Merck (MRK) acquires Pandion Therapeutics (PAND) for $1.85 billion

Shares of Pandion Therapeutics (PAND) skyrocketed on news that Merck (MRK) will acquire the
company for $1.85 billion, a 132% premium.

Pandion is a clinical-stage biotech company that develops therapeutics for patients living with
autoimmune diseases. Their lead candidate PT101 completed Phase 1A trial earlier this year and is a
potential treatment for ulcerative colitis.

Merk initiated a tender offer through a subsidiary to acquire all outstanding shares of Pandion at $60
per share. On Wednesday shares closed at $25.63. The completion of the acquisition is expected to
close in the first half of 2021.

According to a release, “This acquisition builds upon Merck’s strategy to identify and secure candidates
with differentiated and potentially foundational characteristics,” said Dr. Dean Y. Li, president, Merck
Research Laboratories. “Pandion has applied its TALON technology to develop a robust pipeline of
candidates designed to re-balance the immune response with potential applications across a wide array
of autoimmune diseases.”

The PT101 drug is an engineered IL-2 mutein fused to a protein backbone designed to selectively
activate and expand regulatory T cells. The company also has other candidates in its pipeline to treat
Systemic Lupus Erythematosus, using their platform called TALON they are also developing PD-1
agonists that target the gut, liver, skin, kidneys, and pancreas.

The vision of Pandion’s efforts is to expand the library of tether and effector modules, with their CD39
effector they can manipulate the inflammatory microenvironment. PT001 is their bifunctional molecule
consisting of PD-1 agonist with a MAdCAM tether.

The MAdCAM is expressed in the gastrointestinal tract and is a critical receptor for the trafficking of
immune cells into gut tissue. PT001 has potential to increase PD-1 agonist to the gut to treat gut-
restricted autoimmune diseases, Pandion plans to initiate IND-enabling studies with PT001 in the first
half of 2021.