Cancer drug developer Revolution (RVMD.US) surged after hours! Rumored to be in talks with Merck & Co., Inc. (MRK.US) for acquisition, with the transaction price potentially reaching $32 billion.

According to reports, Merck & Co., Inc. (MRK.US) is in talks to acquire the biotechnology company Revolution Medicines (RVMD.US) that focuses on cancer research. The report, citing sources familiar with the matter, stated that the discussed deal price ranges from $28 billion to $32 billion. If the deal is finalized, this would be one of the largest pharmaceutical industry transactions since Pfizer Inc.'s $43 billion acquisition of Seagen at the end of 2023. Boosted by this news, Revolution Medicines' stock surged over 15% in after-hours trading on Thursday. It is worth mentioning that on Wednesday, there were reports that AbbVie (ABBV.US) was in "deep" talks to acquire Revolution Medicines, with the valuation of the latter, a company that has not yet brought any products to market, potentially exceeding $20 billion. However, AbbVie later responded that the company was not in talks to acquire Revolution Medicines. Revolution Medicines' key asset is RMC-6236, a pan-RAS inhibitor (Daraxonrasib) it is currently developing. Daraxonrasib is an oral targeted therapy, a direct acting RAS (ON) multi-selective inhibitor used to treat cancers driven by RAS gene mutations. It acts directly on activated RAS protein, blocking the binding of RAS to downstream signaling proteins, thereby inhibiting the sustained activation of the RAS signaling pathway and slowing the proliferation of tumor cells. Daraxonrasib targets common oncogenic RAS mutations, including G12X, G13X, and Q61X mutations, which are significant drivers of key cancers such as pancreatic ductal adenocarcinoma (PDAC), non-small cell lung cancer (NSCLC), and colorectal cancer (CRC). Currently, Daraxonrasib is being evaluated in four global phase 3 clinical trials, including three studies targeting PDAC and one study targeting locally advanced or metastatic RAS-mutant NSCLC. Key study results are expected to be announced this summer. In December last year, Revolution Medicines announced that the RASolute304 clinical trial had enrolled its first patient. RASolute304 is a global, open-label, phase 3 clinical trial designed to evaluate the safety and efficacy of Daraxonrasib in resectable PDAC patients who have undergone surgery and completed chemotherapy. The trial plans to enroll approximately 500 PDAC patients carrying oncogenic RAS mutations who have undergone tumor resection surgery and received perioperative chemotherapy. The trial will evaluate whether Daraxonrasib can improve patients' disease-free survival compared to observation alone. Industry research data suggests that with the help of Daraxonrasib, the pancreatic cancer treatment market could expand tenfold by 2035, exceeding $3 billion. In October last year, the U.S. Food and Drug Administration (FDA) selected Daraxonrasib to participate in a new program aimed at accelerating the approval of promising drugs. Industry research suggests that Daraxonrasib is expected to be approved for market as early as 2026. Typically, merger and acquisition activity between pharmaceutical companies heats up significantly in January every year, as companies in the life sciences industry gather in San Francisco to attend the annual JPMorgan Healthcare Conference considered a hotbed for M&A deals. According to industry research analysts Javier Manso Polo and Sam Fazeli, Revolution Medicines drug development pipeline makes it an extremely attractive acquisition target. They stated, "Any deal would come with execution risk and a higher valuation premium." Merck & Co., Inc.'s blockbuster cancer drug Keytruda is set to lose its patent by the end of this decade. Since 2021, the company has nearly doubled its late-stage product pipeline through internal development and major transactions (such as the $11.5 billion acquisition of Acceleron's pulmonary arterial hypertension drug Winrevair). A deal with Revolution Medicines could potentially give Merck & Co., Inc. access to its experimental drug Daraxonrasib.