Merck & Co. to buy Pandion for $1.85 billion, gaining autoimmune drug pipeline

Merck & Co. announced Thursday a definitive agreement to acquire Pandion Therapeutics for $60 per share in cash, representing an equity value of approximately $1.85 billion. The purchase will hand Merck a clutch of experimental drugs, including lead candidate PT101, that target a range of autoimmune diseases.

Dean Li, who recently took over from Roger Perlmutter as head of Merck Research Laboratories, noted that "Pandion has applied its TALON technology to develop a robust pipeline of candidates designed to re-balance the immune response with potential applications across a wide array of autoimmune diseases." According to Pandion, its TALON platform relies on immunomodulatory effector modules that can be combined with tissue-selective tethers to create systemic and tissue-targeted new drugs.

Selective expansion of Tregs

PT101 is an engineered IL-2 mutein fused to a protein backbone designed to activate and expand regulatory T-cells (Tregs) as a potential treatment for ulcerative colitis and other autoimmune diseases. The drug completed a Phase Ia trial earlier this year, and besides achieving its primary objectives of safety and tolerability, it was able to induce "potent and selective" expansion of Tregs, including a subset with high CD25 expression, without triggering expansion of natural killer cells or pro-inflammatory conventional T-cells at any dose tested. "Multiple third-party clinical trials suggest that expansion of Tregs by low-dose IL-2 can benefit patients with autoimmune diseases," Merck noted.

Pandion has said a Phase Ia/II trial of PT101 in ulcerative colitis is expected to start in mid-2021, while a Phase II study in systemic lupus erythematosus is slated to get under way in the second half. Its pipeline also includes the IL-2 mutein PT002, as well as the PD-1 agonists PT627 and PT001, which are in preclinical development for numerous autoimmune diseases.

Closing in H1 amid CEO transition

The buyout, which represents a premium of around 134% to Pandion's closing share price on February 24 and is expected to close in the first half of 2021, comes during a major transition period for Merck, as it prepares to hand over the reigns of the company to Robert Davis after current CEO Kenneth Frazier steps down on June 30. Late last year, it bolstered its oncology pipeline with ROR1-targeting drugs through the $2.75-billion purchase of VelosBio.

Meanwhile, Pandion inked a licensing and collaboration deal with Astellas back in 2019 to develop locally acting immunomodulators for type 1 diabetes and other autoimmune diseases of the pancreas.

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