MSD rumoured to be eyeing $3bn+ MoonLake takeover

MSD is reported to have been negotiating with Swiss biotech MoonLake Immunotherapeutics over a takeover deal – estimated to be worth more than $3 billion – according to media reports.

The Financial Times, citing three people familiar with the matter, said that MSD submitted a non-binding offer for MoonLake earlier this year, which was rejected, but suggested talks may be restarted.

In April, Nasdaq-listed MoonLake secured up to $500 million in financing from Hercules Capital to help fund a broad clinical development programme for lead drug sonelokimab, an IL-17-targeting nanobody in eight phase 2 and phase 3 clinical trials across indications, including a pair of pivotal trials in skin disorder hidradenitis suppurativa (HS) that is due to read out in the coming weeks.

MSD – known as Merck & Co in the US and Canada – has been steadily adding projects to its product pipeline as it prepares for the loss of patent protection for cancer immunotherapy Keytruda (pembrolizumab), which is due to take place around 2028.

Keytruda contributed $25 billion of MSD's $60.1 billion global sales last year, and the company has also been hit by a decline in revenues for its HPV vaccine Gardasil, its second biggest seller, and what the FT said was slower-than-expected uptake of new pulmonary arterial hypertension (PAH) therapy Winrevair (sotatercept), that it acquired as part of its $11.5 billion takeover of Acceleron in 2021.

Earlier this year, MSD chief executive Rob Davis said that the company needed to do more M&A to augment its pipeline and was open to considering business development deals in the "sweet spot" of $1 billion to $15 billion.

Tapping into MSD's financial muscle would make sense for MoonLake, given its ambitious development plans for sonelokimab across HS and follow-up indications including juvenile HS, palmoplantar pustulosis (PPP), psoriasis, psoriatic arthritis, and axial spondyloarthritis (axSpa).

Shares in the Zug-headquartered biotech have risen almost 18% since rumours of MSD's interest first emerged, trading at $48.55 at the time of writing, which gives it a market cap of more than $3.1 billion.

The company ended the first quarter of this year with cash reserves of $480 million and said that, alongside the Hercules financing facility, will fund its operations "into 2028." It has pitched sonelokimab as a "gold-standard" therapy for HS, a market it expects to grow from a value of around $2 billion at present to upwards of $10 billion in 2035.

Photo by Vidar Nordli-Mathisen on Unsplash