Merck Bids $1.75 for Viralytics

Merck (NYSE:MRK) and Viralytics announced overnight the agreed acquisition of Viralytics by Merck for A$1.75 cash. The stock last traded at 63 cents prior to the announcement. VLA hit a high of $1.26 in December 2016.

Quest owns 6% of Viralytics shares on behalf of investors.

The Quest initial investment in Viralytics was via placement at 28 cents in January 2014. At that time we were the only Australian institution to invest in the company. The company also attracted interest from some global specialist biotech investors. With this support the company was able to expand its clinical trials in cancer.

CAVATAK is being evaluated in Phase 1 and 2 trials in combination with Merck’s KEYTRUDA in the treatment of melanoma, lung, prostate and bladder cancers, along with trials with other immuno-oncology drugs.

The Viralytics Board have agreed to sell the company, subject to any higher offer, to Merck which will see full rights to CAVATAK transfer to Merck. Merck is the world’s 5th largest pharma company with annual revenues of USD$40 Bn.  The offer values Viralytics at $500 million, a long way from the $50 million market capitalisation when Quest first invested.

The deal will see an Aussie success story consumed by the New Jersey based giant.  Merck can claim the lead in the rapidly growing immuno-oncology space – with their blockbuster drug KEYTRUDA. Adding CAVATAK to the Merck arsenal is likely to further extend their lead. More importantly though is the fact that more patients are likely gain access to CAVATAK following this deal, perhaps extending life expectancy for some very sick patients.

Quest is the only Australian substantial shareholder in VLA.

The Scheme is scheduled to be implemented in mid-June 2018.

Troy Cairns can be seen on the ABC News discussing Merck’s acquisition of Viralytics by clicking on the following link  https://youtu.be/PO4MZaIpqqs