Shares of Pandion, Watertown, Mass., at last check were trading at $59.57, compared with Wednesday's close at $25.63. Merck was little changed at $74.60.
Under the terms, Merck, the Kenilworth, N.J., health-care giant, will pay $60 a share cash for Pandion. The deal is expected to close in the first half, subject to conditions including antitrust clearance and a vote of Pandion holders.
Last month, Pandion said its leading drug candidate, PT101, met its main goals of safety and tolerability. The drug is being developed to treat ulcerative colitis, systemic lupus erythematosus, and other autoimmune diseases.
SVB Leerink analyst Geoffrey Porges said in a note to clients that the deal "is an outsized outcome for Pandion's shareholders given the company's early stage of development," according to Investors Business Daily.
"This transaction also validates the notion that investors in recently public and early stage biopharma companies can still be tempted by the possibility by an early huge return from a large transaction at a high premium," the analyst said.
Earlier this month, Merck posted weaker-than-expected fourth-quarter earnings and said longtime Chief Executive Ken Frazier would retire later this year.
In November, Merck said it would pay $425 million for OncoImmune, a privately held biotech that has developed a promising treatment for patients suffering a severe form of COVID-19.
"This acquisition builds upon Merck’s strategy to identify and secure candidates with differentiated and potentially foundational characteristics," Dean Y. Li, president, Merck Research Laboratories, said in a statement.