even more this year, according to Dean Li, Ph.D., head of Merck Research Labs, on Thursday. Meanwhile, CEO Rob Davis says the company is hunting for more mid-sized deals.
Three new assets entered phase 3 trials in the fourth quarter, all three of which came from business development. MK-1022 is the most recent, coming over in Merck’s multi-billion dollar deal with Daiichi Sankyo announced in the fall. Candidates stemming from Merck’s licensing deal with Kelun and 2019 acquisition of Imago also entered phase 3 studies.
The advancement of programs stemming from deals only reinforces Davis’ continued commitment to business development, which he affirmed yet again on Thursday. In the last 12 months, Merck has acquired preclinical biotech Caraway Therapeutics, plus Prometheus Biosciences and Harpoon Therapeutics, each providing a different therapeutic area. All these moves are part of Merck’s larger diversification strategy to assuage investor concerns about Keytruda’s 2028 patent expiration.
“We do continue to believe we need more and we will continue to prioritize business development,” Davis said on the Thursday earnings call.
Davis reiterated that Merck is interested in deals between $1-15 billion, with the $10 billion-plus range being the sweet spot. The likes of Prometheus and Acceleron fell in this range and that’s “still the size of deals we are very interested in,” he said. For comparison, Merck’s foray into T-cell engagers through last month’s Harpoon buy cost the biotech $680 million.
Recent acquisitions and partnerships contributed to Merck’s ballooning R&D spend in 2023, which exceeded a whopping $30 billion in GAAP expenses. But when you subtract charges stemming from deals with Daiichi, Prometheus and Imago, the total falls to $13.6 billion, $100 million more than the 2022 total, and about 23% of 2023 sales.
Still, Merck is trimming around the edges of its pipeline, including external assets. Gone from the company’s phase 1 pipeline is MK-0482, which was in development for non-small cell lung cancer as recently as the third quarter. Clinical trial records show that the company terminated a phase 1 study in patients with leukemia at the beginning of the year for “business reasons.”
Merck is also narrowing the use of an antibody-drug conjugate acquired from VelosBio to focus solely on hematological malignancies. Earnings documents from the third quarter show that MK-2140 was being tested in a handful of solid tumors as well, but they’re now no longer listed alongside the asset.
A spokesperson for Merck & Co. did not immediately respond to a request for comment on the changing plans for both assets.