Merck said Wednesday it would buy COPD drugmaker Verona Pharma for $10 billion. The news sent Verona stock flying, while Merck shares ticked higher.
An estimated 11.7 million people in the U.S. contend with COPD, or chronic obstructive pulmonary disease. Verona's Ohtuvayre blocks enzymes called PDE3 and PDE4. This allows it to act as an anti-inflammatory and a bronchodilator, relaxing the muscles in the lungs and widening the airways.
The acquisition reflects Merck's work to expand its portfolio of treatments for cardio-pulmonary diseases, Chief Executive Robert Davis said in a statement.
"Ohtuvayre complements and expands our pipeline and portfolio of treatments for cardio-pulmonary diseases while delivering near- and long-term growth as well as value for shareholders," he said.
Verona Pharma shares surged 20.6%, closing at 104.77. That put shares within striking distance of the 107 a share takeover price. Merck stock rose 2.9% to 83.71.
Verona Pharma's Commercial Success
Verona's drug works differently from Regeneron Pharmaceuticals' and Sanofi's Dupixent, which won approval to treat COPD last September. Dupixent is an injected drug that blocks an inflammatory cytokine called IL-4. This allows it to tackle one form of inflammation. But Verona's executives said Ohtuvayre can work on both forms of inflammation.
During the first quarter, Ohtuvayre brought in $71.3 million in sales, growing 95% sequentially and crushing expectations for $50.3 million. Verona Pharma said there were 25,000 Ohtuvayre prescriptions filled in the first three months of the year.
Wall Street expects another quarter of solid Ohtuvayre growth. Analysts project $91.8 million in sales, which would grow 29% vs. the first quarter, according to FactSet.
David Zaccardelli, Verona's CEO, says the deal will markedly expand Ohtuvayre's reach.
"We believe Merck's commercial footprint and industry-leading clinical capabilities will help accelerate the potential of Ohtuvayre to reach more patients living with COPD," he said in a written statement. "This agreement will enable the strong launch trajectory of this important medicine and provides value to Verona Pharma shareholders."
The companies expect the deal to close in the fourth quarter.
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