Merck buys Verona Pharma for $10B deal to bring life into its breathing prospects
Merck hit a $10 billion deal to acquire Verona Pharma, a biotechnology whose first class of drugs has been commercialized in an endemic lung disease and has shown potential in other respiratory diseases. The multi-block potential of the drug is important to Merck, which is searching for assets to compensate for the sharp drop in revenues of its highest overall product as it falls on the patent cliff.
London-based Verona owns U.S. deposit shares trading on Nasdaq. Under the terms of the acquisition announced Wednesday, Merck will pay $107 per share, which is a premium of more than 23% of Verona’s closing price on Tuesday. When Verona went public in 2017, its stock price was $13.50.
Verona’s main asset is Ohtuvayre, a drug that approved last year a maintenance treatment for chronic obstructive pulmonary disease (COPD). Ensifentrine, the main drug ingredient of this inhaled drug, is a small molecule with a dual mechanism of action. In addition to preventing the PDE4 enzyme from blocking inflammation, it blocks the PDE3 enzyme to expand the airway. This dual approach may be used in other respiratory diseases. Intermediate studies are underway for asthma, cystic fibrosis and noncystic fibrosis bronchodilation.
The indication of bronchodilation is particularly promising because this chronic lung disease is growing in prevalence and there are currently no FDA-approved treatments – although it may change soon. Insmed Drug Brensocatib is currently undergoing an FDA review in non-CF bronchodilation. It is expected that by August 12, the FDA decision to take oral small molecules is expected. Industry Observer Project INSMED Drugs could be a sensational seller. Ohtuvayre offers Merck a way to gain a possible market for bronchodilation.
When Ohtuvayre was approved in June 2024, it was the first new inhaled COPD drug with a new two decades of action mechanism. Since then, the 2-in-1 and core from GSK (both biologics that are injected) have specifically expanded the label to include COPD treatments driven by type 2 inflammation, a new indication of two blockbuster products.
Ohtuvayre is also expected to become a blockbuster seller. The market for COPD drugs is absorbed quickly. In the first quarter of this year, Verona reported about 25,000 Ohtuvayre prescription COPD prescriptions, while prescribers of drugs increased by 50%, compared with $71.3 million in the first quarter compared to the fourth quarter of 2024, up from $36.6 million in the previous quarter.
Verona CEO David Zaccardelli told Medcity News in an interview last year that he expects his company’s clinical and regulatory validation of PDE3 and PDE4 inhibition, and that through a single molecular inhibition will lead to other companies being able to seek this way. He added that Verona is committed to commercializing Ohtuvayre in the United States, but will seek partners to develop and commercialize in other markets. So far, the only partner is Shanghai-based Nuance Pharma, which gained rights to small Chinese molecules in 2021. In a Merck announcement Wednesday, Zaccardelli said the pharmaceutical giant’s business footprint and clinical capabilities will allow Ohtuvairss to promote Ohtuvayre to attract more COPD patients.
Merck’s top overall product is the cancer immunotherapy KeyTruda, which had revenue of $29.4 billion last year, up 17% from the previous year’s sales. But Keytruda’s patent expires in 2028, putting the drug giant in a position to find commercial assets or drugs in late development and potentially fill the upcoming revenue gap.
Merck said in the investors’ speech, Ohtuvayre represented billions of dollars in business opportunities in the mid-2030s. The pharmaceutical giant put Verona’s acquisition as a complement to its heart and lung portfolio, the product is currently the title of Winrevair, a drug that received FDA approval last year for the treatment of pulmonary hypertension. Winrevair comes from $11.5 billion in 2021 acquisition of Acceleron Pharma. Merck’s older cardiovascular drug went to Organon, when the unit left the Pharma giant earlier that year. Winrevair is now the top product for Merck’s cardio, accounting for $419 million in 2024 sales. The drug is also expected to be a sensational product.
“Ohtuvayre supplements and expands our pipeline and nutrient portfolio for cardiopulmonary disease while providing near- and long-term growth as well as shareholder value,” Merck CEO Robert Davis said in a prepared statement. “This novel first-class treatment is an important need for ongoing symptoms in patients with COPD based on a unique combination of bronchodilation and nonsteroidal anti-inflammatory effects.”
Merck’s acquisition of Verona has been approved by the board of directors of both companies. The transaction still requires approval from Verona shareholders and regulators. The two companies are expected to close their deals in the fourth quarter of this year.
Photo: Christopher Occhicone/Bloomberg
