Merck, known as MSD outside of the US and Canada, has agreed to acquire Eyebiotech (EyeBio), a UK-based biotechnology company focused on ophthalmology, for up to $3bn.

Under the terms of the agreement, Merck, through a subsidiary, will purchase all outstanding shares of EyeBio for an upfront payment of $1.3bn in cash.

EyeBio is eligible to receive an additional $1.7bn in potential developmental, regulatory and commercial milestone payments.

The acquisition has been unanimously approved by the Board of Directors of EyeBio.

Its closing is expected in the third quarter of this year, subject to regulatory approval, the Hart-Scott-Rodino Antitrust Improvements Act, and other customary conditions.

As part of the acquisition, EyeBio founders David Guyer and Tony Adamis will work for Merck to advance the clinical development of Restoret and other ongoing development programs.

Merck Research Laboratories president Dean Li said: “We continue to execute on our science-led business development strategy to expand and diversify our pipeline.

“The EyeBio team, under the leadership of Dr. David Guyer and Dr. Tony Adamis, has a strong track record of developing groundbreaking ophthalmology therapies.

“By combining our strengths, we aim to advance with rigor and speed the development of their promising pipeline of candidates targeting retinal diseases.”

The acquisition includes EyeBio’s lead candidate Restoret, an investigational tri-specific antibody to treat diabetic macular oedema and neovascular age-related macular degeneration.

It also includes the company’s clinical and preclinical candidates for the prevention and treatment of vision loss related to retinal vascular leakage, a risk factor for retinal diseases.

The acquisition is expected to strengthen Merck’s pipeline, expand its presence in ophthalmology, and diversify its portfolio of experimental treatments for eye diseases.

Citi served as financial advisor and Gibson, Dunn & Crutcher as legal advisors to Merck on this transaction.

Centerview Partners served as financial advisor and Skadden, Arps, Slate, Meagher & Flom as legal advisors to EyeBio.

EyeBio CEO and president David Guyer said: “As a subsidiary of Merck, EyeBio will be positioned to tap into the resources and infrastructure needed to support the clinical, regulatory and commercial development of these candidates and help bring them to patients worldwide.”

EyeBio board chair and SV Health Investors managing partner Kate Bingham said: “Less than three years ago, EyeBio was hatched to translate Dr. David Guyer’s idea for a potential new therapy for retinal diseases into a reality.

“This agreement reflects the hard work of the talented EyeBio team, led by Dr. Guyer, who through this agreement have placed Restoret on a defined development path to patients.”