Merck buys small Cambridge biotech for up to $610 million

The pharmaceutical company Merck & Co. is buying the Cambridge biotech Caraway Therapeutics.Christopher Occhicone/Bloomberg

Merck & Co. has agreed to pay as much as $610 million to buy Caraway Therapeutics, a small, privately owned Cambridge biotech working on potential drugs for neurodegenerative and rare diseases.

The total includes an undisclosed upfront payment and payments contingent on reaching goals for developing medicines to treat conditions such as Parkinson’s disease, ALS, and rare kidney diseases.

“This will enable us to propel our programs forward faster,” said Martin D. Williams, chief executive of Caraway, which was founded in 2018 and will become a wholly owned subsidiary of the pharmaceutical giant. Caraway has 16 employees, he said.

George Addona, senior vice president for discovery at Merck Research Laboratories, said Caraway has made “important progress in evaluating novel mechanisms” to treat progressive neurodegenerative diseases.

Caraway is working on pills that harness the ability of cells to break down and get rid of toxic substances implicated in diseases, according to Williams. Caraway is focusing on a cellular structure called the lysosome that contains digestive enzymes and breaks down harmful proteins.

In the case of Parkinson’s, a progressive disorder that affects the nervous system and parts of the body controlled by nerves, these toxic proteins accumulate in the brain, Williams said. Caraway hopes to use the lysosome to clear them away.

Merck has been a shareholder of Caraway through its MRL Ventures Fund since 2018. Merck is looking for new products to replace revenue from its blockbuster cancer drug Keytruda before the drug’s patents expire in 2028. At that point, Merck would face the threat of competition from generic drug makers.