US-headquartered pharma giant Merck has entered into a definitive agreement to acquire autoimmune-focused Pandion Therapeutics. The deal is priced at $60 per share in cash, which represents a total value of $1.85bn.

According to the terms of the agreement, Merck will initiate a tender offer to buy all outstanding shares of Pandion through a subsidiary. Upon completion of the tender offer, Merck’s subsidiary will be merged into Pandion. The transaction is expected to close in the first half of 2021.

Merck research laboratories president Dr Dean Yi said: “This acquisition builds upon Merck’s strategy to identify and secure candidates with differentiated and potentially foundational characteristics.

“Pandion has applied its TALON technology to develop a robust pipeline of candidates designed to re-balance the immune response with potential applications across a wide array of autoimmune diseases.”

Pandion’s TALON technology

Pandion’s proprietary TALON technology allows the design and development of immune modulators that target natural immune regulatory mechanisms, such as regulatory T cells (Tregs) and inhibitory checkpoints like programmed cell death protein 1 (PD-1), to re-balance the immune response in patients with autoimmune disease.

The platform does this by engineering immune effector modules to mimic the action of immune control nodes. These are then combined with a protein backbone or in a format with an antibody-based, tissue-targeted tether module. Having these two approaches means the drugs produced can either be systemic or tissue-targeting.

A Merck spokesperson stated that Pandion’s immune modulators “have the potential to provide immune tolerance without immune suppression and therefore provide a differentiated option for appropriate patients”.

Pandion CEO Dr Rahul Kakkar said: “We are proud that Merck has recognized our team’s innovation and drive in creating a pipeline of diverse candidates that activate natural immune regulatory mechanisms and thereby have the potential to achieve better clinical responses for patients.

“We believe Merck is well-positioned to bring our novel approach to the millions of those living with autoimmune diseases, and we look forward to seeing these molecules progress in the clinic.”

PT101 and the rest of Pandion’s pipeline

Kakkar noted: “Pandion grew out of our founders’ personal and scientific mission to change the way patients living with autoimmune diseases are treated. In just a few years, we have taken that mission from idea to clinical proof of mechanism with PT101, our lead IL-2 [interleukin-2] mutein.”

PT101 is Pandion’s lead candidate and it combines an engineered IL-2 mutein with a protein backbone. Acting systemically, PT101 aims to activate and expand Tregs to treat autoimmune diseases, including ulcerative colitis and systemic lupus erythematosus.

“Earlier this year, Pandion announced that PT101 had completed a Phase 1a clinical trial, which achieved its primary objective of safety and tolerability,” says a Merck spokesperson. “The company’s pipeline also includes PD-1 agonists in development for numerous autoimmune diseases.”

For example, Pandion’s candidate PT627 is a systemically acting product, while PT001 targets the gastrointestinal tract or liver. Both products are currently in pre-clinical development.

In addition, Pandion is working on developing discovery tethers for certain organs and targets. It is developing tethers for kidney and skin alone, while working with Astellas on a pancreas tether. The company is also working on a tether for the target CD39 that will manipulate the inflammatory microenvironment.