Merck to Acquire Oncolytic Virus Firm Viralytics in $394M Deal
Sydney-based Viralytics has now inked a A$502 ($394 million) acquisition deal with Merck & Co., expanding the latter’s immuno-oncology pipeline with a mid-stage oncolytic immunotherapy that has already shown positive clinical data in combination trials.
Sydney-based Viralytics’ most advanced candidate is Cavatak, a common cold RNA virus. Viralytics selected the nongenetically altered virus on the strength of its ability to target ICAM-1 and infect a variety of cancer cells. Once inside the cells, the virus starts wiping out the tumor through oncolytic and immunotherapeutic activity. That mechanism chimes with Merck’s strategy.
The experimental therapy is currently being tested in multiple Phase I and Phase II clinical trials, both as an intratumoral and intravenous agent, including in combination with Merck’s anti-PD-1 therapy Keytruda (pembrolizumab).
Under terms of the agreement, Merck will pay $394 million for Viralytics, which represents a 160 percent premium to the weighted average price of Viralytics common shares over the past month. Merck and Viralytics anticipate the transaction will be implemented by the second quarter of 2018.
The deal is subject to approval by Viralytics shareholders. Viralytics said it has secured the backing of its largest shareholder, Lepu Medical Group
, which currently holds voting power in 13 percent of the Viralytics’s shares. Lepu Medical acquired its $23 million stake in January of this year.“Viralytics’s approach of engaging the innate immune system to target and kill cancer cells complements our immuno-oncology strategy, which is focused on the rapid advancement of innovative monotherapy approaches and synergistic combinations to help the broadest range of cancer patients,” said Dr Roy Baynes, senior vice president and head of global clinical development, chief medical officer, Merck Research Laboratories.
“We are eager to further build on Viralytics’s science as we continue our efforts to harness the immune system to improve long-term disease control and survival outcomes for people with cancer.”
“This proposed acquisition culminates years of dedicated work by the Viralytics team and represents an opportunity for significant value creation for our shareholders. Viralytics is proud to have progressed its lead investigational candidate Cavatak to Phase I and Phase II clinical trials and, we believe that Merck, the leader in immuno-oncology, is best suited to advance Cavatak for the benefit of patients globally, and to realize its potential,” Malcolm McColl, managing director and chief executive officer of Viralytics said in a statement.
