Shares of small-biotech MoonLake Immunotherapeutics MLTX rose 18% yesterday following a report issued by the Financial Times (FT), which stated that pharma giant Merck MRK is interested in acquiring the company.

Per the article, Merck had submitted a non-binding offer for MoonLake earlier this year in a deal valued at more than $3 billion. Though this offer was rejected, the FT stated that the talks could be revived and other suitors may express interest in acquiring MLTX. Both Merck and MoonLake have declined to comment on the rumor.

Swiss-based MoonLake Immunotherapeutics is a clinical-stage company developing its lead pipeline asset, sonelokimab, for the treatment of inflammatory diseases. The drug is a novel nanobody therapy being developed in late-stage studies for hidradenitis suppurativa (HS) and psoriatic arthritis (PsA) indications. Topline data from the HS study is expected around September 2025.

MoonLake is also developing sonelokimab for other indications in dermatology and rheumatology, including palmo-plantar pustulosis (PPP) and axial spondyloarthritis (axSpA).

MLTX Share Price Performance

Year to date, the stock has lost 10% compared with the industry’s 4% decline.

Image Source: Zacks Investment Research

What’s Driving Merck’s Reported Interest in MoonLake?

The idea behind the deal is clear — Merck aims to diversify its current revenue base, which has become highly dependent on Keytruda. In 2024, the company generated nearly 46% of its total revenues from the drug’s sales. With concerns over Keytruda’s potential loss of exclusivity (LOE) after 2028, MRK remains under pressure from the investor community to pursue deals for new drugs that could help reduce its dependence on a single product for growth.

In the past year, Merck has been tapping Chinese biotechs for licensing deals. Toward the end of last year, the company struck multi-billion-dollar deals with Hansoh Pharma, LaNova Medicines and Hengrui Pharma. While the Hansoh deal added the investigational oral GLP-1 receptor agonist HS-10535 to Merck’s pipeline, the LaNova deal added the experimental bispecific VEGF/PD-1 antibody LM-299. With the Hengrui Pharma deal, Merck acquired rights to an investigational oral small-molecule lipoprotein(a) inhibitor, HRS-5346.

Recent M&A Transactions in the Pharma Space

While broader macroeconomic concerns — including Trump-era tariffs and leadership shifts at the FDA — have weighed on deal-making in 2025, Big Pharma continues to pursue strategic assets in key growth areas.

This week, Sanofi SNY announced a $9.5 billion acquisition of Blueprint Medicines to strengthen its immunology pipeline and reduce reliance on blockbuster drug Dupixent. Through this transaction, Sanofi intends to add Ayvakit — an inhibitor of KIT and PDGFRA proteins with growing commercial traction — and several early-stage pipeline assets focused on systemic mastocytosis (SM). Sanofi expects to close this deal in the third quarter of 2025.