Merck Hit by Problems at Imclone
April 25, 2002
Merck KGaA, Germany's third-largest listed drug group, on Wednesday said it will delay its regulatory filing for its key cancer drug Erbitux to the first half of 2003 from the second half of this year following regulatory problems at its U.S. development partner, Imclone Systems.
Erbitux is among the most promising candidates in a new group of cancer drugs. But the regulatory filing Imclone submitted in the United States was rejected by the Food and Drug Administration (FDA) because of inadequate data. This triggered a serious conflict between Imclone and its U.S. partner, Bristol-Myers Squibb.
Merck holds the distribution rights to the drug for Europe and had so far upheld its plans to make its regulatory filing in the second half of this year. Merck said it now intended to await the results of its own studies into the treatment of bowel cancer. This would provide the opportunity to open up a much larger area of use for the new drug.
Previously, the group had planned to use Erbitux only to treat brain tumors and cancer of the throat, for which it had carried out its own clinical trials. Imclone was to have provided the data on the treatment of bowel cancer.
Shares in Merck remained mostly unaffected by Wednesday's announcement. But the delay is risky because it allows a rival product from Astra Zeneca to further extend its time lead over Erbitux.
Merck sees Erbitux renewing its product range in the coming years, and the need for such a renewal was demonstrated by the weak earnings the group posted for the first quarter.
Even though strong growth in its generics business helped it to lift revenue 7% to 1.9 billion euro, its operating profit fell 15% to 182 million euro and net profit by 19% to 76 million euro. The main reason for the decline was that its key diabetes drug, Glucophage, has started to come under intense pressure from generic competition.
Merck upheld its forecast for a decline in profit and a one-digit percentage rise in sales for the full year. Analysts on average forecast a 50% drop in profit for Merck this year from last year's figure of 655 million euro.