Merck expands search for new cancer drugs with plans to buy San Diego's VelosBio for $2.75B

New Jersey pharma giant Merck announced Thursday that it will buy San Diego biotech VelosBio for $2.75 billion in a bid to expand its cancer treatment portfolio.

Merck will pick up VelosBio's lead experimental drug, which uses an antibody to selectively send a toxic chemical to cancer cells while avoiding healthy ones.

The antibody latches onto ROR1, a protein that your body mostly stops making after birth, but which can be found on the surface of a variety of cancer cells. Once the antibody gets absorbed into the cancer cell, the toxin it's attached to kills the cell.

VelosBio is currently testing this strategy in a Phase 1 clinical trial of various leukemias and lymphomas and a Phase 2 study for certain types of breast and lung cancer. The former study is focused on testing the drug's safety at different doses, while the latter is looking for early signs that the antibody-toxin combo causes tumors to shrink.

"Merck is a recognized leader in oncology, and this acquisition reflects the hard work and commitment of all the employees at VelosBio," said VelosBio CEO Dave Johnson in a statement. "As part of Merck's oncology pipeline, our lead product candidate … is now well positioned to achieve its maximum potential to benefit appropriate cancer patients in need."

Johnson founded VelosBio in 2017. In that time, the company has raised more than $200 million and grown to about 25 employees.

The Union-Tribune reached out to Merck for specifics on how the acquisition will affect VelosBio's San Diego operations and clinical trials, but communications director Pamela Eisele said that it is too early to speculate on the matter given that the deal has not gone through yet.

Merck expects to complete the deal by the end of 2020, though it is subject to regulatory approval.

It's the second major deal Merck has announced in recent months with a company working on what are known as antibody-drug conjugates. In September, Merck announced a $1.7 billion deal with Washington biotech Seattle Genetics, which is working with Merck to develop antibody-drug conjugate treatments against breast cancer and other tumor types.

"This acquisition aligns with Merck's strategy to broadly develop innovative oncology assets and to expand further into hematologic malignancies and potentially solid tumors," said Eisele in an email. "We believe that antibody-drug conjugates (ADCs) represent a broad category of assets with different targets, and the acquisition of VelosBio complements our existing ADC collaborations with (Seattle Genetics)."

This story originally appeared in San Diego Union-Tribune.

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