Today it was announced that Merck would shell out $10 billion to acquire Verona Pharma, which is intended to add the FDA-approved drug Ohtuvayre (ensifentrine) as a maintenance treatment option for patients with chronic obstructive pulmonary disease (COPD) in adults. The way this comes out in terms of value is that Merck will pay $107 per American Depository Share (ADS), each of which represents about eight Verona ordinary shares. If this transaction goes through several hurdles, then it is expected to close in Q4 of 2025.
This acquisition makes a lot of sense for Merck, because it adds a very unique clinical asset into its cardiopulmonary pipeline. Ohtuvayre takes an entirely different approach to treating patients with COPD, in that it consists of a novel mechanism of action (MOA). It is a first-in-class selective dual inhibitor of the enzymes phosphodiesterase 3 (PDE3) and phosphodiesterase 4 (PDE4). What makes it unique is the fact that it offers two modes of action. One of such action is to act as a bronchodilator, whereby the muscles of the lungs are relaxed to allow the airways to open and freely allow air to flow. The second action is that it has a non-steroidal anti-inflammatory component to it, whereby it is intended to reduce inflammation that occurs in patients with COPD. COPD is a lung disease that constitutes chronic bronchitis (inflammation of airways) and emphysema (air sacs of lungs damaged).
With Ohtuvarye having its dual MOA approach, it has been able to help patients treat their COPD through nebulized delivery. Speaking of which, this gives the company the mantle of having the first novel inhaled mode of action for the treatment of these COPD patients in more than 20 years. Merck really wanted to add this drug, as it spent a lot to get its hands on it, but it makes sense why it would do so. There are several reasons that likely enticed it to acquire Verona for such a large sum. The first reason being that the drug itself is selling well on the market. Since first being approved in June of 2024, it has been able to achieve strong sales since then.
Consider that from the prior reported quarter at the end of 2024 to the recently reported Q1 of 2025 earnings report, it was able to report high double-digit percentage growth. Sales of Ohtuvayre for the first quarter of 2025 were $71.3 million, which, when compared to the prior Q4 of 2024 was an increase in revenues by 95%. A second possible reason is that there is room to grow with this drug. For starters, it is currently being evaluated to treat another lung disorder, known as non-cystic fibrosis (CF) bronchiectasis, in a phase 2 study. With this lung disorder the bronchi of the lungs become damaged and widen. This brings about mucus and recurrent infections for the patient. As the name suggests, it is entirely different from that of Cystic Fibrosis (CF), because it occurs due to other causes like immune dysfunction, infections, and other factors.
Plus, Verona was already looking to keep its footprint in the COPD space with a combination of some sort. It had plans to start a phase 2b dose-ranging study of a fixed-dose combination of Ohtuvayre and glycopyrrolate for the maintenance treatment of these COPD patients. Such a trial was expected to kick off in the 2nd half of 2025. Glycopyrrolate is used to treat airflow blockage that occurs for these patients, and thus, the testing of this combination makes sense to see if efficacy could be enhanced. The next reason of note to mention would be the projected sales that are expected to come in. Analysts ‘ believe that this COPD maintenance drug could end up exceeding $3 billion or more in revenue eventually.
To that end, this brings up the final point, which is that Merck needs to start looking at additional acquisition deals beyond what was achieved just now. The biggest reason for doing so is because its best-selling cancer drug, Keytruda, is expected to have a lot of key patents set to expire in 2028. This drug generates on average $30 billion in annual revenue, and losing out on this is going to be a huge hit to the big pharma. Where it could win would be making acquisitions such as this in order to set itself up for the future in terms of increasing profit over the next several years. This is not all that Merck can do with its acquisition of Verona. The company also tested ensifentrine for the treatment of patients with asthma, where it was able to improve lung function, as measured by primary endpoints. The global asthma market is growing rapidly, and this is another potential multibillion-dollar avenue that can be tapped into with Ohtuvayre.