What prompted Merck to strike this deal is probably a study that was conducted earlier, which discovered that Viralytics’ product Cavatak produces better results when combined with Merck’s own Keytruda, in early phase trials.
As per the study, the combination had triggered positive response in approx. 61% of the patients tested. Given this information, it is not surprising that Merck was generous enough to offer a 160% premium to clinch this deal.
What prompted Merck to strike this deal is probably a study that was conducted earlier, which discovered that Viralytics’ product Cavatak produces better results when combined with Merck’s own Keytruda, in early phase trials.
However, the point of concern here is that the deal also highlights Merck’s strategy to double down on its flagship product, Keytruda. The drug currently accounts for around 10% of Merck’s total revenue, and by 2022, it is expected to increase to 25%, according to Bloomberg. The pharma giant’s recent discontinuation of an Alzheimer’s drug, as well as extensive dependency on Keytruda make the company a risky bet to a section of investors.
Once the transaction is complete, Viralytics will act as a unit of Merck. Merck will also get exclusive access to Cavatak.