Merck announced Sunday morning that it is purchasing Prometheus Biosciences for nearly $11 billion.

As part of the definitive agreement, Merck will acquire Prometheus’ lead candidate, PRA023, an anti-TL1A drug for treating immune-mediated diseases. 

PRA023 has had a notable start to the year after making a good impression at the J.P. Morgan Healthcare Conference in January. Prometheus heralded Phase 2 IBD data for the drug, highlighted by a 26% placebo-adjusted clinical remission rate in ulcerative colitis and Crohn’s disease.

In an investor note, SVB Securities described the drug’s performance as having “Rinvoq-like efficacy with Entyvio-like safety” and projected revenue exceeding $6 billion by 2035.

Merck is set to acquire the San Diego-based clinical-stage biotech through a subsidiary. The Merck deal is still subject to approval by Prometheus shareholders and regulatory approvals, but the two organizations expect to close during Q3 2023.

“This agreement with Merck, a leader in biopharmaceutical research and development, allows Prometheus to maximize the potential for PRA023, while continuing to apply our technology and expertise to fuel further discoveries to address the needs of patients with immune disorders,” said Prometheus CEO Mark McKenna in a statement.

Prometheus’ stock benefited greatly from news of the proposed acquisition, trading up nearly 70% during the early morning session on Monday.

The move reflects the growing interest among pharma companies in the inflammation and immunology space as well as around the potential of precision medicine.

Merck has been on a hot streak as of late as the company inked a multi-year research collaboration and license agreement with Proxygen worth up to $2.55 billion earlier this month. 

This built upon a $554 million strategic collaboration the two companies signed last June to develop molecular glue graders up to a clinical candidate stage.

“The agreement with Prometheus will accelerate our growing presence in immunology where there remains substantial unmet patient need,” said Merck CEO Robert M. Davis in a statement. “This transaction adds diversity to our overall portfolio and is an important building block as we strengthen the sustainable innovation engine that will drive our growth well into the next decade.”