January 23, 2009 / 7:47 AM / 11 years ago

UPDATE 3-Germany's Merck pulls ahead in race for MS pill

* Merck will submit cladribine in Europe and U.S. mid-2009

* Phase III trial shows big reduction in relapse rate

* Shares jump 6 percent on hopes for new drug

(Adds Deutsche upgrade, latest shares, comparative efficacy)

By Maria Sheahan and Ben Hirschler

FRANKFURT/LONDON, Jan 23 (Reuters) - Merck KGaA (MRCG.DE) pulled ahead of Novartis NOVN.VX in the race to develop the first pill for multiple sclerosis on Friday, announcing it planned to submit its drug cladribine for approval in mid-2009.

The move follows successful results from a pivotal Phase III clinical trial, which showed a lower dose of the drug reduced the number of relapses per year in patients with some forms of multiple sclerosis (MS) by 58 percent compared with a placebo.

More than 2 million people worldwide have MS, which generally strikes young adults and often in a form in which attacks are followed by periods of remission. Current treatments are administered by frequent injections. An oral formulation would be a major advance.

Elmar Schnee, Merck’s executive board member with responsibility for pharmaceuticals, said the experimental drug would be submitted to regulators in Europe and the United States at around the same time.

Merck stock had jumped 6 percent on the news to 68.09 euros by 1215 GMT -- bucking a 2.2 percent fall in Germany's blue-chip DAX index .GDAXI -- as Deutsche Bank analysts raised their price target to 84 euros from 77, reiterating it as a "buy". Analysts at Citigroup said cladribine could have potential sales of more than 1 billion euros ($1.3 billion) a year, although the current market consensus is well below this figure.

Citi said cladribine’s near-60 percent reduction in annualised relapse rates compared favourably with the reduction of about 30 percent seen with current first-line treatments.

SIDE EFFECTS

One issue that doctors will study carefully is the possible side effects of cladribine.

Merck said that overall the frequencies of adverse events were low in the two-year Phase III trial and comparable to those observed in the placebo group. However, rates of lymphopenia, which is an abnormally low level of lymphocytes — white blood cells that fight off disease — were higher in the cladribine group.

Cladribine tablets have already been granted a fast-track designation by the U.S. Food and Drug Administration.

Merck is an established leader in MS treatment with its Rebif medicine, which was acquired when the German drugmaker bought Swiss biotech firm Serono in 2006. Cladribine was also developed in Serono’s laboratories.

Merck’s primary rival in the oral MS treatment race is Novartis, whose product FTY720 is further behind in development but is expected to have Phase III trial results later this year.

Several other oral drugs are at an earlier stage of development at such companies Sanofi-Aventis (SASY.PA), Biogen Idec (BIIB.O), Teva TEVA.O, GlaxoSmithKline (GSK.L) and UCB (UCB.BR). (editing by John Stonestreet and Karen Foster)

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