MSD reaches $610m deal to buy lysosome biotech Caraway

MSD has agreed to pay up to $610 million to acquire Caraway Therapeutics, a Cambridge, Massachusetts biotech focusing on neurodegenerative disorders and rare diseases.

The big pharma, known as Merck & Co in the US and Canada, will make an undisclosed upfront payment to get control of Caraway this quarter, with the remainder of the total consideration forthcoming if Caraway’s R&D pipeline delivers as anticipated. It has been a shareholder in the biotech since 2018 through its venture capital arm, MRL Ventures Fund.

The biotech is focusing on precision, small-molecule medicines that work via a process known as cellular clearance by activating the lysosome, sometimes referred to as the cell’s recycling and disposal organelle. It has a range of preclinical-stage projects that aim to harness lysosomes’ ability to clear toxic materials and defective cellular components.

Mutations that impair cellular clearance pathways are associated with multiple neurodegenerative and rare diseases, according to the company.

There’s not much information available on Caraway’s pipeline, which is headed by candidates for Parkinson’s disease associated with mutations in the GBA gene and another non-neurological rare disease that targets the TRPML1 ion channel.

It also has slightly earlier-stage programmes in Parkinson’s and amyotrophic lateral sclerosis (ALS), also known as motor neuron disease (MND).

In 2020, the biotech was awarded a research grant from The Michael J Fox Foundation to investigate the role of TMEM175, a lysosomal potassium ion channel genetically implicated in Parkinson’s. Decreased TMEM175 function reduces lysosomal efficiency in neuronal cells, and is strongly associated with the disease. The following year, AbbVie paid $17 million upfront for an option on that programme, with up to $267 million in additional milestone payments.

“Caraway’s multidisciplinary approach has yielded important progress in evaluating novel mechanisms of modulation of lysosomal function with potential for the treatment of progressive neurodegenerative diseases,” said George Addona, head of discovery, preclinical development, and translational medicine at Merck Research Laboratories.

“We look forward to applying our expertise to build upon this work with the goal of developing much-needed disease-modifying therapies for these conditions.”

Other companies operating in this area include Biogen, which licensed a lysosome-targeting drug from Alectos in $722.5 million deal last year, as well as Takeda/AcuraStem and Verge Genomics with inhibitors of PIKfyve, an enzyme thought to be involved in an underlying disease process in ALS linked to the function of lysosomes.

The Caraway deal comes against a backdrop of increased M&A activity at MSD, which bought Prometheus Biosciences earlier this year for $10.8 billion, and in the last couple of years also snapped up Imago Biosciences for $1.35 billion and Acceleron Pharma for $11.5 billion. It was also linked to a possible takeover of Seagen, before Pfizer agreed its $43 billion deal for the company.