May 21 (Reuters) - Merck & Co Inc said on Tuesday it would buy Peloton Therapeutics Inc for $1.05 billion in cash to gain access to the privately held company’s renal cancer drug candidate.

Peloton shareholders will be eligible to receive a further $1.15 billion on achieving certain milestones. (Reporting by Manas Mishra in Bengaluru; Editing by Shinjini Ganguli) </s> (Reuters) - Merck & Co Inc said on Tuesday it would buy Peloton Therapeutics Inc for $1.05 billion in cash to gain access to the privately held company’s renal cancer drug candidate.

Peloton shareholders will be eligible to receive a further $1.15 billion on achieving certain milestones. </s> This story is developing and will be updated.

On the eve of its initial day of public stock trading, Dallas-based cancer drug developer Peloton Therapeutics has been sold to pharmaceuticals giant Merck in a deal that could total $2.2 billion.

Merck will pay $1.05 billion in cash now, plus $1.15 billion in additional payments based on how Peloton's experimental drugs are further developed. Peloton was set to go public Wednesday.

The New Jersey-based company announced the acquisition Tuesday. It said that the deal will expand its pipeline of cancer-fighting drugs. </s> Merck & Co Inc said on Tuesday it would buy Peloton Therapeutics Inc for US$1.05 billion in cash to gain access to the privately held company's renal cancer drug candidate.

REUTERS: Merck & Co Inc said on Tuesday it would buy Peloton Therapeutics Inc for US$1.05 billion in cash to gain access to the privately held company's renal cancer drug candidate.

The company's lead drug candidate, PT2977, will be studied in a late-stage study for treating renal cell carcinoma.

Peloton shareholders will be eligible to receive a further US$1.15 billion on achieving certain milestones.

The company had been looking to go public and gave a pricing range of US$15 to US$17 per share for its initial public offering last week.

Credit Suisse acted as financial adviser for Merck and Covington & Burling LLP as its legal adviser. Centerview Partners was financial adviser to Peloton and Wilson Sonsini Goodrich & Rosati was its legal adviser. </s> Merck & Co. has reached an agreement to acquire privately held biopharmaceutical company Peloton Therapeutics for an upfront payment of $1.05 billion in cash.

Peloton had been set to price an initial public offering Wednesday with a range of $15 to $17 per share, giving it a valuation of about $904 million at the top of its range, including underwriters’ options and other outstanding shares.

Under the merger agreement, Peloton shareholders can receive another $1.15 billion if the company reaches certain regulatory and sales milestones.

The deal strengthens Merck’s cancer drug portfolio and gives it access to Peloton’s kidney cancer drug candidate. Last month, regulators approved Merck’s immunotherapy drug Keytruda for the treatment of renal cell cancer. In a separate statement, Merck said Keytruda failed to meet its stand-alone goal of treating an aggressive type of breast cancer.

“The deal announced today should also underscore the opportunity for other small and mid cap biotech names in the cancer biology space,” Cantor Fitzgerald analyst Louise Chen said.

Peloton expects to begin late-stage trials of its kidney-cancer drug in the second half of the year.

“This is a classic bolt-on deal. Peloton has a drug that looks promising in renal cell carcinoma, and there’s actually been a lot of success in the field in recent years,” said Brad Loncar, manager of the Loncar Cancer Immunotherapy ETF.

“Peloton scientists have applied their unique expertise in HIF-2α biology to develop PT2977, which has already shown intriguing activity in the treatment of renal cell carcinoma,” Merck Research Laboratories President Dr. Roger Perlmutter said in a statement. “We look forward to advancing this late-stage asset as part of our broad oncology R&D program.”

Merck was advised by Credit Suisse. Peloton was advised by Centerview Partners.

The deal is expected to close in the third quarter of 2019. </s> (Reuters) - Merck & Co Inc said on Tuesday it would buy Peloton Therapeutics Inc for $1.05 billion in cash to gain access to the privately held company’s renal cancer drug candidate.

The company’s lead drug candidate, PT2977, will be studied in a late-stage study for treating renal cell carcinoma.

Peloton shareholders will be eligible to receive a further $1.15 billion on achieving certain milestones.

The company had been looking to go public and gave a pricing range of $15 to $17 per share for its initial public offering last week.

Credit Suisse acted as financial adviser for Merck and Covington & Burling LLP as its legal adviser. Centerview Partners was financial adviser to Peloton and Wilson Sonsini Goodrich & Rosati was its legal adviser. </s> Merck & Co. Inc. MRK, +0.20% said Tuesday it has reached an agreement to acquire Peloton Therapeutics Inc. PLTX, +0.00% for an upfront payment of $1.05 billion in cash. Peloton, a clinical-stage biotech focused on cancer treatments, was expected to price an initial public offering on Wednesday. The biotech's business hinges instead on two drugs that are designed to block a transcription factor called hypoxia-inducible factor-2 alphaαthat - among other things - regulates how the body responds to low oxygen levels. Under the terms of the deal, Peloton shareholders will be entitled to a further $1.15 billion in milestone payments based on the achievement of certain future regulatory and sales goals. "This acquisition exemplifies Merck's strategy to pursue novel therapeutic candidates based on exceptionally promising and innovative research," said Dr. Roger M. Perlmutter, president of Merck Research Laboratories. "Peloton scientists have applied their unique expertise in HIF-2α biology to develop PT2977, which has already shown intriguing activity in the treatment of renal cell carcinoma. We look forward to advancing this late-stage asset as part of our broad oncology R&D program." The deal is expected to close in the third quarter. Merck shares were not active premarket, bu have gained 34.7% in the last 12 months, while the S&P 500 SPX, -0.67% has gained 3.9%.

Have breaking news sent to your inbox. Subscribe to MarketWatch's free Bulletin emails. Sign up here. </s> American pharmaceutical giant Merck & Co . (ticker: MRK) said it is buying Peloton Therapeutics, a clinical-stage biopharmaceutical company, for $1.05 billion in cash.

The deal includes a potential $1.15 billion for Peloton shareholders down the road if the company’s drugs hit certain milestones.

Peloton, which focuses on cancer treatments, is currently in clinical trials with a drug targeting forms of kidney cancer. The company had originally planned an initial public offering for later this week. The acquisition helps build the oncology pipeline at Merck, which is currently riding the success of its blockbuster cancer drug Keytruda.

The back story. Merck stock has surged over the past year, owing largely to Keytruda, as Barron’s reported in February. The shares are up 36% for the past 12 months, far outpacing the S&P 500’s 5% gain over the same period.

Investors had been pushing Merck to decrease its reliance on Keytruda, Credit Suisse analyst Vamil Divan wrote in a note Tuesday. According to a report at the website BioPharmaDive, sales of the cancer drug counted for nearly a quarter of Merck’s drug sales in the first three months of 2019.

What’s new. Tuesday morning, Merck said it has snapped up Peloton just days before the company’s scheduled IPO.

“This acquisition exemplifies Merck’s strategy to pursue novel therapeutic candidates based on exceptionally promising and innovative research,” Roger M. Perlmutter, Merck Research Laboratories president, said in a statement. “We look forward to advancing this late-stage asset as part of our broad oncology R&D program.”

Peloton’s marquee product, which it calls PT2977, targets renal cell carcinoma. It is currently in clinical trials for a number of related indications.

Looking ahead. Merck shares closed 0.8% higher at $79.50 on Tuesday.

Divan, in his note, said that Peloton operates in an area where Merck has already begun to focus.

“While maybe not the size of deal that some have been hoping Merck to pursue, Peloton’s initial focus on [renal cell carcinoma] is complementary to where Merck is already finding success,” Divan wrote. </s> (Reuters) - U.S. drugmaker Merck & Co Inc on Tuesday agreed to buy Peloton Therapeutics Inc for $1.05 billion in cash, gaining access to the privately held company’s lead kidney cancer drug candidate.

FILE PHOTO: The Merck logo is seen at a gate to the Merck & Co campus in Linden, New Jersey, U.S., July 12, 2018. REUTERS/Brendan McDermid/File Photo

The acquisition can strengthen Merck’s presence in the field of renal cell carcinoma and bolster its cancer drug portfolio.

Merck’s blockbuster immunotherapy Keytruda was approved last month in the United States for treating renal cell cancer.

“This is a classic bolt-on deal. Peloton has a drug that looks promising in renal cell carcinoma, and there’s actually been a lot of success in the field in recent years,” said Brad Loncar, who runs the Loncar Cancer Immunotherapy ETF.

Peloton expects to start studying its lead drug, a kidney cancer treatment code named as “PT2977”, in a late-stage trial in the second half of this year.

In an older mid-stage trial testing patients whose cancer had spread even after treatment with at least one therapy, 24% of patients treated with Peloton’s drug showed an at least 30% shrinkage of targeted lesions.

Confident of its pipeline, Peloton was earlier looking to go public and had given a pricing range of $15 to $17 per share for its initial public offering last week.

At the upper limit of that range, the company would have been valued at $903.6 million, including underwriters’ option and other outstanding shares.

With the Merck deal now in place, Peloton shareholders would be eligible to receive a further $1.15 billion on achieving certain sales and regulatory milestones.

“The deal announced today should also underscore the opportunity for other small and mid cap biotech names in the cancer biology space,” said Cantor Fitzgerald analyst Louise Chen.

Credit Suisse was financial adviser for Merck and Centerview Partners was to Peloton.

(This refiled story corrects spelling in paragraph 3 to “bolt-on”, from “blot-on”)
Pharmaceutical giant Merck & Co. announces that it will purchase Peloton Therapeutics Inc. for $1.05 billion in cash. The catalyst for the deal is Peloton's recent progress in the development of a kidney cancer treatment.