Merck & Company Inc (NYSE:MRK) has ceased discussions to acquire biotechnology firm Revolution Medicines Inc (NASDAQ:RVMD), following a failure to reach an agreement on the company’s valuation. According to the Wall Street Journal, citing people familiar with the matter, the drug giant had been exploring a deal that could have valued the cancer-focused biotech at approximately $30 billion.
The collapse of the talks sent Revolution Medicines’ shares tumbling 20.9% in premarket trading on Monday. This retreat follows a period of intense speculation that had pushed the company’s market capitalization from $16 billion to more than $22 billion earlier this month.
The impasse reportedly centered on the purchase price, as Merck maintains a disciplined approach to its aggressive oncology acquisition strategy. Regarding the company’s financial flexibility, Merck Chief Executive Rob Davis stated at a recent conference, “We are not limited from a balance sheet,” but that the company is focused on deals for up to $15 billion.
Revolution Medicines is currently developing a pipeline of experimental drugs designed to inhibit RAS, a molecular driver found in many difficult-to-treat cancers. The company’s lead assets are being tested against lung, pancreatic, and colorectal tumors, with key clinical data expected in the first half of this year.
Earlier reports had also linked AbbVie to a potential bid for the biotech, though those rumors were eventually dismissed.
Despite the current breakdown in negotiations, observers note that a deal could still materialize if clinical results prove favorable or if a new suitor emerges. For now, Merck remains focused on its existing portfolio as it prepares for the upcoming loss of exclusivity for its top-selling drug, Keytruda.
