Rockville’s OncoImmune Inc., which is advancing its lead therapeutic candidate as a Covid-19 treatment, has inked a deal to be acquired by New Jersey pharmaceutical giant Merck & Co. (NYSE: MRK) for $425 million in cash.
Under the transaction, announced Monday, OncoImmune’s shareholders could receive payments based on sales of that product and certain regulatory milestones.
As part of the deal, the local biopharma will also spin out certain assets unrelated to its Covid-19 program — namely, its immune-oncology candidates — to a new business owned by the company’s existing shareholders. Merck would then invest $50 million as a minority shareholder in that entity, the parties said.
The transaction is expected to close before the end of 2020.
The clinical-stage immunotherapy company, which focuses on cancer and autoimmune diseases, secures its exit after releasing positive interim data from its late-stage study of its lead drug candidate in severe Covid-19 cases. That analysis showed that patients with severe or critical cases of coronavirus who received the candidate, called CD24Fc, showed a 60% greater chance of improvement than patients who did not receive it — and that the therapy cut the risk of respiratory failure and death by more than half.
“Outstanding work by the OncoImmune team has provided compelling evidence regarding the use of CD24Fc in patients with severe and critical Covid-19 in our phase 3 trial,” OncoImmune co-founder and CEO Yang Liu said in a statement. “We look forward to working with the scientists and manufacturing engineers at Merck as well as regulators as we seek to accelerate the global development of this potentially important therapy.”
Goodwin Procter LLP served as legal adviser and Guggenheim Securities as financial adviser for OncoImmune.
The move comes two months after OncoImmune raised $56 million in Series B funding and two decades after Liu started the company to develop molecular therapies for cancer and multiple sclerosis.
OncoImmune’s candidate “will represent an important addition to the Merck pipeline of investigational medicines and vaccines designed to address the Covid-19 pandemic,” Dr. Roger Perlmutter, president of Merck Research Laboratories, said in a statement.
Merck is working to find both a treatment for, and defense against, the coronavirus, as the pandemic accelerates more than eight months since its start in the U.S. in mid-March. The company is working with Miami’s Ridgeback Biotherapeutics to evaluate an oral antiviral candidate, now in phase 2 and 3 trials. It’s also among the companies developing coronavirus vaccine candidates, with two in the works: one with Austria’s Themis Bioscience and another with research nonprofit International AIDS Vaccine Initiative, or IAVI.
Merck’s deal with OncoImmune comes as the larger firm trails some of the frontrunners in the vaccine race: New York’s Pfizer Inc. (NYSE: PFE) and Germany’s BioNTech SE (NASDAQ: BNTX) have jointly filed for emergency use authorization with the Food and Drug Administration after disclosing strong efficacy for their vaccine candidate; Cambridge, Massachusetts-based Moderna Inc. (NASDAQ: MRNA) likewise came out with impressive results; and British pharmaceutical company AstraZeneca PLC (NASDAQ: AZN) and the University of Oxford announced positive findings Monday.
Gaithersburg’s Novavax, too, has a vaccine candidate. It still has ground to cover, though it is now armed with a fast-track designation from the FDA.
