Ongoing Negotiations with No Binding Agreement
Merck KGaA, the German healthcare and technology conglomerate, has confirmed that it is in advanced negotiations to acquire SpringWorks Therapeutics, a commercial-stage biopharmaceutical company. This announcement follows an earlier Reuters report on the potential deal. However, Merck emphasized that no legally binding agreement has been signed, and there is no certainty that the acquisition will materialize.
SpringWorks declined to comment on the matter.
Potential Deal Could Be Finalized Soon
If discussions progress successfully, a deal could be signed in the coming weeks, according to three anonymous sources who spoke to Reuters. While they did not disclose specific financial terms, market activity reflected strong investor optimism. SpringWorks’ shares surged 34% on Monday, bringing the company’s market value to approximately $4 billion. At one point, the stock jumped nearly 49% following Reuters’ report, reaching its highest level since April 2022.
Resurgence in U.S. Healthcare Mergers
Mergers and acquisitions in the U.S. healthcare sector are regaining momentum after a slowdown in 2024. Large pharmaceutical companies had taken a step back to integrate previous acquisitions, but the sector is now seeing renewed activity. Last month, Johnson & Johnson agreed to purchase Intra-Cellular Therapeutics for approximately $14.6 billion.
SpringWorks, based in Stamford, Connecticut, went public in 2019 and focuses on developing treatments for various forms of cancer, including rare tumors and uterine cancer. The company’s monotherapy drug for desmoid tumors has already received U.S. approval. Additionally, SpringWorks expects the approval of a treatment for neurofibromatosis type-1, a rare genetic disorder, later in February.
Strategic Fit for Merck’s Oncology Pipeline
Acquiring SpringWorks would mark one of Merck’s largest pharmaceutical deals in recent years and strengthen its oncology pipeline. Merck has faced setbacks in late-stage drug trials, including halting development of its head and neck cancer drug Xevinapant. Additionally, a major trial for its multiple sclerosis drug Evobrutinib failed in December 2023.
Despite these challenges, Merck’s most recent quarterly earnings report showed a 12% rise in adjusted earnings. Temporarily lower drug development costs and increased demand for specialty materials drove this growth.
Analysts See Potential Synergies
JPMorgan analysts believe acquiring SpringWorks could complement Merck’s existing oncology franchise, which accounted for about 25% of its healthcare sales in 2024. The deal could also help offset revenue losses from drugs facing loss of exclusivity and increased competition.
Merck’s History of Bold Acquisitions
As reported by medicaldialogues.in, Merck has a track record of making large acquisitions. In 2015, it purchased U.S. lab equipment supplier Sigma-Aldrich for $17 billion, marking its largest deal. In 2019, it acquired Versum, a U.S. electronics materials manufacturer, for €5.8 billion ($5.97 billion).
In a January interview, Merck’s CEO stated that improving sales across its major businesses would enable the company to take a cautious yet strategic approach to acquisitions, despite high valuations in the market.
If finalized, the SpringWorks acquisition could solidify Merck’s position in oncology and strengthen its long-term growth strategy.