By Christy Santhosh
(Reuters) -Merck on Wednesday agreed to buy privately held biotech EyeBio for as much as $3 billion, as it looks to diversify its portfolio of experimental drugs with treatments for eye diseases.
The drugmaker agreed to pay $1.3 billion in cash and another $1.7 billion in future milestone-based payments for EyeBio, and will gain access to its retinal disease drug Restoret as part of the deal.
The deal is the latest in a string of recent acquisitions by Merck to reduce its reliance on blockbuster immunotherapy Keytruda, which is expected to face rivals by the end of the decade when it is set to lose patent protection.
Merck had said in February it was in the market for deals of up to $15 billion. Its recent acquisitions include a $10.8 billion deal for Prometheus Biosciences in 2023 and the purchase of Elanco's aqua business for $1.3 billion in February this year.
Merck's proposed acquisition of EyeBio would boost its limited presence in the eye diseases space, BMO Capital Markets analyst Evan Seigerman wrote in a research note.
While the deal was on the smaller side, "we are encouraged by the progress Merck continues to make diversifying its revenue base ahead of its Keytruda (loss of exclusivity)", he said.
Restoret is expected to enter a mid- to late-stage trial as a treatment for diabetic macular edema, a type of swelling in the eye, in the second half of 2024.
It is also being tested in patients with neovascular age-related macular degeneration, a disease which leads to abnormal blood vessel growth in the eye and affects more than 200 million people worldwide.
EyeBio, which operates as Eyebiotech Ltd, has operations in the U.S. and the UK. It was founded by SV Health Investors, which is backed by Kate Bingham — the former head of the UK's COVID-19 vaccine taskforce.