June 22, 2011 / 10:03 AM / 8 years ago

Merck KGaA pulls plug on cladribine on FDA feedback

FRANKFURT (Reuters) - Merck KGaA said U.S. drug regulators’ concerns about the risks of its cladribine pill will put an end to any development or marketing plans for the multiple sclerosis (MS) treatment.

Merck also said on Wednesday it planned to withdraw cladribine from markets in Australia and Russia where it has been approved and is available under the name Movectro.

Its shares were down 1.8 percent, underperforming a 0.5 percent lower European healthcare sector index.

“Merck believes that data from ongoing clinical trials are very unlikely to address the (U.S. Food and Drug Administration’s) requirements,” it said, adding new trials would not justify the costs.

“We have decided ... to focus resources on other projects bringing benefit to patients with multiple sclerosis,” said Stefan Oschmann, who joined German group Merck in January from U.S. namesake peer Merck & Co.

His predecessor Elmar Schnee left following a string of setbacks in drug development.

In March, the U.S. Food and Drug Administration asked Merck, which traces its roots to a 17th century pharmacy, to either provide additional analyses of study results it had submitted, or to carry out new trials.

Due to some cases of cancer that emerged during a trial, the drug had been rejected in September by regulators in the European Union, which would have been its largest market.

That kept most analysts skeptical about the drug’s prospects of getting FDA approval.

“The FDA feedback was consistent with the feedback previously received from the European Medicines Agency,” the company said.


In the wake of the EU rebuff last autumn, most analysts had eliminated any future revenue from the pill — some of which amounted to far more than 1 billion euros ($1.4 billion) — from their valuation models.

Merck’s shares, which fell in the months following the EU’s dismissive statements on cladribine, had been recovering due to the group’s strong earnings from liquid crystals for display screens this year.

“While this is not good news it was widely expected that the company would no longer seek global approval for cladribine following the negative FDA decision last fall. We do not currently price in revenues from cladribine,” said Silvia Quandt Research analyst Stefan Muehlbauer.

Merck’s cladribine had initially been regarded as a formidable contender in the race with Novartis to bring the first oral treatment against MS to a major market.

The Swiss drugs major won U.S. approval for its Gilenya pill in September and is out to win a sizable chunk of the more than $10 billion global market of established injectable MS treatments.

These are offered by Biogen Idec, Bayer AG and Teva. Merck and Novartis themselves are also selling MS injections.

Merck said the withdrawal would result in a one-off charge of 20 million euros in the second quarter after it had already written off the book value of the business of about 50 million at the end of 2010.

(Reporting by Ludwig Burger; Editing by Dan Lalor)

$1 = 0.6971 euro

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