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Sunday's Bonus Content 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 a formidable $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 win for its investors. The world's wealthiest individuals are making huge moves with their money.
Warren Buffett just liquidated billions of shares. Bill Gates sold 500,000 shares of Microsoft. Jeff Bezos filed to sell Amazon shares worth $4.8 billion.
What is going on? One multi-millionaire believes they are preparing for a catastrophic event. But not a crash, bank run, or recession. It's something we haven't see in America for more than a century. For the full story, click here. Merck’s own shares reacted more modestly, reflecting confidence in a carefully planned strategic move. This acquisition is more than a headline — it demonstrates Merck’s forward-looking strategy to build 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 preparing for the expected 2028 patent expiration of Keytruda, the cancer therapy that has reshaped oncology and currently accounts for a significant portion of its revenue. Rather than wait for that challenge, the company is executing an aggressive, science-led business development strategy to diversify its portfolio over the next decade. This isn't reactive; it's a deliberate strategic offensive. The Cidara acquisition exemplifies that approach and is enabled by Merck’s strong finances. With trailing-twelve-month net income of more than $17 billion and a healthy debt-to-equity ratio (D/E) of 0.69, Merck can absorb a $9.2 billion deal without straining operations or shareholder commitments. It follows last month’s completed acquisition of Verona Pharma and its promising COPD drug, OHTUVAYRE. These moves show management’s discipline in using Merck’s balance sheet to acquire external innovation and systematically mitigate future risks. By expanding into the respiratory antiviral space, Merck targets a stable, recurring revenue opportunity in the large global influenza market — a sensible diversification from the intensely competitive oncology field. CD388: What Makes a Flu Drug Worth Billions? At the heart of the multi-billion-dollar valuation is Cidara's crown jewel: an investigational drug known as CD388. This asset is more than an incremental improvement in flu treatment; it could represent a paradigm shift in influenza prevention, which helps explain the premium price. Its value rests on attributes that reduce risk and enhance commercial potential. - Advanced and de-risked: CD388 is already in Phase 3 clinical trials, the final and most expensive stage before regulatory approval. That advanced status means much of the early scientific and clinical risk has been navigated — a critical factor for an acquirer like Merck.
- 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 could be effective regardless of which variants dominate in 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 labels are reserved for therapies targeting serious conditions that may show substantial improvement over available options, signaling strong regulatory support and potentially accelerating the path to market.
Merck’s management projects a commercial opportunity that could exceed $5 billion annually — blockbuster potential that helps justify the acquisition price and its potential impact on Merck’s top line. What This Deal Means for Investors For investors, Merck’s acquisition of Cidara strengthens the long-term bullish case for the stock. The deal creates a clear pathway to growth that helps insulate the company from future patent cliffs — a primary risk for pharmaceutical valuations. It shows management is both aware of long-range challenges and executing a decisive, well-capitalized plan to address them. That strategic foresight rests on attractive financial fundamentals. Merck’s stock trades at a forward price-to-earnings ratio (P/E) of about 10.4, a valuation that appears reasonable given its growth prospects and the broader market. The company’s commitment to shareholder returns remains clear, with a dividend yield of 3.48% that has been increased for 14 consecutive years. That dividend is supported by a payout ratio of just 42.8% of earnings, leaving ample capital for reinvestment and strategic transactions like this one. With a consensus analyst price target of around $104.50, the stock offers a 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 sustain positive momentum. The Cidara deal is more than a pipeline add; it signals proactive leadership and long-term value creation, reinforcing Merck’s status as a blue-chip innovator preparing for its future.
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