Merck KGaA in Advanced Talks to Acquire SpringWorks Therapeutics for $3.5 Billion

German pharmaceutical giant Merck KGaA is in late-stage negotiations to acquire SpringWorks Therapeutics, a rare cancer-focused biotech company, for approximately $3.5 billion. The potential deal, which could be announced as early as Monday, would value SpringWorks at $47 per share, marking a significant development in the pharmaceutical industry's ongoing consolidation efforts.

Deal Details and Market Reaction

Merck KGaA confirmed that while no formal, legally binding arrangement has been reached, the companies are actively discussing the proposed acquisition. The news has already had a notable impact on the market, with SpringWorks' share price jumping 9% on Thursday following the reports.

The current negotiations value SpringWorks at around $47 per share, a figure that sits between the company's recent market fluctuations. SpringWorks' stock had previously surged to around $60 when talks with Merck were first reported in February but had since fallen to below $35 earlier this month.

Strategic Implications for Merck KGaA

The potential acquisition of SpringWorks comes at a crucial time for Merck KGaA, following a series of clinical setbacks in recent years. The company has faced challenges with its BTK blocker evobrutinib, which received a partial clinical hold from the FDA in April 2023 due to liver injury concerns. Subsequently, evobrutinib failed two Phase III studies in relapsing multiple sclerosis, leading to the termination of its development program in March 2024.

Additionally, Merck KGaA experienced another setback in June 2024 when it was forced to axe trials of xevinapant after the drug candidate failed to significantly improve survival in patients with locally advanced head and neck cancer.

SpringWorks' Portfolio and Pipeline

The acquisition of SpringWorks would provide Merck KGaA with a valuable portfolio of approved drugs and promising pipeline candidates in the oncology space. SpringWorks' assets include:

1. Ogsiveo: Approved for adults with progressing desmoid tumors, generating $172 million in U.S. sales last year.
2. Gomekli: An oral drug recently approved for neurofibromatosis type 1 with symptomatic plexiform neurofibromas.
3. Brimarafenib: A selective RAF dimer inhibitor in Phase 1b trials for colorectal and pancreatic cancer.
4. SW-682: A TEAD inhibitor in Phase 1 studies for Hippo-mutant solid tumors.
5. SW-3431: A PP2A activator with plans for human trials this year.

This portfolio aligns with Merck KGaA's focus on oncology and rare diseases, potentially reinvigorating its pipeline and market position in these therapeutic areas.