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Merck Targets Autoimmune Treatment in Pandion Therapeutics

On Thursday, February 26th Merck announced that it will pay out roughly $1.85 billion to acquire Pandion Therapeutics, a biotech hoping to target regulatory T cells (Tregs) to treat a range of autoimmune disorders.

Tregs act as a control node within the immune system and can inhibit the activity of several different proinflammatory immune cell types. Tregs are critical for self-tolerance, or the ability of the immune system to recognize a hosts’ cells and not produce an immune attack against them. Defects in Tregs result in multi-organ inflammation and their dysfunction is associated with many autoimmune diseases.

“This acquisition builds upon Merck’s strategy to identify and secure candidates with differentiated and potentially foundational characteristics,” said Dr. Dean Y. Li, president, Merck Research Laboratories. “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 bispecific work, though targeted on autoimmune conditions, could play well in Merck’s next-gen search for oncology blockbusters, of which they have 22 drugs in Phase III trials. Bispecific antibodies have become one of the big hot zones in cancer development. Merck continues to profit off of its star Keytruda and has room to be aggressive in chasing novel treatments.

Pandion’s lead candidate drug, PT101, is an engineered IL-2 mutein fused to a protein backbone designed to selectively activate and expand regulatory T cells (Tregs) for the potential treatment of ulcerative colitis and other autoimmune diseases. Ulcerative colitis affects about 750,000 patients per year in the United States, and nearly 24 million Americans suffer from some form of auto-immune disease which is a huge market to capitalize on. Investors are willing to take a risk on early stage biopharmaceutical companies at a high premium for the potential of a huge return.

The final price this acquisition, which was all-cash, is equivalent to $60 per share, which is roughly 134% premium on Pandion’s closing price Wednesday, the 24th. Merck comprises about 7% of the PPIP portfolio and while Merck’s stock was $74 at the time of the announcement, there was not much reaction as the market dealt with expectations for the next phase of the pandemic. Merck announced fourth-quarter worldwide sales of $12.5 billion – an increase of 5%, and full-year 2020 worldwide sales of $48.0 billion – an increase of 2%. Excluding the impact from foreign exchange, sales grew 4% last year. Merck anticipates full-year 2021 worldwide sales to be between $51.8 billion and $53.8 billion, including a positive impact from foreign exchange of approximately 2%.

Overall, Merck continues to expand in a crowded biopharmaceutical market and remains a company to keep a close eye on for exciting products to come to market in the coming months.


  1. Blankenship, Kyle. “UPDATED: Merck Takes a Swing at the IL-2 Puzzlebox with a $1.85B Play for Buzzy Pandion and Its Autoimmune Hopefuls.” Endpoints News, Endpoints News, 25 Feb. 2021,

  2. “Merck to Acquire Pandion Therapeutics.” Pandion Therapeutics, Inc., 25 Feb. 2021,

  3. “Our Fourth-Quarter and Full-Year 2020 Financial Results.”, 4 Feb. 2021,

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