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UPDATE 2-Merck to bolster cancer drug portfolio with VelosBio $2.75 bln deal

(Adds details, shares)

Nov 5 (Reuters) - Merck & Co Inc said on Thursday it agreed to acquire privately held VelosBio for $2.75 billion in cash, in a move that will help it strengthen its cancer drug portfolio.

VelosBio’s lead investigational drug is being evaluated in clinical trials for the treatment of patients with hematologic malignancies and solid tumors.

Merck has been striking deals to bolster its suite of promising oncology drugs as the drugmaker looks to reduce its reliance on its blockbuster cancer therapy Keytruda.

The drugmaker said in September it would buy $1 billion worth of equity stake in Seattle Genetics and pay $600 million upfront to co-develop and sell the smaller drugmaker’s cancer therapy.

The deal for VelosBio comes months after the privately held firm raised $137 million in a funding round led by Matrix Capital Management and Surveyor Capital, a Citadel company.

The acquisition is expected to close by the end of the year, the companies said.

Merck’s shares were 1.2% higher at $81.62 in premarket trading.

Merck was represented by Gibson Dunn & Crutcher LLP as legal adviser and J.P. Morgan Securities LLC as financial adviser, while VelosBio was represented by Cooley LLP as legal adviser and Centerview Partners LLC as financial adviser.

Reporting by Ankur Banerjee in Bengaluru; Editing by Sriraj Kalluvila, Bernard Orr and Aditya Soni

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