Merck's $1.3B Deal For Potential Autoimmune Disorder Candidate Is Relevant To Cullinan's Investigational Drug, Says Analyst

On Friday, Merck & Co Inc MRK agreed to acquire CN201, an investigational clinical-stage bispecific antibody for B-cell-associated diseases, from privately-held Curon Biopharmaceutical.

“We continue to identify opportunities to expand and diversify our pipeline,” said Dr. Dean Y. Li, president of Merck Research Laboratories. “Early clinical data have provided robust evidence for the potential of CN201 to target and deplete circulating and tissue B cells with the potential to treat a range of malignant and autoimmune diseases.”

Merck will acquire full global rights to CN201 for an upfront payment of $700 million in cash.

Curon is also eligible to receive up to $600 million in milestone payments.

CN201 is currently being evaluated in Phase 1 and Phase 1b/2 trials for relapsed or refractory non-Hodgkin’s lymphoma and B-cell acute lymphocytic leukemia, respectively.

Merck plans to evaluate CN201 as a treatment for B-cell malignancies and investigate its potential for autoimmune diseases.

The transaction is expected to close in the third quarter of 2024. Merck expects to record a pre-tax charge of approximately $750 million, or approximately $0.28 per share, to be included in adjusted results.

Also Read: Merck Stops Lung Cancer Study For Keytruda Combo Due To Ineffective Results, Side Effects.

William Blair writes that the deal is relevant to Cullinan Therapeutics Inc.’s CGEM CLN-978, which is expected to enter clinical trials in systemic lupus erythematosus and rheumatoid arthritis.

CN201 is a CD19xCD3 bispecific, and the analyst says the deal supports its potential in treating autoimmune diseases. The analyst also highlighted the appealing valuation of Cullinan, which is currently valued at under $300 million.

As competition intensifies in the CD19 autoimmune sector, William Blair sees less rivalry in the CD19 bispecific arena than cell therapies, presenting a substantial opportunity for Cullinan.

The analyst reiterates the Outperform rating on Cullinan shares.

Price Action: CGEM stock is up 3.66% at $16.98, and MRK stock is up 0.31% at $114.27 at the last check on Friday.

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Photo Courtesy Merck