Merck's $3B+ Bid for MoonLake Signals Shift in Late-Phase Biotech Landscape

Pharmaceutical giant Merck & Co. has reportedly made a bold move in the biotech acquisition arena, offering over $3 billion for MoonLake Immunotherapeutics. This development, revealed by the Financial Times, underscores Merck's strategic pivot as it faces the looming loss of exclusivity for its blockbuster cancer drug Keytruda.

Merck's Acquisition Strategy and Pipeline Diversification

Merck's reported offer for MoonLake, which was initially rejected but may be revisited, represents a significant step in the company's efforts to diversify its pipeline beyond oncology. CEO Robert Davis recently emphasized Merck's ambition to expand into cardio-metabolic, immunology, ophthalmology, and vaccine sectors.

The potential acquisition aligns with Merck's dealmaking strategy, focusing on transactions in the $1 billion to $15 billion range. This approach has already seen the company secure several deals to bring molecules discovered in China to Western markets, although Davis clarified that this is not a deliberate geographic bias.

MoonLake's Sonelokimab: A Promising Asset

At the heart of Merck's interest lies MoonLake's lead candidate, sonelokimab, a nanobody inhibiting IL-17A and IL-17F. Originally licensed from Merck KGaA in 2021, sonelokimab is currently in late-stage development for various inflammatory conditions:

• Hidradenitis suppurativa: Phase 3 primary endpoint data expected in September 2025
• Psoriatic arthritis: Ongoing Phase 3 studies
• Psoriasis, palmoplantar pustulosis, and axial spondyloarthritis: Advancing towards pivotal trials

The acquisition of sonelokimab could provide Merck with a potential revenue stream to offset anticipated biosimilar competition to Keytruda, expected to emerge in 2028.

Market Reaction and Industry Implications

News of Merck's interest has had an immediate impact on MoonLake's market position. The biotech's stock rose nearly 18% in premarket trading, pushing its share price to $48.50 and elevating its market capitalization above the reported $3 billion offer.

This development may signal a renewed interest in late-phase biotech companies, potentially catalyzing further acquisition activity in the sector. As large pharmaceutical companies like Merck seek to bolster their pipelines and diversify revenue streams, innovative late-stage assets in areas such as immunology are likely to become increasingly attractive targets.