Merck & Co. inks $1.4B blood cancer biotech buyout to muscle in on Bristol Myers, Novartis

Merck & Co. has opened its wallet wide to buy a midphase treatment for life-threatening diseases of the bone marrow, paying $1.35 billion to snap up Imago BioSciences for its oral lysine-specific demethylase 1 (LSD1) inhibitor bomedemstat.

Imago discovered the small molecule and took it into phase 2 on the strength of evidence that inhibiting LSD1 reduces the hallmark symptoms of myeloproliferative neoplasms (MPNs), a family of bone marrow cancers that can transform into acute myeloid leukemia. If Imago is right, bomedemstat will improve outcomes in the MPNs essential thrombocythemia, myelofibrosis and polycythemia vera.

Merck has bought into the idea. To take control of Imago, the Big Pharma has agreed to pay $36 per share in cash in a deal that values its quarry at $1.35 billion. Imago’s stock closed at $17.40 on Friday and has ranged from $11 to $27 since the biotech went public last year at $16 per share. Imago raised $340 million across its private rounds and IPO.

The deal, which Merck expects to close in the first quarter of 2023, opens up several markets for the Big Pharma. Imago is running phase 2 clinical trials in essential thrombocythemia and myelofibrosis, and, with enrollment now complete, plans to share data updates from both studies next month. The biotech has already met with the FDA to discuss an active-controlled phase 3 trial in essential thrombocythemia.

Imago sees opportunities to improve on the best-available therapy in its lead indications, noting that the current options in the large essential thrombocythemia market are poorly tolerated and that there is no disease modifying therapy for myelofibrosis. The biotech sees polycythemia vera, which it is studying in a third phase 2 trial, as a growing market in need of new well-tolerated treatments.

To make a big dent on its target markets, bomedemstat will need to demonstrate an edge over Jakafi, which is sold by Incyte in the U.S. and Novartis overseas, and Bristol Myers Squibb’s JAK inhibitor Inrebic. Merck could also face competition from other LSD1 inhibitors such as Iadademstat, although Oryzon, the developer of that molecule, has focused its clinical activities on acute myeloid leukemia.

The takeover marks a second exit for a team led by Hugh Rienhoff Jr., M.D. The Imago CEO is one of several people in the biotech’s C-suite who previously held leadership positions at FerroKin BioSciences, a rare disease player that Shire bought for $100 million upfront a decade ago.