RAHWAY, N.J. - Merck & Co., Inc. (NYSE:MRK), a global healthcare leader, has announced the acquisition of EyeBio, a private biotech company specializing in ophthalmology, in a deal that could be worth up to $3 billion. The transaction includes an upfront cash payment of $1.3 billion with the potential for an additional $1.7 billion tied to future milestones.
The acquisition is poised to significantly enhance Merck's footprint in the ophthalmology sector, adding EyeBio's novel late-phase candidate Restoret™ for diabetic macular edema (DME) and neovascular age-related macular degeneration (NVAMD) to its pipeline. Restoret™ is expected to enter a pivotal study for DME in the second half of 2024, following promising results from earlier clinical trials.
EyeBio's expertise in developing therapies for retinal diseases will be integrated into Merck's operations. The EyeBio leadership team, including founders Dr. David Guyer and Dr. Tony Adamis, will continue their work under Merck to advance the clinical development of Restoret™ and other programs.
The transaction, approved by EyeBio's Board of Directors, is subject to customary closing conditions, including the Hart-Scott-Rodino Antitrust Improvements Act. The deal is expected to close in the third quarter of 2024 and will be accounted for as an asset acquisition.
Merck anticipates recording a charge of approximately $1.3 billion, or $0.50 per share, which will be reflected in non-GAAP results for the quarter in which the transaction is finalized.
Restoret™ is an investigational, potentially first-in-class tetravalent, tri-specific antibody that targets the Wnt signaling pathway. It is designed to restore and maintain the blood-retinal barrier, addressing a significant unmet medical need in patients with retinal vascular diseases characterized by leakage.
The acquisition aligns with Merck's science-led business development strategy to diversify its pipeline. It follows less than three years after EyeBio's inception in August 2021, with the company successfully raising $130 million to date.
The information for this article is based on a press release statement.
InvestingPro Insights
Merck & Co. (NYSE:MRK) has made a strategic move to expand its portfolio in the ophthalmology space with the acquisition of EyeBio. This decision comes at a time when Merck's financial health and market performance show positive signs. With a robust market capitalization of $319.36 billion and a revenue growth of 6.11% over the last twelve months as of Q1 2024, Merck is positioning itself for further growth in the healthcare sector.
Investors should note that Merck's Price / Book ratio stands at 7.91, indicating a premium valuation compared to the book value of its assets. Additionally, the company is trading near its 52-week high, with a price that is 94.75% of this peak. While the P/E ratio is at a high of 138.68, the adjusted P/E ratio for the last twelve months as of Q1 2024 is considerably lower at 24.98, reflecting a more normalized earnings valuation.
Among the InvestingPro Tips for Merck, two particularly stand out in the context of this acquisition. Firstly, Merck has raised its dividend for 13 consecutive years, demonstrating a commitment to returning value to shareholders. Secondly, analysts have revised their earnings upwards for the upcoming period, which could be a reflection of confidence in Merck's growth trajectory, potentially buoyed by strategic acquisitions like that of EyeBio.
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Merck's next earnings date is set for July 30, 2024, which may provide further information on the impact of the EyeBio acquisition and the company's overall performance.
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