Merck announced that it will acquire immune-focused Prometheus Biosciences for approximately $10.8 billion, scoring five clinical and pre-clinical candidates for inflammatory bowel and immune-mediated diseases.

According to terms of the all-cash agreement, Merck will buy all of Prometheus’ outstanding shares for $200 a piece, representing a 75% premium to Prometheus’ Friday closing price of $114. The companies expect to close the deal in the third quarter of 2023.

At the center of the transaction is Prometheus’ investigational monoclonal antibody, PRA023, which is set to enter late-stage studies later this year for ulcerative colitis (UC) and Crohn’s disease (CD). The drug targets and inhibits the action of tumor necrosis factor (TNF)-like ligand 1A (TL1A), a key immune factor that plays a role in both inflammation and fibrosis in intestinal immune-mediated disease.

In December, Prometheus announced results from Phase II and IIa studies that showed promising efficacy and safety in both inflammatory bowel diseases.

In the Phase II ARTEMS-UC study, 26.5% of patients with moderately-to-severely active UC reached clinical remission 12 weeks after receiving PRA023, as opposed to 1.5% of placebo comparators. Prometheus’ candidate also demonstrated superior endoscopic improvement and met all of the trial’s secondary endpoints.

According to Merck, PRA023 also performed well in the Phase IIa APOLLO-CD study, eliciting a 49.1% clinical remission rate in patients with moderately-to-severely active disease, compared with a 16% historical placebo rate. The candidate also led to higher endoscopic response and improved several markers of fibrosis and inflammation.

Both trials enrolled patients who had failed prior lines of therapy.

Prometheus is also evaluating PRA023 in systemic sclerosis-associated interstitial lung disease in Phase II assessments. In March 2022, the company kicked off the Phase II ATHENA-SSc-ILD study in this indication, with topline results expected in the first half of 2024.

Aside from PRA023, Prometheus is advancing four other candidates for immune-mediated indications, all of which will join Merck’s fold after the buyout.

The Prometheus acquisition is Merck’s second big foray into the immune-mediated inflammatory disease space. In February 2021, Merck shelled out $1.85 billion to buy Pandion Therapeutics, gaining access to its lead asset, PT101, an engineered IL-2 mutein with a protein backbone. The candidate selectively targets regulatory T cells and promotes their activity and expansion to treat autoimmune diseases. 

Now called MK-6194, the candidate is in Phase I studies for UC, launched in 2021, and atopic dermatitis, initiated in July 2022.