This is why Merck is buying Cidara Therapeutics for $9.2 billion, and why Wall Street is happy

By Jaimy Lee

The drug giant is facing a patent cliff for Keytruda and upheaval in the market for Gardasil and has expressed a desire for deals that would offset those issues

Robert Davis is CEO of Merck, which announced its second major acquisition this year.

Merck & Co. is buying the developer of an experimental antiviral drug designed to prevent the flu, as the drugmaker aims to counter sales cliffs for two of its biggest drugs.

Merck has been vocal about its desire for dealmaking, saying as far back as January 2024 that it was willing to spend up to $15 billion. Any deals, especially for companies with late-stage assets like Cidara Therapeutics Inc., are expected to buoy revenue once Merck's cancer drug Keytruda loses patent protection in 2028. Keytruda has long been Merck's - and the world's - top-selling drug, bringing in $29.5 billion in revenue in 2024.

But the drugmaker (MRK) is also dealing with falling sales of its second-best-selling drug. Earlier this year, it paused shipments of the HPV vaccine Gardasil to China, where there are now competing vaccines made by domestic drug companies. Gardasil's sales plunged 48% to $2.4 billion in the first half of the year.

Those two drugs made up 59% of Merck's total sales in 2024.

Merck announced the $9.2 billion deal with Cidara on Friday, sending Cidara's stock (CDTX) soaring 106% in recent morning trading, enough to make it the biggest gainer on the major U.S. exchanges. The per-share price Merck is paying for Cidara, at $221.50 in cash, is a 109% premium to Thursday's closing price.

Merck shares gained 0.8% toward an eight-month high.

With Cidara, Merck will gain a drug-Fc conjugate called CD388, which is in Phase 3 clinical trials to determine whether it can prevent flu infections in healthy seniors as well as in teens and adults who are at high risk of complications. A Phase 2b study showed that a single dose produced 76.1% efficacy during the flu season.

Cidara last month received funding for CD388 that's worth up to $339 million from the Biomedical Advanced Research and Development Authority, the U.S. agency that works on medical countermeasures.

Merck has said it expects to have the first batch of pivotal data for CD388 in the first quarter of next year, and Cidara has said the drug could be made available to more than 100 million people in the U.S. if approved. It's targeting a launch in 2028 and projecting peak sales of $3.1 billion by 2040.

Wall Street likes the deal. Cantor's Carter Gould said CD388's sales "would provide a meaningful offset" to Keytruda's loss of exclusivity and noted that the drug fits neatly into Merck's existing work in infectious diseases.

The deal is expected to close in the first quarter.

Earlier this year, Merck acquired Verona Pharma - which sells a drug for chronic obstructive pulmonary disease called Ohtuvayre - for $10 billion. Its acquisitions of Verona and Cidara are two of the largest biopharma deals so far this year.

-Jaimy Lee

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11-14-25 1120ET