Rahway To Purchase Harpoon For $23/Share; Take A $650 Million Charge In Q2 2024…

As is increasingly common in bioscience R&D deals, Merck will -- on closing -- charge off almost the entire deal price, as a non-tax deductible in process R&D charge -- to avoid a subsequent bloat (if a high value product ultimately comes to market), at the goodwill line on the Rahway balance sheet.

To be certain, this deal makes solid financial sense, as an immuno oncology candidate, and may turn out to be an insurance policy, in the T-cell space, specifically, should Amgen meet with success on its T-cell candidates. Here is a bit, from the morning presser:

. . .The transaction is expected to close in the first half of 2024 and will be accounted for as an asset acquisition. Merck expects to record a charge (non-tax deductible) of approximately $650 million, or approximately $0.26 per share, that will be included in non-GAAP results in the quarter that the transaction closes. . . .

[Harpoon's] HPN328 targets delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand. HPN328 uses Harpoon’s proprietary Tri-specific T cell Activating Construct (TriTAC®) platform that is designed to recruit a patient’s own immune cells to kill tumor cells. HPN328 is being evaluated as monotherapy and in combination in an ongoing open-label, multicenter two-part study (NCT04471727) to assess the safety, tolerability, and pharmacokinetics in patients with certain advanced cancers associated with expression of DLL3.

In March 2022, the U.S. Food and Drug Administration (FDA) granted Orphan Drug Designation to HPN328 for the treatment of small cell lung cancer. . . .

Now you know -- and jetting out of the mountain snows! Onward!

नमस्ते