SpringWorks Therapeutics, Inc. (SWTX) shares plummeted 5.98% in after-hours trading on Tuesday, following reports that German pharmaceutical giant Merck KGaA is in advanced talks to acquire the U.S. cancer and rare diseases drugmaker. The potential acquisition raised concerns among analysts about the deal's profitability impact on Merck.

While the acquisition could bolster Merck's cancer-treatment pipeline, analysts questioned whether it would be accretive from the outset. Equita analyst Davide Marchesin pointed out that SpringWorks is currently loss-making despite generating over 350 million euros in annual revenue. This has led to doubts about the deal's immediate financial benefit for Merck.

The market's reaction to these profitability concerns has caused SpringWorks Therapeutics' stock to plunge in after-hours trading, reflecting investor uncertainty about the potential acquisition's implications for the company's financial performance.