Merck & Co. agreed to purchase Imago BioSciences Inc. to gain therapies for bone marrow conditions that lead to overproduction of blood cells, including one drug in mid-stage trials.

Merck will pay US$36 a share in cash for South San Francisco-based Imago for a total value of about US$1.35 billion. The transaction is expected to close in the first quarter of next year, the companies said Monday in a statement. Imago’s shares closed at US$17.40 Friday and more than doubled to US$35.75 after Monday’s New York market opening. Merck shares were little changed.

Imago is developing therapies for myeloproliferative neoplasms, with one drug called bomedemstat in mid-stage trials for the conditions that affect the bone marrow’s production of platelets and blood cells. The purchase is part of Merck’s search for more treatments for cancer and rare diseases after its deal discussions with Seagen Inc. stalled earlier this year. 

“This acquisition of Imago augments our pipeline and strengthens our presence in the growing field of hematology,” Merck Chief Executive Officer Robert Davis said in the statement.

Myeloproliferative neoplasms occur when the bone marrow overproduces red blood cells, platelets or white cells. The buildup of extra cells may lead to bleeding problems, anemia, infection, fatigue, clotting and other symptoms. 

Imago’s bomedemstat is a member of family of proteins that regulate the maturation of blood cells. The oral drug is being tested in multiple trials against essential thrombocythemia, when the bone marrow makes too many platelets, polycythemia vera, an oversupply of red blood cells, and a scarring of the bone marrow called myelofibrosis. 

Other drugs to treat excess blood cell and platelet production range from aspirin and generic hydoxyurea to more recent branded drugs like Incyte Corp.’s Jakafi that blocks blood-cell growth factors. In some severe cases, myelofibrosis patients may require a bone marrow transplant. 

Imago’s lead target is essential thrombocytopenia, where Jakafi is not approved, Truist Securities analysts said in a note. Imago’s pipeline does overlap with other companies' on myelofibrosis and polycythemia vera, and the analysts said they “continue to watch the space.” 

Morgan Stanley acted as financial adviser to Merck, while Centerview Partners advised Imago.