Merck inks $2.7B ArQule deal, teeing up cancer race with Lilly

ArQule used the American Society of Hematology 2019 annual meeting to share data on the drug at the heart of the Merck deal. (Merck)

Merck is set to buy ArQule for $2.7 billion. The planned takeover centers on ARQ 531, a BTK inhibitor that triggered durable responses in patients with B-cell malignancies in an early-phase trial. 

ArQule has had plenty of ups and downs over its more than 20 years on public markets but has now found an exit. Merck has agreed to pay $20 a share, a more than 100% premium over ArQule’s Friday closing price, to buy the drug developer, primarily for midphase BTK inhibitor ARQ 531.

The drug is one of a clutch of BTK inhibitors in development with the potential to work in patients who are refractory to Imbruvica. Loxo Oncology, now part of Eli Lilly, has generated promising early data on its BTK inhibitor. Sunesis Pharmaceuticals also has a contender in the clinic, although there are signs its may be eclipsed by its rivals.

ArQule provided an explanation for Merck’s willingness to pay a sizable sum to enter a competitive niche hours after news of the takeover emerged. At the American Society of Hematology (ASH) 2019 annual meeting, ArQule revealed eight of the nine evaluable chronic lymphocytic leukemia (CLL) patients who initially received an ARQ 531 dose of at least 65 mg experienced a partial response. All five evaluable CLL patients that had a third scan had durable responses and are still on therapy.

The readout came one day after Lilly shared encouraging data on its BTK inhibitor at ASH, setting up a potential scrap that at this early stage is too close to call. 

“Overall, doc feedback at ASH suggests hard to pick a winner between ARQL vs LLY-Loxo just yet,” Evercore ISI analyst Umer Raffat wrote in a note to investors. Raffat flagged the need to factor in differences in the baseline characteristics of patients treated by ArQule and Lilly, particularly with regards to the number of prior lines of treatment.

Tougher tests await for both drugs, but, in Merck, ArQule has found a buyer with a track record of smoothly navigating cancer development and delivering market-leading drugs. 

ARQ 531 is the focal point of the deal, but Merck also highlighted ArQule’s other assets, with Roger Perlmutter praising the work the biotech has done to build out its pipeline. 

“ArQule’s focus on precision medicine has yielded multiple clinical-stage oral kinase inhibitors that have novel and important properties,” Perlmutter, president of Merck Research Laboratories, said in a statement. “This acquisition strengthens Merck’s pipeline with the addition of these strategic assets including, most notably, ARQ 531, a compelling candidate for the treatment of B-cell malignancies.”