Merck to acquire Verona Pharma for $10bn, securing Ohtuvayre COPD therapy

Why did Verona Pharma stock surge over 20% following Merck’s $10 billion acquisition announcement?

Verona Pharma plc (NASDAQ: VRNA) shares soared over 20% on July 9, 2025, after Merck & Co., Inc. (NYSE: MRK) unveiled its definitive agreement to acquire the respiratory-focused biopharmaceutical firm for approximately $10 billion. The all-cash transaction, priced at $107 per American Depositary Share (ADS), reflects a significant premium over Verona Pharma’s previous closing price of $86.86. The market reacted swiftly to the news, with Verona’s stock trading above $104.70 by mid-session—marking a 20.62% intraday gain as institutional investors recalibrated their outlook on the commercial potential of Verona’s lead asset, Ohtuvayre® (ensifentrine).

This acquisition underscores Merck’s intensified focus on cardio-pulmonary innovation, reinforcing its late-stage pipeline with a first-in-class therapy approved in the U.S. for chronic obstructive pulmonary disease (COPD). The buyout is expected to close in Q4 2025, pending regulatory and shareholder approvals, and represents one of Merck’s largest respiratory deals to date.

How does the acquisition of Verona Pharma align with Merck’s cardio-pulmonary pipeline strategy?

Merck’s decision to absorb Verona Pharma fits squarely within its stated science-led, value-driven business development strategy. The American biopharmaceutical major, best known for oncology blockbusters like Keytruda, has been under pressure to expand into adjacent therapeutic categories with durable revenue potential. With the addition of Ohtuvayre, Merck adds an FDA-approved maintenance therapy for COPD that offers dual action—bronchodilation and non-steroidal anti-inflammatory effects.

Ohtuvayre, a selective dual inhibitor of phosphodiesterase 3 and 4 (PDE3/PDE4), is the first novel inhaled COPD mechanism approved in over two decades. Verona’s clinical program ENHANCE demonstrated meaningful improvements in lung function, and the drug is already gaining momentum in the U.S. market since its commercial launch in August 2024. By securing this asset, Merck not only enters the $20B+ global COPD treatment market but also strengthens its cardio-respiratory franchise with a differentiated, first-in-class molecule.

What does the acquisition mean for Ohtuvayre’s commercial outlook in the COPD treatment market?

Institutional sentiment suggests that Merck’s expansive commercial reach and deep R&D capabilities could significantly accelerate Ohtuvayre’s trajectory. The inhaled therapy’s uptake has been described as “rapid and accelerating” since its U.S. launch less than a year ago, with analysts expecting broader formulary access and prescriber awareness under Merck’s stewardship.

Ohtuvayre’s mechanism uniquely targets persistently symptomatic COPD patients who have limited response to existing LAMA/LABA treatments. The drug’s dual-action profile could position it as both an adjunct and potential alternative to steroid-based inhalers, which are associated with systemic risks in long-term use. Further, a fixed-dose combination of ensifentrine with glycopyrrolate is already under development, potentially expanding the commercial label in the near future.

Given the projected longevity of the COPD market, analysts believe that Merck is locking in a future growth engine with multi-year exclusivity and a robust life-cycle management strategy already underway.

How did the stock market react to the Verona Pharma acquisition and what does the valuation suggest?

The $107 per ADS deal price represents a sharp premium over Verona’s July 8 close of $86.86—translating to a $10 billion transaction that significantly exceeds the biotech’s prior market capitalization. This valuation reflects not only the immediate revenue potential of Ohtuvayre but also Verona Pharma’s development-stage pipeline, including studies in non-cystic fibrosis bronchiectasis, another high-unmet-need respiratory condition.

Verona shares surged to $104.77 during intraday trading on July 9, capturing most of the acquisition premium. The bid-ask spread of $104.75 x 100 and $104.78 x 100 suggests market confidence in deal closure. The current trading levels imply less than a 2% deal risk discount, often seen in biotech takeouts where antitrust or shareholder risks are minimal.

With a market cap of $8.9 billion at the time of announcement, the stock’s rapid move to within cents of the offer price signals institutional consensus on both the strategic logic and likelihood of completion.

What are the key risks Merck and investors must weigh despite Ohtuvayre’s promise?

Despite its upside potential, Ohtuvayre’s safety profile includes important boxed warnings around psychiatric adverse events, including insomnia, anxiety, and rare cases of suicidality. While overall incidence rates in trials remain low, these risks will require vigilance in real-world settings. Additionally, Ohtuvayre is not approved for acute bronchospasm and cannot replace short-acting bronchodilators in emergency scenarios.

From a business risk perspective, Merck must also manage regulatory scrutiny—both under the Hart-Scott-Rodino Act in the U.S. and via sanction from the High Court of Justice in England and Wales. Although such approvals are procedural for mid-cap biotech acquisitions, any delay could impact timeline expectations.

Finally, Verona Pharma’s future development programs, including combination therapies and expanded indications, may not all meet regulatory or commercial benchmarks. As such, Merck’s long-term returns from this transaction depend not only on Ohtuvayre’s core sales but also on successful lifecycle extensions and clinical execution.

What does this mean for Merck’s broader M&A strategy and competitive positioning?

Merck’s latest move follows its well-defined pattern of bolstering late-stage pipelines through targeted acquisitions rather than early-stage risk-heavy bets. The Verona Pharma acquisition mirrors Merck’s earlier respiratory investments and comes amid intensifying competition in the inhaled drug space, including rivals like AstraZeneca, GSK, and Boehringer Ingelheim.

While the deal may not immediately rival Merck’s blockbuster oncology portfolio in terms of revenue, it aligns with the company’s post-Keytruda diversification plan. With patent cliffs looming for major assets by the end of the decade, industry watchers believe Merck is systematically building a second wave of growth anchored in cardio-respiratory and infectious disease therapeutics.

The acquisition also sends a broader signal to investors that Merck remains confident in its M&A capacity and willing to spend strategically on assets with existing approval and expansion runway.

Could this trigger further dealmaking in the biotech respiratory drug space?

Analysts suggest that Merck’s bold move could spark renewed M&A activity in the COPD and asthma drug markets, particularly among mid-cap firms with promising inhaled formulations or dual-mechanism therapies. Biotech names with late-stage respiratory assets could become acquisition targets as Big Pharma players look to shore up non-oncology revenue streams.

Investor attention may now turn to companies like Theravance Biopharma, Verona’s U.K. peer Circassia, or even private firms with novel bronchodilator or PDE-based platforms. Merck’s willingness to pay $10 billion for a single-asset platform may also reset valuation expectations across the space.

What is the expected timeline for closure and how are stakeholders approaching the deal process?

The acquisition is structured as a U.K. scheme of arrangement and has received unanimous approval from both boards. The deal still requires approval from Verona Pharma shareholders, regulatory clearance under the Hart-Scott-Rodino Act, and court sanctioning in the U.K. If these steps proceed as expected, closing is anticipated in Q4 2025.

Both Merck and Verona Pharma have initiated shareholder engagement processes, including investor calls, SEC filings, and informational disclosures. There is no requirement for Rule 8 disclosures under the U.K. Takeover Code, simplifying procedural aspects for institutional investors. The capitalization of the purchase price as an intangible asset—amortized over the product life—also offers financial predictability from a GAAP standpoint.