Merck to buy lung-disease biotech for $10 billion

Merck said this moring that it will buy Verona Pharma for $10 billion to bolster its lung-disease business and help replace the expected loss of revenue when blockbuster cancer drug Keytruda loses patent protection.

The centerpiece of the acquisition is Ohtuvayre, a treatment for chronic obstructive pulmonary disease that secured U.S. approval last year. The drug's commercial launch has exceeded Wall Street expectations, with analysts forecasting $4 billion-plus in peak annual sales, according to Visible Alpha.

Merck is paying $107 per share to buy Verona, representing a 23% premium over its Tuesday closing price. It's the largest Merck acquisition since the company bought Prometheus Biosciences for $11 billion in 2023 and Acceleron Pharma for $11.5 billion in 2021.

politics

Trump teases 'very, very high' pharma tariffs, after grace period

For the past few months, President Trump has repeatedly said he will impose tariffs on pharmaceutical products, while not providing much detail. He teased tariffs again yesterday at a Cabinet meeting.

"We'll be announcing something very soon on pharmaceuticals," he said. "We're gonna give people about a year, year and a half to come in, and after that they're gonna be tariffed if they have to bring the pharmaceuticals into the country.... They're going to be tariffed at a very, very high rate, like 200 percent."

Commerce Secretary Howard Lutnick told CNBC after the meeting that details on pharmaceutical tariffs "will come at the end of the month."

For more on pharma tariffs, how they could affect drug prices, and how pharma companies may respond, read this explainer from my colleague Ed Silverman.

gene therapy

Astellas to test new version of muscle drug with troubled past

From my colleague Jason Mast: In May 2019, researchers announced breathtaking data for a new gene therapy: Some children born with a fatal, muscle-wasting disease called x-linked myotubular myopathy, or XLMTM, were able to come off ventilators and achieve key motor milestones. But within a year, excitement was replaced by tragedy: Four children died after receiving the treatment. The trial was placed on indefinite hold, along with many families' hopes.

Now, a half-decade later, researchers are trying again. Astellas, which purchased the treatment in late 2019, just registered a new clinical trial for a newly designed gene therapy for XLMTM.

The new therapy relies on a new gene-ferrying virus, developed at the Broad Institute, that can more easily reach muscle, potentially allowing doctors to administer a much lower — and safer — dose.

Results from the study could have major implications beyond XLMTM. Companies, advocates, and scientists are hoping a new generation of engineered gene therapy viruses can help crack long-intractable diseases in muscle and neurons. Astellas' study will be one of the first tests.

politics

Which drugmakers will be hit hardest by the 'One Big Beautiful Bill'?

President Trump's recently passed tax-cut bill — which will slash federal funding for Medicaid by over $1 trillion over the next decade — has rattled doctors, hospitals, and patients. Some drugmakers also stand to be significantly affected.

Analysts at Leerink led by David Risinger ranked the companies that could experience the greatest impacts from cuts to Medicaid reimbursement. At the top of the list: Gilead — with its HIV drug franchise — which the analysts estimate has 16% of its worldwide sales exposed to Medicaid, and Vertex — with its cystic fibrosis drug franchise — which they estimate has 15% of sales exposed.

Chart made by analysts at Leerink Partners

The analysts note that substantive Medicaid cuts will not occur until after the 2026 midterm elections, so the financial impacts on drugmakers will essentially start in 2027. "Medicaid reimbursement cuts have potential implications for the entire biopharmaceutical sector," they wrote.

financing

One radiopharma startup's challenging path to get funding

From my colleague Allison DeAngelis: How many investors does a founder need to pitch in order to raise $75 million? Well, Actithera founder and CEO Andreas Goutopoulos spoke to more than 250 investors in order to raise that much for a Series A round, announced today.

Actithera is developing radiopharmaceutical or radioligand therapies, a form of targeted radiation treatment that has boomed in recent years but comes with caveats. These medicines are nuanced and difficult to manufacture — so far, the field is led by one company, Novartis, which faced several shortages during the launch of its blockbuster drug. They also require experience with radioactive particles that is difficult to find in the drug industry, which some fear could hamper the growing field.

"Talent's a bottleneck," said Goutopoulos, who is currently the sole employee at his company and looking to hire. That's part of why the company opened on office in Oslo, Norway, which has a more ingrained radiation research ecosystem than Massachusetts, where Actithera is headquartered.

Actithera is developing therapies that search out FAP, a protein found on cancer fibroblasts. These proteins are found in sarcomas and mesothelioma, among other cancers. Goutopoulos hopes the Actithera will be ready for clinical trials next year.

HIV

Gilead reaches agreement on HIV prevention drug

After months of anticipation, Gilead this morning formalized an agreement to provide its groundbreaking HIV prevention drug to up to 2 million people in low and middle-income countries.

Under the new deal, The Global Fund to Fight AIDS, Tuberculosis and Malaria will be responsible for purchasing and making available doses of the drug, known as lenacapavir and approved for sale last month in the U.S. as Yeztugo. Gilead maintained that it will provide doses at a "no profit" price, STAT's Jason Mast and Ed Silverman report.

The antiviral offers virtually complete protection against contracting HIV with just a single administration every six months.