Merck KGaA's $2 Billion Bet: The Tiny Biotech That Could Save Its Neurology Pipeline

Merck KGaA MRK is going back on offense in neurologyand it's betting big. The German drugmaker just announced a collaboration with Skyhawk Therapeutics that could top $2 billion, aimed at developing RNA-targeting small molecules for hard-to-treat neurological diseases. Under the deal, Skyhawk will lead discovery and preclinical development using its proprietary RNA splicing tech, while Merck steps in if the science clears early hurdles. Though financial terms weren't disclosed, the structure includes upfront and milestone payments, plus royalties tied to future sales.

This isn't a pivot. It's a rebuild. After two major clinical failures rocked its pipeline and with its blockbuster multiple sclerosis drug Mavenclad losing exclusivity starting in 2026, Merck is under pressure to restock its innovation shelf. CEO Belen Garijo is tightening focus on external innovationand fast. That includes this Skyhawk deal, and the recently closed acquisition of SpringWorks Therapeutics, which is expected to start contributing to Merck's healthcare revenue in the second half of this year.

Behind the scenes, this deal speaks volumes about where Merck thinks the next frontier lies. Amy Kao, who heads neuroscience and immunology research at Merck, called RNA splicing modulation an exciting frontierand that might be understating it. The company is betting that Skyhawk's tech could unlock new treatments where traditional approaches have failed. If even one program makes it through to commercialization, it could mark a turning point in Merck's quest to reignite long-term growth in its pharma arm.