Merck & Company Inc (NYSE:MRK) has reportedly ended discussions to acquire Revolution Medicines Inc (NASDAQ:RVMD) after the two sides failed to agree on valuation, according to the Wall Street Journal, citing people familiar with the situation. The talks had centered on a potential transaction that could have valued the oncology-focused biotech at around $30 billion.
News of the breakdown triggered a sharp sell-off in Revolution Medicines’ stock, which fell 20.9% in premarket trading on Monday. The decline followed weeks of heavy speculation that had driven the company’s market value up from roughly $16 billion to more than $22 billion earlier this month.
Sources indicated that negotiations stalled primarily over price, reflecting Merck’s disciplined stance as it pursues acquisitions in the oncology space. Addressing the company’s financial capacity at a recent conference, Merck CEO Rob Davis said, “We are not limited from a balance sheet,” while adding that the group remains focused on transactions of up to $15 billion.
Revolution Medicines is advancing a pipeline of experimental therapies targeting RAS, a key molecular driver in several hard-to-treat cancers. Its leading drug candidates are being studied in lung, pancreatic and colorectal cancers, with important clinical readouts expected in the first half of the year.
Earlier market chatter had also linked AbbVie to a possible bid for Revolution Medicines, although those reports were later dismissed.
Despite the collapse of the latest talks, some market observers note that acquisition interest could resurface if upcoming clinical data are positive or if another potential buyer steps in. In the meantime, Merck is concentrating on its existing portfolio as it prepares for the eventual loss of exclusivity for its blockbuster drug, Keytruda.