Merck, looking to build on cancer success, buys I-O biotech Rigontec

Merck could pay up to $500 million for the European biotech.

Merck is spending €115 million ($137 million) up front and up to €349 million in future payments to buy out German biotech Rigontec.

The Munich, Germany-based company is at work on accessing the retinoic acid-inducible gene I (RIG-I) pathway, part of the innate immune system, as a new approach in cancer immunotherapy.

The idea is to induce both immediate and long-term antitumor immunity; its leading candidate, RGT100, is in early clinical trials in patients with various tumors. More details on targets and financials were not given.

The early-stage company was founded back in 2014 as a spinout of the University Bonn in Germany, raising nearly €30 million in that time from a host of VCs, including Boehringer’s Venture Fund, Forbion Capital Partners, High-Tech Gründerfonds, Wellington Partners Life Sciences and MP Healthcare Venture Management.

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Though not on the scale of Gilead's recent $11.9 billion buyout of CAR-T biotech Kite Pharma, Merck hopes this can add to its pipeline of cancer meds in a broader effort to shore up its future in I-O, coming after the commercial success of its checkpoint inhibitor Keytruda, which now has a series of FDA-approved uses across a number of cancers.