A decade after departing the ophthalmology drug market, Merck is launching a return to the field in a $1.3 billion upfront cash acquisition for Series A-stage EyeBio.
Merck could dish out another $1.7 billion in biobucks, EyeBio CEO David Guyer confirmed to Endpoints News. Merck largely exited the ophthalmology space when it sold off its US unit in the eye disease field to Akorn Pharmaceuticals and divested its products in Japan and other Asia-Pacific and European markets to Santen Pharmaceutical in 2014.
David GuyerThe Wall Street Journal first reported the impending deal on Tuesday, citing anonymous sources, and the Financial Times reported the agreement Wednesday morning. (Endpoints is a part of FT Specialist, a unit of the Financial Times.)
Merck said Wednesday morning the deal is expected to close in the third quarter. EyeBio expects to begin a Phase 2/3 pivotal trial of its lead asset, named restoret, that same quarter, Guyer said. The diabetic macular edema study will include about 200 sites globally, he said.
Derived from regenerative medicines startup AntlerA Therapeutics, the tri-specific Wnt agonist antibody aims to tamp down on leakage in vascular eye diseases, including diabetic macular edema and neovascular age-related macular degeneration.
The deal follows a steady drumbeat of tuck-in or bite-sized acquisitions for the industry so far this year, including Johnson & Johnson’s $1.25 billion Yellow Jersey deal and Asahi Kasei’s $1 billion-plus move for Calliditas on Tuesday.
A re-entry into the ophthalmology field could help Merck shore up its mid- and late-stage development pipeline and gain access to a multibillion-dollar market currently driven by blockbuster medicines such as Regeneron’s Eylea and Roche’s Vabysmo.
Dean Li“We would be interested in not being a one-trick pony in this space and that by working with EyeBio this allows a lead candidate to go and other compounds will come though,” Merck Research Laboratories president Dean Li said in an interview with Endpoints. “I would make this a little bit analogous to our Prometheus [deal], which is we have an anti-TL1A that gets everyone’s attention as a lead molecule to drive into Phase 3, but there are many other immunology programs coming behind that.”
Behind restoret, EyeBio has a “restoret 2.0” and other preclinical assets that are “important in relationship to what I would call standard vascular endothelial growth factor pathways,” Li said.
“Despite the $12 billion in sales from anti-VEGFs, there is a significant group of patients that do not have the optimal vision and still have residual fluid,” Guyer said in an interview with Endpoints last fall.
At a conference earlier this year, the New York and London biotech said restoret led to a mean 11.2-letter vision improvement in early-stage testing.
“In our initial data presented at the Macula Society, all of those eyes were naïve, never treated with anti-VEGFs before, never treated during the trial and not rescued, and we know the natural history does not improve,” Guyer said in a Wednesday interview. “So to see improvement in all these patients by imaging and such significant vision gains of 11.2 letters in only three months, certainly we think was a very strong signal that Wnt agonism is likely and potentially important for these back-of-the-eye diseases.”
Plugging a Keytruda-sized gap
Merck’s cancer medicine powerhouse, the immunotherapy Keytruda, is approaching a major patent cliff in 2028. The antibody has become a staple prescription in many pockets of the oncology treatment landscape and drove 41% of Merck’s full-year 2023 revenues, bringing in $25 billion.
To stave off the steep declines that could happen early next decade, the New Jersey pharma giant has been looking for external innovation that could deliver new treatments later this decade or at the start of the 2030s. Merck has been the most active acquirer among large pharmas since January 2018, making 19 M&A deals since then, according to Stifel and DealForma data.
Under CEO Rob Davis, the more-than-century-old pharmaceutical conglomerate has inked deal after deal, and one of its largest bets, the $11.5 billion for Acceleron in 2021, recently paid off with a key FDA approval in pulmonary arterial hypertension. It’s also bought immunology drug developer Prometheus Biosciences for $10.8 billion, T cell engager biotech Harpoon Therapeutics for $680 million, and safer ADC startup Abceutics for up to $208 million.
Merck was familiar with EyeBio by way of its corporate venture capital arm, MRL Ventures Fund, which invested in the startup. It’s a dealmaking strategy that Merck has deployed before, with acquisitions like Caraway Therapeutics and Imago BioSciences.
EyeBio had doubled its Series A to $130 million last fall. SV Health Investors helped create the company. Additional backers of the young startup include Jeito Capital, Bain Capital Life Sciences, Omega Funds, Vertex Ventures HC and Samsara BioCapital. Last week, French firm Jeito secured another portfolio company exit via Biogen’s $1.15 billion bid for HI-Bio.
EyeBio was in the process of raising a Series B, but was also getting inbound buyout interest from pharma companies, Guyer said.
While Merck largely departed ophthalmology, it has a decadeslong legacy in the field with the first glaucoma drug in the 1950s and then ivermectin for river blindness starting in the 1980s. Merck has said it’s donated more than 4.4 billion ivermectin treatments since 1987.
Guyer and CSO Anthony Adamis lead EyeBio. Guyer had steered Eyetech Pharmaceuticals when it snagged the first anti-VEGF treatment nod for Macugen in 2004 and went on to lead another eye disease biotech, Iveric Bio, but left a few years prior to its $5.9 billion sale to Astellas last year. Adamis, meanwhile, helped Genentech make its ophthalmology medicine Vabysmo, among other drugs.
Editor’s note: This story was updated to include details from interviews with David Guyer and Dean Li and a Merck press release.