In a bid to further strengthen its oncology pipeline, Merck & Co. Inc. is set to acquire privately held Velosbio Inc. for $2.75 billion in cash.
Velosbio is developing cancer therapies targeting receptor tyrosine kinase-like orphan receptor 1 (ROR1). The company’s follow-on programs include next-generation antibody-drug conjugates (ADC) and bispecific immune-engagers targeting ROR-1, which it has been developing for nearly two years.
Through a subsidiary, Merck is poised to acquire all of San Diego-based Velosbio’s outstanding shares. The transaction is expected to close by the end of 2020.
Kenilworth, N.J.-based Merck has been spending big to expand and strengthen its oncology pipeline. In January, it completed a $2.7 billion cash tender offer, through a subsidiary, to acquire all outstanding shares of common stock of small molecule directed Arqule Inc., of Burlington, Mass., at $20 per share. Arqule’s focus is kinase inhibitor discovery and development for treating cancer and other diseases. Its lead candidate, ARQ 531, is a Bruton’s tyrosine kinase inhibitor that is in a phase II dose expansion study for treating B-cell malignancies.
Velosbio’s lead candidate, VLS-101, an ADC that targets ROR1, is in phase I clinical study for treating hematologic malignancies and a phase II study for treating solid tumors. The phase II’s first participant was dosed in October as the study aimed for its primary endpoint, an objective response rate.
The FDA granted VLS-101 fast track and orphan drug designations in August to treat mantle cell lymphoma.
Velosbio is part of the portfolio of London’s Arix Bioscience plc (LSE:ARIX), a venture cap company. Arix said it expects net proceeds from the Merck sale of $185 million, a 12x return on its investment of $15.71 million. It was Arix that co-led a series A financing in October 2018.
Velosbio has fared well with capital, caught up in what has been the best year for biopharma financings in 20 years. In July, $2.04 billion was raised from 55 financings of private companies and it was Velosbio posting the highest VC round that month with an oversubscribed $137 million series B. That deal was closed tailed by a $135 million funding raised by South San Francisco-based Encoded Therapeutics Inc.’s series D. In total, it has brought in $202 million since its creation in 2017.