Merck KGaA’s Rare Tumor Strategy Takes Shape With $3.9B SpringWorks Acquisition
Merck KGaA is building up its portfolio and pipeline with a $3.9 billion deal to acquire SpringWorks Therapeutics, a company with two FDA-approved rare tumor drugs, both of which offer the potential to expand their uses to the treatment of several types of cancer.
According to financial terms announced Monday, Merck KGaA will pay $47 for each share of SpringWorks. While that’s a 4.6% premium to SpringWorks’s closing stock price on Friday, it represents a 26% premium to the biotech’s stock price before speculation about a Merck acquisition emerged in early February. When SpringWorks went public in 2019, the biotech priced its shares at $18 each.
Stamford, Connecticut-based SpringWorks launched in 2017 with two in-licensed drugs that Pfizer had shelved after initially developing them in cancer. SpringWorks shifted the development of both small molecules toward nonmalignant tumors that have few, if any, treatments. One of those drugs, Ogsiveo, is a small molecule designed to block an enzyme that activates a receptor associated with tumor growth.
In 2023, Ogsiveo became the first FDA approved drug for desmoid tumors, a type of tumor affecting connective tissue. SpringWorks reported $172 million in revenue for the product in 2024. The drug is also in mid-stage clinical development for ovarian granulosa cell tumors, a rare type of ovarian cancer that currently has no FDA-approved therapies. Through partnerships, the twice daily pill is being evaluated as part of combinations with BCMA-targeting therapies for multiple myeloma.
The second drug licensed from Pfizer is Gomekli, a small molecule inhibitor of two MEK proteins. In February, the FDA approved Gomekli for the treatment neurofibromatosis type 1 (NF1), a rare genetic disease that leads to the formation of tumors on nerves. With an approval that covers both adults and children, Gomekli has an advantage over AstraZeneca’s Koselugo, which is only approved for pediatric NF1 patients. Gomekli is also in mid-stage clinical development for pediatric low-grade gliomas.
Ogsiveo and Gomekli are under regulatory review in Europe. Ogsiveo is expected to receive a European Medicines Agency decision in desmoid tumors in the current quarter. Broader commercialization of both drugs will boost the payout to Pfizer, which is in line for commercialization milestone payments of up to $232.5 million for Ogsiveo and up to $229.8 million for Gomekli, according to SpringWorks regulatory filings.
Darmstadt, Germany-based Merck said the SpringWorks acquisition fits a strategic goal of strengthening its U.S. presence. The company added that the SpringWorks drugs complement its own portfolio, which includes pimicotinib, a drug that Abbisko Therapeutics has advanced to late-stage clinical development for tenosynovial giant cell tumor, a type of tumor that forms in and around joints. Besides surgery, the only FDA-approved drugs for these rare tumors are products from Ono Pharmaceuticals and Daiichi Sankyo. Last month, Merck paid $85 million to exercise its option for global commercialization rights to Abbisko’s drug.
“We have the unique opportunity with SpringWorks to establish a leadership position in rare tumors and build a strong foundation for further investments in this area, where a large unmet medical need exists,” Peter Guenter, CEO of Merck KGaA’s healthcare division, said in a prepared statement.
Merck said it is funding the SpringWorks acquisition with available cash and new debt. The company added that it retains the financial ability to pursue larger transactions, with life science deals being a priority. The Merck and SpringWorks boards of directors and have approved the acquisition, which is expected to close in the second quarter of this year. The deal still needs approvals from SpringWorks shareholders and regulators.
Photo by SpringWorks Therapeutics
