Shares in Aussie biotech Viralytics soared 175 per cent on Thursday after news of its acquisition by leading global pharma Merck was announced overnight.

Under the arrangement, Merck will acquire all Viralytics shares (ASX:VLA) at $1.75 a share – at a 284 per cent premium to their closing price on Wednesday.

The shares jumped 175 per cent to $1.69.

The proposed acquisition values the junior biotech at $502 million, and complements the US pharma’s existing immune-boosting cancer-drug program focused around Keytruda – an alternative to chemotherapy or radiation therapy that uses your own immune system to fight cancer.

“Viralytics’s approach of engaging the innate immune system to target and kill cancer cells complements our immuno-oncology strategy, which is focused on the rapid advancement of innovative monotherapy approaches and synergistic combinations to help the broadest range of cancer patients,” Merck chief medical officer Dr Roy Baynes told investors.

Viralytics (VLA) share price movements over the past month.
Viralytics (VLA) share price movements over the past month.

If all goes to plan, and the acquisition passes shareholder approvals, Viralytics will become a wholly-owned subsidiary of Merck, gaining full rights to its CAVATAK oncolytic immunotherapy.

“We believe that MSD, the leader in immuno-oncology, is best suited to advance CAVATAK for the benefit of patients globally, and to realise its potential,” VLA managing director Dr Malcolm McColl said.