NEW YORK/FRANKFURT (Reuters) - Merck KGaA, the German healthcare and technology group, is in advanced talks to acquire U.S. cancer and rare diseases drugmaker Springworks Therapeutics ( SWTX ) , according to people familiar with the matter.

If the talks are successful, a deal could be signed in the coming weeks, the three sources said, requesting anonymity as the discussions are confidential. They did not disclose the exact terms being discussed.

Springworks, which has a market value of $3 billion, declined to comment. A Merck spokesperson also declined to comment.

"We continuously assess options that could support our businesses and enhance our strategic positioning as a leading science and technology company. Any specific transactions will be announced as and when they materialize," Merck said in a statement.

Dealmaking in the U.S. healthcare sector is showing signs of picking up, after a slowdown in activity in 2024 as large pharmaceutical companies took a breather to integrate big acquisitions they completed the previous year. In January, Johnson & Johnson ( JNJ ) agreed to buy Intra-Cellular Therapeutics for about $14.6 billion.

Springworks, which listed its shares in New York in 2019, is a commercial-stage biotech firm that develops drugs to treat various forms of cancer and other rare diseases such as uterine cancer and tumours. Its monotherapy drug that is used to treat desmoid tumors has been approved in the United States.

A transaction for Springworks would rank as one of the biggest pharma deals for Merck in recent years and boost its ongoing efforts to build out its cancer treatment pipeline. In 2015, Merck agreed to buy U.S. lab equipment supplier Sigma-Aldrich for $17 billion.

Merck, which has a market value of 61.25 billion euros ($63.13 billion) has suffered high-profile setbacks recently in late-stage drug trials, prompting it to halt development of head and neck cancer drug xevinapant. A major trial testing multiple sclerosis drug evobrutinib failed in December 2023.

In its most recent quarterly earnings, Merck reported a 12% rise in adjusted quarterly earnings, helped by temporarily lower spending on drug development and a rebound in demand for its specialty materials. In an interview in January, Merck's CEO said a recovery in sales growth at its major businesses would allow the company to take a cautious approach to buying other companies, which are expensively priced.

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