Merck & Co. signs $208M deal to acquire startup in bid to improve ADC safety

Merck & Co. led the antibody-drug conjugate (ADC) shopping spree last year with its multi-billion dollar deal with Daiichi Sankyo, but now the U.S. pharma clearly wants to further fine-tune its ADC pipeline.

To this end, Merck has signed a small deal worth up to $208 million, which includes milestone payments, to acquire a University at Buffalo startup called Abceutics. The announcement, contained in an April 5 release by the university, makes no mention of whether Merck is handing over any money upfront.

Abceutics launched in 2020 with the aim of taking forward tech developed in the lab of University at Buffalo researcher Joseph Balthasar, Ph.D., which is designed to be synergistic with ADCs. Specifically, the Abceutics team are working on engineered “payload-binding selectivity enhancers” (PBSEs) designed to bind and neutralize stray payload molecules, reducing the impact of these therapies on healthy cells.

The end goal is for PBSEs to be administered along with ADCs to reduce the risk of side effects.

The biotech is headed up by CEO Brandon Bordeau, Ph.D., one of the company’s co-founders who is also assistant professor at the University of Michigan. Bordeau said Merck “has the expertise and capabilities needed to bring our PBSE technology to patients.”

“We are proud to have advanced PBSEs to this stage of development and believe that Merck is well-suited to build upon the progress our company has made,” the CEO added.

Merck made a big splash when it returned to the ADC space in October 2023 to pay $4 billion upfront to co-develop Daiichi’s next three ADC prospects.

The New Jersey-based drugmaker had already made multiple bets on the red-hot modality in recent years, paying Seagen $600 million upfront for rights to a now-shelved candidate in 2020, buying VelosBio for $2.75 billion that same year and forming a trio of pacts with Kelun-Biotech in quick succession.

Merck also has its own internally developed ADC programs in the works with hopes of entering the clinic in the “next couple of years.”

“The Abceutics team has already made remarkable progress in translating this novel idea into reality with a series of candidates and compelling early evidence,” David Weinstock, M.D., Ph.D., vice president of oncology discovery at Merck Research Laboratories, said in Friday’s release.

"We look forward to further evaluating the potential of this innovative approach in the clinic,” Weinstock added.