Merus (MRUS) with a very notable trade on 4/28 as 2000 September $45 at-the-money puts sold to open for $6.50 as a name lacking notable open interest but did see 1100 January $50 calls buy at $5 on 4/1 and on 4/8 the January $45 calls bought 1100X aggressively $6.50 to $7. MRUS is working back inside monthly value this week and shares +7.7% YTD have held up well with recent lows coming right at the rising 200-week EMA and weekly RSI moving back above 50 while MACD signal back to bull mode as a weekly falling wedge pattern forms. MRUS does have 10.7% of its float short but has fallen from 14% at the start of the year.

Merus N.V., a clinical-stage immuno-oncology company, engages in the development of antibody therapeutics which includes BIZENGRI for the treatment of patients with pancreatic adenocarcinoma or non-small cell lung cancer (NSCLC) and non Neuregulin 1. The company is also developing MCLA-158 for the treatment of solid tumors; MCLA-129 for the treatment of patients with lungs and other solid tumors; ONO-4685 to treat relapsed/refractory T cell lymphoma; and INCA33890 for advanced solid tumors. In addition, it has collaboration agreement with Eli Lilly and Company, Ono Pharmaceutical Co., Ltd., and Betta Pharmaceuticals Co. Ltd. Merus emphasizes the advantages of its multi-specific antibody platform, highlighting its similarity to monoclonal antibody development, which allows for established manufacturing processes, predictable in vivo behavior, and low immunogenicity

MRUS has a $3.1B market cap and trades 5.8X Cash with some forecasts for $215M in Revenues for FY27. MRUS makes a lot of sense as a M&A target given its pipeline in an area of need for Oncology. MRUS is exploring the potential of petosemtamab in colorectal cancer, with initial clinical data expected in the second half of the year. In the first-line setting for head and neck cancer, petosemtamab is competing with zanzalintinib from Exelixis and ivonescimab from Akeso-Summit. In the HPV-negative subset, ficerafusp (Bicara’s BCA-101) is a competitor. Both Phase 3 trials in head and neck cancer are expected to be substantially enrolled by the end of this year. The company is considering HPV-positive and HPV-negative populations in its clinical development plans, with discussions with regulatory authorities focusing on the entire patient population. Petosemtamab monotherapy in second-line recurrent/metastatic head and neck cancer showed a 36% overall response rate (ORR) in 75 patients, with a median duration of response of 6.2 months and overall survival of around 11.5 months.

Piper views the company’s EGFRxLGR5 bispecific, petosemtamab, as significantly de-risked as both a monotherapy in second-line head and neck squamous cell carcinoma and in combination with pembrolizumab in first-line head and neck squamous cell carcinoma cells that express the PD-L1 protein. Piper expects additional Phase II data on the combo in 2025 to de-risk the Phase III LiGeR-HN1 study. It believes petosemtamab is positioned to generate $3B-plus in risk-adjusted revenues by 2035 in head and neck squamous cell carcinoma alone. Wells Fargo thinks petosemtamab could disrupt treatment in second-line head and neck squamous cell carcinoma and says first-line data should further de-risk it in earlier lines, with a larger market opportunity. Petosemtamab’s mechanism of action in metastatic colorectal cancer remains underappreciated, creating a favorable risk/reward into the Phase 2 data readouts. Goldman also at Buy with a $73 target sees best-in-class potential in a large market noting the next key Phase 2 update could unlock a lot of value.