Merck & Co to buy Aton Pharma as way to expand into cancer therapy sector

US pharmaceutical major Merck & Co has entered into a definitive agreement to acquire 100% of the privately-held US biotechnology company Aton Pharma. Financial terms of the deal were not disclosed, but Merck noted that consideration for the purchase will consist of upfront and contingent payments based on the regulatory filing, approval and sale of products.

Aton was founded in 2001 by a group of cancer investigators to develop and commercialize novel therapeutics for this indication and for other diseases. According to a Merck statement, the former's clinical pipeline of histone deacetylase inhibitors represents a promising class of antitumor agents with a novel mechanism of action.

Merck has been one of the few US drug majors to have resisted the temptation to enter large-scale merger and acquisition activity, despite the fact that it has been lagging in new product development and earnings growth under its current strategy. Indeed, for the fourth quarter of 2003, the company saw a 23% decline in net income due to charges and lower product sales (Marketletter February 2).