Merck to buy private biotech Caraway in neuroscience deal

Dive Brief:

• Merck & Co. will pay as much as $610 million to acquire private biotechnology company Caraway Therapeutics in a deal that expands Merck’s research presence in neurodegenerative disease.
• Announced Tuesday, the deal involves an undisclosed upfront payment along with conditional milestone payments. Merck plans to expense the upfront charge this quarter.
• Launched five years ago, Caraway specializes in studying the waste disposal machinery of cells. It lists four preclinical drug programs in its pipeline, the most advanced of which target an ion channel that’s been on Merck’s radar for some time already.

Dive Insight:

Caraway raised a small Series A round of $23 million in 2018, backed by several pharmaceutical venture arms, including Merck’s.

At the time, the company went by the name of Rheostat Therapeutics. It rebranded to Caraway one year later, but kept its focus on developing treatments for rare and neurological diseases that work by “restoring cellular balance.”

While the company has kept a low profile since, Merck appears to have liked what it’s seen from the company’s emerging pipeline.

Its two advanced programs target the ion channel known as TRPML1, which can regulate how the lysosome removes cellular waste. Caraway is exploring how targeting the protein could help treat Parkinson’s disease linked to mutations in a gene called GBA, as well as non-central nervous system rare diseases.

Merck previously bet on TRPML1-targeting drugs. In 2019, the drugmaker acquired a small biotech called Calporta Therapeutics in a deal worth $576 million. Calporta’s pipeline consisted of drugs that supported lysosome activity by targeting the TRPML1 ion channel.

Pharma investment in neuroscience has shown signs of rebounding in recent years, after many large drugmakers exited or deprioritized the field at the end of the last decade following clinical setbacks.

For Merck, the planned acquisition is the latest in a busy year of dealmaking. Earlier in 2023, the company acquired Prometheus Therapeutics about $11 billion, gaining a late-stage bowel disease drug. And in October, Merck agreed to pay $5.5 billion to Daiichi Sankyo to gain access to three antibody-drug conjugate cancer drugs.

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