Recently, according to the UK’s The Financial Times, Merck is in negotiations to acquire MoonLake Immunotherapeutics, with the deal expected to exceed $3 billion.
Encouraged by the news, MoonLake’s stock rose about 20% in after-hours trading.
In fact, Merck had previously made a non-binding acquisition offer to MoonLake Immunotherapeutics earlier this year, but the proposal was rejected by MoonLake.
MoonLake Immunotherapeutics was founded in 2021 and went public in 2022 through a merger with SPAC company Helix Acquisition Corp (NASDAQ: HLXA). MoonLake is also one of the few SPAC biopharma stocks to maintain a share price above $10 long after listing.
What attracted Merck’s interest is that MoonLake currently has only one pipeline: Sonelokimab.
Sonelokimab was originally developed by Ablynx, and in 2013, Merck KGaA acquired the global exclusive rights. In 2021, MoonLake obtained those rights from Merck KGaA for an upfront payment of $29.9 million (including $25 million in cash and 9.9% equity), with potential future milestone payments totaling €307.1 million.
Sonelokimab is a tri-specific antibody targeting IL-17A/F, composed of three VHH domains. The central domain binds to human serum albumin, helping enrich the drug at sites of inflammatory edema.
Currently, MoonLake is developing Sonelokimab for several indications: hidradenitis suppurativa (HS), psoriatic arthritis (PsA), palmoplantar pustulosis (PPP), and axial spondyloarthritis (axSpA).
In June 2023, the company reported topline results from its Phase II MIRA trial of Sonelokimab in adults with moderate-to-severe active HS. The trial met both its primary and key secondary endpoints. At Week 12, a significantly higher percentage of patients treated with Sonelokimab achieved HiSCR75 and HiSCR50 compared to placebo. The drug also showed statistically significant results in other secondary endpoints. Following this announcement, the company's stock soared by 112%.
In March 2024, MoonLake released results from the Phase II ARGO trial of Sonelokimab for PsA. The trial met its primary endpoint. At Week 24, the Sonelokimab group showed significantly higher ACR50 and ACR70 response rates than the IL-17A/F monoclonal antibody bimekizumab (60% and 40%, respectively). Over 80% and 60% of patients achieved PASI90 and PASI100, respectively.
MoonLake has now launched Phase III trials for HS and PsA. The company plans to release Phase III results for HS (VELA trial) in September this year.
Despite rejecting Merck’s acquisition offer, MoonLake does have financial needs. In April, the company signed a debt financing agreement with Hercules Capital worth up to $500 million, of which $75 million has already been drawn.
According to MoonLake’s Q1 2025 financial report, it holds $480.1 million in cash, cash equivalents, and short-term securities. The company expects this funding to sustain operations through 2028.
As one of the hot targets in the autoimmune field, IL-17 has attracted numerous companies. Despite the presence of multiple approved drugs, latecomers are still receiving high expectations. Oral small molecule IL-17 developer DICE Therapeutics was acquired by Eli Lilly at a 40% premium. Acelyrin, boosted by an acquired IL-17 pipeline, gained significant attention in both primary and secondary markets.
Merck's willingness to pursue a deal with MoonLake before the release of Phase III data indicates strong confidence in Sonelokimab. Rumors of MoonLake being a potential acquisition target surfaced as early as 2023. With Merck raising its offer, MoonLake may ultimately decide to accept the acquisition.
