On Wednesday morning, Rahway-headquartered Merck announced it will acquire EyeBio in a deal that has a potential value of $3 billion.

The agreement will bring EyeBio into Merck‘s umbrella as a subsidiary. The privately held ophthalmology-focused biotechnology company is developing a pipeline of clinical and preclinical candidates for the treatment of vision loss associated with retinal vascular leakage, including its leading candidate, Restoret – an investigational, potentially first-in-class tetravalent, tri-specific antibody.

Restoret is anticipated to enter a pivotal study for diabetic macular edema later this year.

Merck says that in addition to augmenting its pipeline, the acquisition also significantly expands its presence in ophthalmology. The buyer pointed to EyeBio’s team and leadership, which includes founders Dr. David Guyer and Dr. Tony Adamis, who will leverage their experience and world-class expertise to continue their pioneering work.

The deal was unanimously approved by the EyeBio board of directors. Under the terms, Merck, through a subsidiary, will acquire all outstanding shares of EyeBio for up to $3 billion, including an upfront payment of $1.3 billion in cash and a further potential $1.7 billion in developmental, regulatory, and commercial milestone payments.

Merck’s financial advisor in the transaction was Citi; Gibson, Dunn, & Crutcher served as its legal advisors. Centerview Partners LLC acted as financial advisor to EyeBio and Skadden, Arps, Slate, Meagher & Flom LLP served as the company’s legal advisors.

Advancing eye care

Dr. Dean Li, president, Merck Research Laboratories, said the deal marks the company’s continued execution of the science-led business development strategy of expanding and diversify its pipeline.

“The EyeBio team, under the leadership of Dr. David Guyer and Dr. Tony Adamis, has a strong track record of developing groundbreaking ophthalmology therapies,” said Li. “By combining our strengths, we aim to advance with rigor and speed the development of their promising pipeline of candidates targeting reginal diseases.”

“Less than three years ago, EyeBio was hatched to translate Dr. David Guyer’s idea for a potential new therapy for retinal diseases into a reality,” said Kate Bingham, EyeBio board chair and managing partner, SV Health Investors. “This agreement reflects the hard work of the talented EyeBio team, led by Dr. Guyer, who through this agreement have placed Restoret on a defined development path to patients.”

“The EyeBio team has successfully assembled a pipeline of novel candidates with the potential to provide new treatment options for patients with retinal disease,” said Guyer, EyeBio’s CEO and president. “As a subsidiary of Merck, EyeBio will be positioned to tap into the resources and infrastructure needed to support the clinical, regulatory, and commercial development of these candidates and help bring them to patients worldwide.”

The acquisition, subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, is expected to close in the third quarter of 2024.