Merck KGaA (MKGAF) recently announced the acquisition of exclusive worldwide development and commercialization rights to multiple sclerosis (MS) candidate PI-2301. The candidate was developed by Peptimmune Inc. prior to the deal. PI-2301, which has completed early-stage studies in MS, is about to enter mid-stage trials.
The addition of PI-2301 will strengthen Merck Serono’s portfolio, whose revenues increased by a mere 2.0% during the recently reported second quarter 2011. Revenues were boosted by strong Rebif sales (up 5.2%), but were partially offset by lower Erbitux sales (down 3.0%).
The company operates under two heads: Pharmaceuticals and Chemicals. The Pharmaceutical division, in turn, functions under two heads, Merck Serono and Consumer Health Care. The Chemical division is split into Merck Millipore and Performance Materials.
Merck KGaA already has a share in the MS market, with Rebif available worldwide as a treatment for the relapsing versions of MS. During the second quarter of 2011, the company submitted an application to the European Medicines Agency (EMA) for the approval of Rebif to treat patients who have experienced a single demyelinating event (an early symptom of the disease) and who stand a high risk of developing MS.
Rebif primarily faces competition from Biogen Idec’s (BIIB), Tysabri and Avonex and Teva Pharmaceuticals Industries Ltd.’s (TEVA) Copaxone.
Merck KGaA had another MS candidate, cladribine, in its pipeline. However, during the second quarter, the company halted the development of cladribine, on the belief that data from the ongoing clinical trials will not be sufficient to address the US Food and Drug Administration’s (FDA) requirements for approval.
The company is of the view that to gain US and European approval, it will have to conduct a new clinical trial that would take several years to complete.
We believe that the acquisition of worldwide rights to PI-2301 should help make up for cladribine loss.
We currently have a Zacks #3 Rank (short-term Hold rating) on Merck KGaA.
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