M&A, People

From dinner in Munich to $5.85 a share, Immune Design execs pushed for every penny they could get from the Merck bargain buyout

Carlos Paya

October 11, 2018 was Black Thursday at Immune Design $IMDZ. That’s when the company broadcast that its lead program for CMB305 combined with Roche’s Tecentriq was a bust in relapsed synovial sarcoma. CEO Carlos Paya then shifted focus to G100 and slashed the staff by 20% as its stock plunged 34%. Shares closed at $1.85.

Days later, during a dinner meeting in Munich while attending ESMO, a “senior executive” at Merck — who had been collaborating with Immune Design for the last 3 years on Keytruda — said the pharma giant $MRK was interested in switching from licensing talks to buying the battered company outright.

Paya’s immediate answer: The company isn’t for sale — at least not at anything like the current stock price.

That was the beginning of a lengthy series of back-and-forth bids and parries. With its share price on the ropes, the biotech steered away from 2 CVRs worth up to $85 million each, along with the initial bid of $200 million in cash. 

Stephen Brady

The M&A deal for Immune Design is at the opposite end of a spectrum lit up by blockbuster deals for the likes of Kite or Loxo and AveXis. There were no vast riches bestowed on successful company execs. But at a time when a lot of biotechs are living with depressed share values, it’s likely we’ll be seeing more of these deals — based on terms like the unpopular CVR, successfully pushed in the Celgene buyout — as the major players gear up with new acquisitions.

But that doesn’t mean you have to give away the store.

Over 4 months of talks — while Immune Design was trying, unsuccessfully, to spark some outside bids among a slate of prospects — Merck and the little biotech gradually came to $5.85 per share as a winning bid. And it came down to pennies, with Immune Design pushing for an extra nickel at the end — even as Merck was ready to call their highest, best offer. During that stretch, Immune Design’s own self-assessment spurred the board to lower the probability of success for G100 in follicular lymphoma as it reviewed its prospective independent future by the numbers.

Jan ter Meulen

Curiously, the company’s SEC filing on the negotiations avoids mentioning which senior executives at Merck were involved in the talks. The pharma giant rarely shows its hand and clearly wanted to keep as much of this behind closed doors as possible.

Paya himself comes away with a termination package of $4,033,298, including $1.4 million for severance. EVP of strategy and finance Stephen Brady gets a package worth $2.1 million. CSO Jan ter Meulen gets $1.9 million and CMO Sergey Yurasov slips in at $1.8 million.

Those numbers won’t win any records, but after the year that Immune Design has had, they’ll take it.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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