Acquisition to expand Merck’s leading immuno-oncology pipeline

27 Feb 2018

Proposed acquisition of Viralytics will add investigational oncolytic immunotherapy, Cavatak, to Merck's pipeline.

Merck (MSD) and Viralytics have signed a definitive agreement under which it is proposed that Merck, through a subsidiary, will acquire Viralytics, an Australian publicly traded company focused on oncolytic immunotherapy treatments for a range of cancers by way of a scheme of arrangement (Scheme) for AUD 1.75 cash per Viralytics share. The proposed acquisition values the total issued shares in Viralytics at approximately AUD 502 million (USD 394 million).

Acquisition to expand Merck’s leading immuno-oncology pipeline

On completion of the transaction, Viralytics will become a wholly-owned subsidiary of Merck, and Merck will gain full rights to Cavatak (CVA21), Viralytics’s investigational oncolytic immunotherapy. Cavatak is based on Viralytics’s proprietary formulation of an oncolytic virus (Coxsackievirus Type A21) that has been shown to preferentially infect and kill cancer cells. Cavatak is currently being evaluated in multiple Phase I and Phase II clinical trials, both as an intratumoral and intravenous agent, including in combination with Merck’s Keytruda (pembrolizumab), an anti-PD-1 therapy. Under an agreement between Viralytics and a subsidiary of Merck, a study is investigating the use of the Cavatak and Keytruda combination in melanoma, prostate, lung and bladder cancers.

“Viralytics’s approach of engaging the innate immune system to target and kill cancer cells complements our immuno-oncology strategy, which is focused on the rapid advancement of innovative monotherapy approaches and synergistic combinations to help the broadest range of cancer patients,” said Dr Roy Baynes, senior vice president and head of global clinical development, chief medical officer, Merck Research Laboratories. “We are eager to further build on Viralytics’s science as we continue our efforts to harness the immune system to improve long-term disease control and survival outcomes for people with cancer.”

“This proposed acquisition culminates years of dedicated work by the Viralytics team and represents an opportunity for significant value creation for our shareholders. Viralytics is proud to have progressed its lead investigational candidate Cavatak to Phase I and Phase II clinical trials and, we believe that Merck, the leader in immuno-oncology, is best suited to advance Cavatak for the benefit of patients globally, and to realize its potential,” said Dr Malcolm McColl, Managing Director and CEO, Viralytics.

Chairman of Lepu Medical Group, Dr Pu stated: “Lepu Medical Group acknowledges this is an attractive opportunity for Viralytics and, as such, is supportive of the transaction. In line with its existing strategy, Lepu Medical Group intends to continue to focus on developing immuno-oncology therapies, including in collaboration with companies globally.”

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