Merck bets on flu prevention with $9.2 billion deal for Cidara Therapeutics

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By Sriparna Roy

(Reuters) -Merck will acquire Cidara Therapeutics in a nearly $9.2 billion deal, gaining access to an experimental flu drug in its effort to diversify ahead of patent loss for its blockbuster cancer drug Keytruda.

The drugmaker will pay $221.50 per share in cash for Cidara, the companies said on Friday, a premium of 108.9% from its last closing price. 

Shares of Cidara, which has a market capitalization of $3.3 billion as of Thursday, doubled in value to $217.89, while Merck slipped 1.3%.

Merck, which is set to lose patents for Keytruda later this decade, has nearly tripled its late-stage pipeline since 2021 through in-house development and big deals such as the $11.5 billion purchase of Acceleron for pulmonary arterial hypertension drug Winrevair.

The company had in July signed a $10 billion buyout of UK-based Verona Pharma gaining Ohtuvayre, a newly approved drug for chronic obstructive pulmonary disease, commonly known as “smoker’s lung”.

“There definitely seems to be a sense of urgency at Merck to add growth to their pipeline via deals,” said James Harlow, senior vice president at Novare Capital Management.

SINGLE ASSET STORY

Cidara’s experimental long-acting antiviral drug CD388 is not a vaccine and is expected to be efficacious in individuals regardless of immune status. It has the potential to be a single-dose, universal prevention against all flu strains.

“The non-vaccine nature of CD388 is notable given the uncertainty around the FDA and CDC’s views on vaccines,” Harlow said.

It aims to protect those at higher risk of flu, with the potential to provide season-long protection.

“While this deal is somewhat complementary, it is not perfectly ‘plug and play’ with the rest of the Merck portfolio,” said Bernstein analyst Courtney Breen, calling Cidara “essentially a single asset story”.

Breen said the deal provides late-stage, lower risk, revenue into the portfolio at the end of this decade, but costs due to diversification and market building may be heavy.

The flu drug belongs to a class known as drug-Fc conjugates that combines zanamivir, the active ingredient of GSK’s FDA-approved influenza drug Relenza, with a clinically-validated human antibody fragment.

It is being studied in late-stage trial in adults and adolescents at higher risk of developing complications from influenza.

“We are confident that CD388 has the potential to be another important driver of growth through the next decade,” said Merck CEO Robert Davis.

Cidara aims to achieve target enrolment of 6,000 participants by December, it said earlier this month. The drug has received breakthrough designation from the U.S. Food and Drug Administration, which could speed up its approval process.

A single dose of the antiviral gave up to 76% protection from symptomatic influenza over 24 weeks compared to placebo, in a mid-stage trial studying the drug in healthy unvaccinated adults aged 18 to 64. 

Merck, through a subsidiary, will acquire all of Cidara’s outstanding shares. The transaction has an equity value of $6.96 billion, according to a Reuters calculation.

The deal is expected to close in the first quarter of 2026.

(Reporting by Sriparna Roy in Bengaluru; Editing by Arun Koyyur)