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Tuesday's Bonus News Merck Writes a $9.2 Billion Check for a Flu Drug That Could Change EverythingWritten by Jeffrey Neal Johnson. Published 11/18/2025. 
Key Points - Merck's major acquisition of Cidara Therapeutics demonstrates a clear and proactive strategy to build its next-generation long-term revenue drivers.
- The acquisition secures a high-potential, late-stage antiviral drug that has already earned key designations from the FDA for its innovative approach.
- This strategic move reinforces Merck’s strong financial fundamentals and its unwavering commitment to creating sustainable, long-term value for its shareholders.
In one of the most decisive strategic moves in the biotech sector this year, pharmaceutical titan Merck & Co. (NYSE: MRK) has committed $9.2 billion in cash to acquire Cidara Therapeutics (NASDAQ: CDTX). The announcement immediately sent Cidara’s stock price rocketing more than 100%, a clear victory for its investors. Years before it became a household name, Shopify showed an early momentum pattern that experienced traders used to catch a 120% move — and that same repeatable signal has just appeared on a new small-cap ticker that hasn't hit the mainstream yet. Our free Momentum Trading Report breaks down how to spot these stealth setups and reveals which names are flashing right now. Get early access to the free Momentum Trading Report here For Merck, the market's measured reaction reflects confidence in a meticulously planned strategic move. This acquisition is more than a headline; it demonstrates Merck's forward-looking approach to building the next generation of revenue drivers from a position of financial and operational strength. A Strategic Imperative: Securing the Next Decade For any pharmaceutical leader, managing the lifecycle of blockbuster drugs is the ultimate strategic test. Merck is proactively addressing the expected 2028 patent expiration of its cancer therapy Keytruda — a drug that has reshaped oncology and currently accounts for a significant portion of the company’s revenue. Rather than waiting for that challenge, the company is pursuing an aggressive, science-led business development strategy to build a more diversified portfolio for the next decade. In short, this isn't a reaction; it's a deliberate strategic initiative. The Cidara acquisition exemplifies that strategy and is enabled by Merck’s strong financial position. With a trailing-twelve-month net income of over $17 billion and a debt-to-equity ratio (D/E) of 0.69, Merck can absorb a $9.2 billion deal without unduly straining operations or shareholder commitments. The move follows last month's acquisition of Verona Pharma and its promising COPD drug, OHTUVAYRE. These transactions show management’s discipline in using Merck’s balance sheet to acquire external innovation and reduce future risks. By expanding into the respiratory antiviral space, Merck targets a stable, recurring revenue stream in the large global influenza market — a sensible diversification away from the highly competitive oncology field. CD388: What Makes a Flu Drug Worth Billions? At the heart of the $9.2 billion valuation is Cidara's lead asset: an investigational drug called CD388. This asset is not merely an incremental improvement in flu treatment; it could represent a paradigm shift in influenza prevention, which helps justify the premium price. Its value rests on several attributes that lower risk and increase commercial potential. - Advanced and de‑risked: CD388 is already in Phase 3 clinical trials, the final—and most expensive—stage before regulatory approval. That progress means much of the early scientific and clinical risk has been addressed, an important consideration for an acquirer like Merck.
- A potential new standard of care: As a long-acting antiviral, CD388 is designed to provide season‑long protection against both influenza A and B from a single dose. That one‑and‑done approach would be a major advantage over current annual vaccines, which must be reformulated each year to match circulating strains. Its strain‑agnostic design aims to be effective regardless of which variants dominate a given season.
- Regulatory confidence: The drug has received both Breakthrough Therapy and Fast Track designations from the U.S. Food and Drug Administration (FDA). These designations are reserved for therapies addressing serious conditions that may offer substantial improvement over available options, and they can expedite the path to market.
Merck management projects a commercial opportunity for CD388 that could exceed $5 billion annually, a blockbuster potential that helps explain the acquisition price and its expected impact on Merck's top line. What This Deal Means for Investors For investors, Merck’s acquisition of Cidara materially strengthens the long-term bullish case for the stock. The deal creates a tangible growth pathway that helps insulate the company from future patent cliffs — a key risk for pharmaceutical valuations. It shows that management is anticipating long-term challenges and is executing a well-capitalized plan to address them. This strategic foresight is supported by attractive financial fundamentals. Merck’s stock trades at a forward price-to-earnings ratio (P/E) of roughly 10.4, a valuation that looks reasonable given its growth prospects and the broader market. The company’s commitment to shareholder returns is evident, with a dividend yield of 3.48% and 14 consecutive years of dividend increases. That dividend is supported by a payout ratio of about 42.8% of earnings, leaving ample capital for reinvestment and strategic deals like this one. With a consensus analyst price target of around $104.50, the stock offers near-term upside of roughly 12%. The shares have already risen more than 10% in the last month, and this acquisition provides a fundamental catalyst to support continued momentum. More than a mere pipeline addition, the Cidara deal signals proactive leadership and long-term value creation, reinforcing Merck’s position as a blue-chip innovator preparing for the future.
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