What occurred

Shares of Prometheus Biosciences (RXDX 69.25%) had been up greater than 69% Monday morning after Merck (MRK -0.69%) mentioned Sunday that it had come to an settlement to purchase the clinical-stage biotech for $10.8 billion. Prometheus focuses on therapies to deal with immune-mediated ailments.

Its shares hit a 52-week excessive of $193.79 early within the morning and sure might go greater since Merck has agreed to pay $200 a share. The deal is contingent on Prometheus shareholders’ approval, however is predicted to be accomplished by the third quarter of 2023, Merck mentioned.

So what

Prometheus’ lead remedy, PRA023, which is in trials to deal with ulcerative colitis (UC), Crohn’s illness, and different autoimmune issues, is the principle attraction, Merck CEO Robert Davis advised Reuters, including that promising part 2 scientific trial outcomes that Prometheus launched in December make Merck assume the drug could possibly be a multimillion-dollar vendor. Merck is going through a patent cliff for its lead immuno-oncology blockbuster Keytruda by 2030.

Now what

Even when the deal falls by way of, which is unlikely, it reveals the promise of PRA023, which is in part 2 trials to deal with UC, Crohn’s illness, and interstitial lung illness related to systemic sclerosis. Prometheus has one other lead remedy, PRA052, that’s being examined towards UC but additionally could possibly be helpful for quite a lot of immune-mediated ailments, the corporate mentioned.

Final 12 months, the corporate misplaced $148 million, however Prometheus is in a strong place, with practically $700 million in money and money equivalents. It additionally had $6.8 million in collaboration income in 2022, in contrast with $3.1 million within the prior 12 months.