Merck & Company Inc has ended discussions aimed at acquiring biotechnology firm Revolution Medicines Inc after talks failed to produce an agreed purchase price, according to people familiar with the matter. The prospective transaction had been discussed at a level that would have valued the cancer-focused biotech at roughly $30 billion.
The breakdown in negotiations had an immediate market impact. Revolution Medicines’ shares dropped 20.9% in premarket trading on Monday, wiping away earlier gains tied to takeover speculation. The company’s market capitalization had climbed from $16 billion to more than $22 billion earlier this month amid investor hopes of a deal.
Sources indicate the impasse centered on valuation, with Merck applying a disciplined filter to its aggressive oncology acquisition efforts. At a recent conference, Merck Chief Executive Rob Davis said the company was not constrained by its balance sheet but stressed the firm was focused on deals up to $15 billion. Those comments reflect Merck’s self-described limits on the size of acquisitions it is prioritizing.
Revolution Medicines is advancing a pipeline of experimental medicines designed to inhibit RAS, a molecular driver implicated in several hard-to-treat cancers. Its lead compounds are being evaluated in trials targeting lung, pancreatic and colorectal tumors. Important clinical readouts for those assets are anticipated in the first half of this year, a development that market observers say could yet change the acquisition calculus.
Earlier coverage connected AbbVie to potential interest in Revolution Medicines, but those suggestions were later dismissed. Observers noted that while talks with Merck have ceased, a transaction could still be possible in future if clinical results are persuasive or if another suitor emerges.
For now, Merck appears to be concentrating on its existing product portfolio as it prepares for the upcoming loss of exclusivity for its top-selling immunotherapy, Keytruda. The company’s stated acquisition parameters and the halted discussions underscore the interplay between valuation discipline and strategic portfolio needs in the current deal environment.
Sectors impacted: biotechnology, pharmaceuticals, healthcare, mergers and acquisitions.