Merck (MRK, Financials) is spending $10 billion to acquire U.K.-based Verona Pharma, the company announced Wednesday; the move is part of Merck's push to diversify its drug portfolio as its blockbuster cancer drug Keytruda approaches major patent cliffs starting in 2028.
Verona brings with it Ohtuvayre, an inhaled treatment for chronic obstructive pulmonary disease, often known as “smoker's lung.” The drug was approved earlier this year and has generated $42.3 million in sales so far in 2024; analysts see long-term potential, estimating peak annual revenue could top $3 billion.
Merck will pay $107 per American depository share—representing a 23% premium to Verona's last Nasdaq close. Shares of Verona surged 20% in premarket trading following the announcement; Merck edged slightly higher.
This is Merck's largest deal since its $10.8 billion acquisition of Prometheus Biosciences in 2023 and adds to its growing pipeline of late-stage assets. The company has made a string of acquisitions since 2021, including the $11.5 billion Acceleron deal, which brought in Winrevair—a treatment for pulmonary arterial hypertension.
While analysts generally welcomed the Verona deal, some flagged that Merck still has work to do to assure investors it can offset looming Keytruda losses. “This looks like a potential complementary therapy,” said Kevin Gade of Bahl & Gaynor. But others, like BMO Capital's Evan Seigerman, noted that one acquisition won't be enough to fully bridge the gap.
