Germany's Merck sticks to guns after drug setback

FRANKFURT (Reuters) - Germany's Merck KGaA (MRCG.DE) could still win approval for use of its drug hopeful Erbitux against certain types of lung cancer, even after drawing a thumbs down from an pivotal experts panel, the head of the group's pharmaceuticals unit told Reuters.

But even if all forms of lung cancer remain off-limits for Erbitux after the rebuff, the biotech drug would still likely generate more than 1 billion euros ($1.4 billion) in sales per year from other indications before its patent expires in 2014, said Elmar Schnee.

Merck now considers the broader lung indication it initially sought to be out of reach, but Schnee said the drug was still in the frame to get the green light for a more narrowly defined market.

"We have huge amounts of clinical data. We know the sub-groups and we are discussing them with the regulators. I see potential for Merck," the unit head said.

Merck's shares nose-dived 12 percent on July 24 -- and have not recovered since -- after an advisory panel to European Union regulators recommended that Erbitux should not be used to treat lung tumors.

In other business areas, Merck remained on track to bring the first oral MS treatment to market, three to four months ahead of rival Novartis (NOVN.VX), Schnee said.

Merck, which in July filed for approval of its MS pill Cladribine in Europe, still plans to lodge an application with the U.S. Food and Drug Administration (FDA) this month, he said.

In a best-case scenario, the pill would come to U.S. markets as early as the second quarter of 2010, provided Cladribine obtains Priority Review status with the FDA, and European market launch would ideally be in the last quarter of 2010, Schnee said.

(Reporting by Ludwig Burger)