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Merck Writes a $9.2 Billion Check for a Flu Drug That Could Change Everything
Written 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 consequential strategic moves in the biotech sector this year, pharmaceutical giant Merck & Co. (NYSE: MRK) has agreed to pay $9.2 billion in cash to acquire Cidara Therapeutics (NASDAQ: CDTX).
The announcement immediately sent Cidara’s stock price soaring by more than 100%, a clear win for its shareholders.
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Click here to watch Roger Scott's full flash crash briefing nowFor Merck, the market’s measured reaction reflects confidence in a carefully planned strategic move. This acquisition is more than a headline; it demonstrates Merck’s intent 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 challenge.
Merck is proactively addressing the anticipated 2028 patent expiration of Keytruda, its blockbuster cancer therapy that has reshaped oncology and currently accounts for a large share of revenue.
Rather than wait, the company is executing a science-led business development strategy to diversify its portfolio for the coming decade. This is a deliberate, offensive move rather than a reactive one.
The Cidara deal exemplifies that strategy and is enabled by Merck’s strong financial position. With trailing-twelve-month net income above $17 billion and a conservative debt-to-equity ratio (D/E) of 0.69, Merck can absorb a $9.2 billion acquisition without disrupting 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 purchase external innovation and reduce future risks. By expanding into the respiratory antiviral space, Merck positions itself in the large, recurring global influenza market—a smart diversification from the highly competitive oncology arena.
CD388: What Makes a Flu Drug Worth Billions?
At the center of the multibillion-dollar valuation is Cidara's lead asset: an investigational drug called CD388.
This candidate is not just an incremental flu treatment; it could represent a paradigm shift in influenza prevention, supporting the premium price. Its appeal rests on several factors that reduce risk and increase commercial upside.
- Advanced and de‑risked: CD388 is already in Phase 3 clinical trials, the final stage before regulatory review. Being this far along 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 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 season.
- Regulatory confidence: CD388 has received both Breakthrough Therapy and Fast Track designations from the U.S. Food and Drug Administration (FDA). Those designations are reserved for therapies targeting serious conditions that may offer substantial improvement over available options, potentially speeding the path to market.
Merck management has expressed high expectations, projecting a commercial opportunity that could exceed $5 billion annually. That blockbuster potential helps justify the acquisition price and its future contribution to Merck's top line.
What This Deal Means for Investors
For investors, Merck’s acquisition of Cidara meaningfully strengthens the long-term bullish case for the stock.
The deal creates a clear growth pathway that helps insulate the company from future patent cliffs—a major valuation risk in the pharmaceutical industry. It shows management is not only aware of long-term challenges but is executing a well-capitalized plan to address them.
This strategic foresight builds on attractive financial fundamentals.
Merck’s stock trades at a forward price-to-earnings ratio (P/E) of roughly 10.4, a valuation that appears reasonable relative to its growth prospects and the broader market.
The company’s commitment to shareholders remains clear, with a dividend yield of 3.48% and 14 consecutive years of increases.
The 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 a near-term upside of roughly 12%. The shares have already risen more than 10% in the past month, and this acquisition provides a fundamental catalyst to sustain momentum.
More than a pipeline addition, the Cidara deal signals proactive leadership and long-term value creation, reinforcing Merck’s standing as a blue-chip innovator preparing for the future.
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