Merck & Co. (NASDAQ: $MRK) will acquire Harpoon Therapeutics for $680 million in a push to consolidate its leadership position in the oncology space. According to the agreement, Merck will pay $23 per share for Harpoon. The purchase price is double Harpoon’s closing share price on Friday, January 5, 2024.
Stock Performance
During early trading on Monday, January 8, Harpoon stock (NASDAQ: $HARP) was up 112.51%. Merck stock (MRK) was relatively unchanged, losing just 0.64% during early trading. Over the past 12 months, HARP stock is up 198.93%, while MRK stock is up 5.55%.
Company Performance
Merck’s top-performing drug is Keytruda, an immunotherapy cancer treatment. However, that will likely come under pressure in the next few years. Consequently, the company is looking for new sources of growth, which Harpoon can provide. In 2022, Merck generated $20.9 billion in revenue from Keytruda.
Harpoon is working on drugs that leverage the body’s immune system to treat cancer. It focuses on treating multiple myeloma and a type of lung cancer. The company utilizes T-cell engagers, which use the patient’s immune system to kill cancerous cells.
The treatment is in early-stage trials as a single treatment for patients with advanced cancers. It is closely being researched with an existing small cell lung cancer immunotherapy.
Merck has been actively building a new product portfolio in recent months. In October 2023, the company acquired the rights to sell three experimental cancer drugs from Daiichi Sankyo Co. As part of the deal, Merck paid $4 billion upfront and up to $22 billion in future payments. In April 2023, the company paid $10.8 billion for autoimmune drugs maker Prometheus.
Merck’s acquisition of Harpoon is expected to close in H1 2024. The financial adviser for Merck in the deal is Evercore Inc., while Harpoon’s adviser is Centerview Partners.
Merck (MRK) Stock Forecast
Stock analysts give MRK stock a strong buy rating. They predict a high of $135 and a low of $115 for their stock. Their average price target for the stock is $125.95, an 8.03% upside on the current price.
Should You Buy Merck Stock?
Keytruda, Merck’s flagship cancer treatment drug, is considered the most profitable drug in the world. In addition, the company has other well-performing products, including Gardasil, Gardasil 9, and HPV vaccines. Consequently, the company has a solid revenue stream in the medium term.
Merck has also been actively working to secure its leadership position in the profitable oncology field via acquisitions. That bodes well for long-term investors. In short, its revenue and dividend outlook look solid. The analysts’ buy rating is accurate based on its current financial standing and projected outlook.
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