Merck agrees to acquire Prometheus Biosciences

Yahoo Finance’s Anjalee Khemlani joins the Live show to discuss news that Merck has agreed to acquire biotechnology company Prometheus Biosciences.

Video transcript

- Merck agrees to acquire Prometheus Biosciences for approximately $10.8 billion as Merck looks to strengthen its immunology pipeline. Joining us here to discuss is Yahoo Finance's Anjalee Khemlani. Anjalee, what do we know about this deal so far?

ANJALEE KHEMLANI: Well, we do know that it's a definitive agreement. It's Merck's first move this year to acquire and much needed. So in addition to strengthening its pipeline, it's also really interesting timing. Merck really needing to get more M&A deals done as it looks at the patent expiry of its blockbuster drug Keytruda. And so that's where this comes into play. The timing of it, according to the CEO, is going to be in time for the pipeline to come through as Keytruda's patents fall off in several years.

So that's what's interesting now. The deal itself is not the biggest, but a big one. We know, of course, Pfizer and Seagen earlier this year penned a deal for $43 billion. Not to be forgotten is that Merck was trying for Seagen last year in a $40 billion deal that fell through. So this is sort of the next thing that it came across for its pipeline.

So one of the bigger deals of the year so far, but we know it's still early for that. They do expect this deal to close by the third quarter of this year.

- What's driving some of these biggest deals? Is it just the bigger companies are trying to pad their pipeline?

ANJALEE KHEMLANI: Yes. Patent loss is a big topic of conversation in the pharmaceutical world, especially for some of these larger companies. They have been dealing with that for some time. In the conversation for Pfizer, for example, there's a lot of pressure on that stock even during the pandemic for the company to find a lot more to do and a lot more with the number of patents that are facing cliffs.

- Now, if we look at this deal and think about all of the other deals that are taking place, I mean, over the past 12 months it's been what feels like a very red-hot environment for consolidation in the broader health-care industry too.

ANJALEE KHEMLANI: In the broader health care industry, yes. But I would say if you just take pharmaceuticals alone, which is the best apples-to-apples comparison, this is actually picking up from what was a slowdown last year. We saw 2021 was red hot for biotech and the drug industry. And so 2022 saw a bit of a pullback. So this is what some are hoping is the signal of a much more active year.

- All right. Yahoo Finance's own Anjalee Khemlani-- breaking all things down health care and specifically this big deal for Merck today. Thanks so much, Anj.