Is Merck Overpaying for Immune Design?

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Immune Design Corp. (NASDAQ: IMDZ) shares absolutely exploded on Thursday after Merck & Co. Inc. (NYSE: MRK) announced that it would be acquiring the firm at what some might call a ridiculous premium.

Under the terms of the agreement, Merck will acquire Immune Design for $5.85 per share in cash for an approximate value of $300 million. Although this is an incredible premium for Immune Design, it is just a drop in the buck for Merck, which boasts a market cap of roughly $206 billion.

It’s worth pointing out that, Immune Design shares were only up about 9% so far year to date, and over the past 52 weeks the stock was down over 57%.

Immune Design is a late-stage immunotherapy company employing next-generation in vivo approaches to enable the body’s immune system to fight disease. The company’s proprietary technologies, GLAAS and ZVex, are engineered to activate the immune system’s natural ability to generate and/or expand antigen-specific cytotoxic immune cells to fight cancer and other chronic diseases.

The transaction is expected to close early in the second quarter of 2019.

Dr. Roger M. Perlmutter, president of Merck Research Laboratories, commented:

Scientists at Immune Design have established a unique portfolio of approaches to cancer immunization and adjuvant systems designed to enhance the ability of a vaccine to protect against infection, which could meaningfully improve vaccine development. This acquisition builds upon Merck’s industry-leading programs that harness the power of the immune system to prevent and treat disease.

Shares of Immune Design were last seen up about 309% at $5.81 early Thursday, in a 52-week range of $1.10 to $5.82. The stock has a consensus price target of $4.13.

Merck traded at $79.25 a share. The 52-week range is $52.83 to $80.19 and the consensus price target is $82.81.

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