Genmab to acquire Merus for $8B cash, adding Phase 3 petosemtamab as biotech M&A heats up

Genmab is doubling down on oncology with an $8.0 billion bet on Merus, a clinical-stage biotech whose lead asset, petosemtamab, sits in Phase 3 for head and neck cancer and already carries two FDA Breakthrough Therapy Designations. Under a unanimously approved agreement, Genmab will acquire Merus for $97.00 per share in cash via a tender offer expected to close by early Q1 2026. The price implies roughly a 41% premium to Merus’s September 26 close and about 44% over its 30-day VWAP—classic late-cycle biotech M&A math that pays up for de-risked, late-stage assets.

Financing is straightforward cash on hand plus about $5.5 billion of new, non-convertible debt backed by a committed facility from Morgan Stanley. There’s no financing condition, and management guides to deleveraging to sub-3x gross leverage within two years post-close. The tender includes a minimum acceptance condition of at least 80% (reducible to 75% at Genmab’s option if other conditions are met), followed by standard post-offer steps and Dutch works-council consultations to reach 100% ownership. Advisors include PJT Partners and Morgan Stanley for Genmab and Jefferies for Merus.

Strategically, the deal accelerates Genmab’s shift toward a wholly owned revenue model and bulks up a late-stage pipeline that management believes can support multiple launches by 2027. Petosemtamab is an EGFR×LGR5 bispecific antibody positioned to be first- and best-in-class in recurrent/metastatic head and neck cancer. Phase 2 data presented at ASCO 2025 showed overall response rate and median PFS meaningfully above standard of care, and a separate mid-stage readout combining petosemtamab with pembrolizumab reported a 63% ORR—two data points that justify both the premium and the “transformational” label Genmab is using. Two Phase 3 studies are underway across first-line and second/third-line settings, with interim toplines targeted for 2026. Assuming positive outcomes and timely review, Genmab is aiming for an initial launch in 2027, with expansion into earlier lines thereafter.

The synergy story is more than cost takes. On the science side, petosemtamab’s bispecific design fits tightly with Genmab’s core antibody-engineering expertise and clinical-regulatory muscle in oncology. On the commercial side, Genmab can plug petosemtamab into an established global footprint, compressing time from approval to uptake. For the P&L, management frames the transaction as EBITDA-accretive by the end of 2029, with petosemtamab capable of at least $1 billion in annual sales by that time and multi-billion potential beyond if label expansions land. In short: platform plus pipeline plus go-to-market—this is a classic “buy late-stage, scale globally” play rather than a platform tuck-in.

Investors will, however, debate timing and price. Ålandsbanken called the consideration “excessive,” noting the debt load and the long runway to EBITDA accretion; Genmab’s shares slipped in early trading following the announcement. That critique isn’t unusual in today’s tape—late-stage oncology assets command steep premiums, and the carry cost is real until revenue arrives. But strategically, Genmab is trading near-term dilution for durable growth: a de-risked registrational asset, a cleaner revenue mix, and higher operating leverage from wholly owned launches.

The broader context is a busy—and supportive—biotech M&A backdrop. Large-cap pharma faces a steady march of patent expiries and needs late-stage, high-probability-of-success programs to backfill growth; well-funded mid-caps like Genmab are selectively moving up the risk curve to control more economics. Deal calendars have been thick with oncology at the center, and buyers are gravitating toward assets with visible registrational timelines, clear biomarker strategies, and combination potential with existing IO backbones. That’s a tailwind for sentiment in the space: the XBI has been trending higher, and active deal flow tends to keep a bid under quality Phase 2/3 stories as investors handicap the next takeout.

What to watch from here: first, trial cadence. Any updates on enrollment, interim analyses, or safety reviews across the two Phase 3 programs will swing the debate on valuation. Second, regulatory path and potential for expedited review, given the dual Breakthrough Therapy designations. Third, integration execution and balance-sheet management—Genmab’s deleveraging plan and any early signals of commercial build for a 2027 launch will matter for the multiple. Finally, competitive dynamics: head and neck cancer is attracting fresh entrants, and relative efficacy/tolerability—including in combos—will define share capture.

Bottom line: Genmab is paying up for speed, control, and scale in a late-stage oncology asset that aligns squarely with its antibody heritage. If the Phase 3s hit, the deal remixes the company toward higher-margin, wholly owned revenues right as biotech M&A momentum and an improving XBI backdrop keep capital flowing to the sector. If they don’t, 2029 EBITDA accretion will feel a long way off. That’s the trade—one many strategic buyers seem increasingly willing to make.