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Merck KGaA, a German healthcare and technology group, has confirmed that it is in advanced discussions to acquire SpringWorks Therapeutics, a US-based biotech company focused on cancer and rare disease treatments.

The deal, if finalized, could mark one of Merck's largest pharmaceutical acquisitions in recent years.

Merck, based in Darmstadt, Germany, stated that while negotiations are ongoing, no legally binding agreement has been signed, and there is no guarantee the deal will go through, Reuters said.

Sources familiar with the talks revealed that a deal could be reached in the coming weeks, but the specifics of the agreement have not been disclosed.

SpringWorks Stock Soars 34% Amid Merck Acquisition Talks

The news caused a surge in SpringWorks' stock price, with shares closing 34% higher on Monday, giving the company a market value of around $4 billion.

This marks the highest share price for SpringWorks since April 2022. In contrast, Merck's shares fell by 3.7% on the same day.

SpringWorks, founded in 2019 and based in Stamford, Connecticut, specializes in developing treatments for rare cancers. The company's most notable drug is its monotherapy treatment for desmoid tumors, a type of soft-tissue tumor.

SpringWorks is also awaiting approval for a product aimed at treating neurofibromatosis type-1, a genetic disorder, expected later this month.

For Merck, acquiring SpringWorks could significantly enhance its oncology and rare disease treatment pipeline.

According to Investing, this comes after a series of setbacks in its own drug development programs, including the halting of its cancer drug Xevinapant and the failure of its multiple sclerosis drug, Evobrutinib, in late 2023.

The potential acquisition is seen as part of a broader trend in the U.S. healthcare sector, where major pharmaceutical companies are ramping up mergers and acquisitions after a brief slowdown.

For example, in January, Johnson & Johnson agreed to acquire Intra-Cellular Therapeutics for $14.6 billion.