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Investing.com -- Cidara Therapeutics was hit with broad downgrades after Merck agreed to buy the company for $221.50 a share in a deal valued at about $9.2 billion.
JPMorgan cut its rating to Neutral and lifted its target to the offer price.
“We believe a $2-handle share price for the deal will be well received and assume peak sales of ~$4B in the U.S. alone,” analyst Anupam Rama said in a note.
Merck’s acquisition gives it control of Cidara’s experimental long-acting flu therapy as the company works to broaden its portfolio ahead of looming patent expirations for its cancer blockbuster Keytruda.
The drugmaker, which faces the loss of Keytruda exclusivity later this decade, has sharply expanded its late-stage pipeline since 2021 through internal development and major transactions, including the $11.5 billion Acceleron deal that added the pulmonary arterial hypertension treatment Winrevair.
Cidara’s lead candidate, CD388, is a long-acting antiviral designed to prevent influenza through a single injection and, unlike vaccines, is intended to work regardless of a person’s immune status.
The therapy is being positioned as a universal flu preventative with the potential to offer season-long protection, particularly for people at elevated risk of severe illness.
Morgan Stanley also lowered its rating to Equal-weight (EW) and raised its target to match the agreed terms. “Our EW rating is based on the expectation that the deal goes through as announced,” analyst Maxwell Skor noted.
Likewise, RBC Capital Markets analyst Brian Abrahams cut the rating to Sector Perform and increased its target to reflect the deal terms.
“We see relatively limited risk of FTC/ regulatory hurdles that would otherwise derail the proposed acquisition, and while there could be potential for another company to come in at a premium… both boards have agreed to the transaction, and this is difficult to predict,” Abrahams noted.
He expects the shares to trade close to the agreed terms as the deal moves toward a planned first-quarter 2026 closing.
Cidara’s drug is built on Cidara’s drug-Fc conjugate platform, combining zanamivir — the active ingredient in GSK’s approved flu medicine Relenza — with an engineered antibody fragment to extend its durability.
CD388 is now in a pivotal study in adolescents and adults vulnerable to complications from influenza.
In a prior mid-stage challenge study in healthy, unvaccinated adults aged 18 to 64, a single dose showed up to 76% protection against symptomatic influenza over a 24-week period compared with placebo.