Merck announced it is buying ophthalmology startup EyeBio in a deal worth up to $3 billion Wednesday morning.

Through a subsidiary, the pharma giant is paying $1.3 billion upfront for the eye-focused biotech and could pay another $1.7 billion in milestone payments.

EyeBio’s board of directors unanimously approved the deal, which is still subject to customary closing conditions and regulatory approvals. The transaction is expected to close in Q3, at which point Merck will record a $1.3 billion charge in its non-GAAP financials.

By scooping up EyeBio, Merck is expanding its ophthalmology offerings and bolstering its vision care pipeline. The prize jewel of the transaction is Restoret (EYE103), a novel, investigational, tetravalent and tri-specific antibody. 

Restoret acts as an agonist of the Wingless-related integration site signaling pathway and has shown potential in a Phase 1b/2a trial treating patients with diabetic macular edema (DME) and neovascular age-related macular degeneration (NVAMD).

Merck stated that Restoret is expected to advance into a Phase 2b/3 trial for treating patients with DME in the second half of the year.

“We continue to execute on our science-led business development strategy to expand and diversify our pipeline,” said Dr. Dean Y. Li, president of Merck Research Laboratories, in a statement. “The EyeBio team, under the leadership of Dr. David Guyer and Dr. Tony Adamis, has a strong track record of developing groundbreaking ophthalmology therapies. By combining our strengths, we aim to advance with rigor and speed the development of their promising pipeline of candidates targeting retinal diseases.”

During a strong first quarter of 2024, Merck has put its money to work. 

The drugmaker previously announced an agreement with Pearl Bio, a Khosla Ventures-backed biotech, that could be worth as much as $1 billion and nabbed biotech startup Abceutics for $208 million. 

The deal was also announced the same day Merck received priority review from the Food and Drug Administration for Keytruda (pembrolizumab) plus chemotherapy for treating partients with unresectable advanced or metastatic malignant pleural mesothelioma.

Prior to the acquisition, EyeBio was a portfolio company of Paris-based Jeito Capital, which acquired the company in early 2022.

EyeBio launched in 2021 with a $65 million Series A funding round and was supported by a $65 million Series A financing extension in November 2023.

Jeito Capital, which saw another portfolio company get snapped up last week after Biogen bought Human Immunology Biosciences in a deal worth up to $1.8 billion, applauded the deal in a separate press release.

“Since our first investment in EyeBio, we have been very impressed by the talent of the team and the high-quality of their research,” Jeito Capital CEO Rafaèle Tordjman, MD, PhD, said in a statement. “Working alongside the management and supporting EyeBio at each step of its value milestones achieved, reflects perfectly our ambition to transform most promising biopharma into future global market leaders. Through this new successful exit in another new therapeutic area with high unmet needs, Jeito demonstrates how its unique investment strategy and collective expertise bring value to the company, the patients and the investors.”

For a June 2024 article on biotech financing and dealmaking rebounding, click here.