September 24, 2010 / 5:50 AM / 7 years ago

UPDATE 3-EU drug watchdog deals blow to Merck KGaA's MS pill

* EU drug body issues negative opinion on cladribine tablet

* Watchdog says pill’s benefits didn’t outweigh risks -Merck

* Merck says looking into appealing the recommendation

* Says evaluating all options to get EU approval of pill

* Merck shares slump 8.9 percent, Novartis 1.4 percent

(Adds shares, Merck executive’s comments, analyst comments)

By Ludwig Burger and Josie Cox

FRANKFURT, Sept 24 (Reuters) - European regulators dealt Merck KGaA (MRCG.DE) a major blow by recommending against its biggest pipeline drug, multiple sclerosis (MS) pill cladribine, adding to a string of setbacks at the company’s drugs unit.

The European Union’s drugs watchdog, whose view is invariably adopted by the European Commission for approval decisions, found that the benefits of cladribine tablets did not outweigh its risks.

Regulators mainly took issue with cases of lymphopenia, a lack of a certain type of white blood cells, and with the risk of cancer, the head of Merck’s pharmaceuticals unit, Elmar Schnee, told Reuters on Friday.

Schnee argued that the cases of lymphopenia in the main drug trial were not clinically relevant and that the link to cancer was not shown to be statistically reliable.

“There is a general trend for regulators to be very risk averse, not just in Europe. But that means patients are denied very good treatment options,” Schnee said.

Shares of Merck dropped 8.9 percent to 64.55 euros at 0851 GMT, while the STOXX Europe 600 Health Care .SXDP benchmark was down 0.5 percent.

“An approval in Europe has become now rather unlikely,” said Merck Finck & Co. analyst Carsten Kunold.

Shares in Swiss drugmaker Novartis NOVN.VX, which this week got U.S. backing for its rival drug, rose 1.4 percent. [ID:nLDE68N04J]

While family-controlled Merck is bolstered by a stellar performance of its liquid crystals unit, which makes chemicals for flat-screen televisions, its pharmaceuticals unit has been hobbled by a string of setback.

U.S. regulators delayed the approval process of cladribine, and trials of experimental cancer vaccine Stimuvax were temporarily halted because of suspected side effects this year.

Merck failed last year to win EU marketing approval for the use of its blockbuster-hopeful Erbitux against lung tumours, the most common form of cancer.


    Merck said it was evaluating all options to gain approval of cladribine in the European Union, including a potential appeal to request a re-examination.

    “We are disappointed by the... opinion but remain fully committed to the potential of cladribine tablets,” Merck said.

    Novartis’s multiple sclerosis pill Gilenya, formerly known as Gilenia, won U.S. backing on Wednesday, putting it ahead of Merck in the race to be first with an MS pill in the United States. [ID:nLDE68K0ZS]

    Both companies are vying to take a sizable chunk of the $10 billion market of injectable MS treatment but Merck has declined to give an assessment of peak sales potential.

    The U.S. Food and Drug Administration’s (FDA) backing of Gilenya was largely expected after a unanimous recommendation by an advisory panel in June.

    Only injectable drugs are currently available to treat MS, with the main products offered by Biogen Idec Inc (BIIB.O), Bayer AG BAYG.DE, Novartis and Teva (TEVA.TA).

    Merck slipped behind Novartis in the race to get the first oral multiple sclerosis treatment to U.S. markets after FDA held up its initial application for approval of cladribine.

    But the FDA accepted a reworked request in July, putting Merck back in the race against rival Novartis to market a pill for multiple sclerosis in the United States. [ID:nLDE66R07W]

    “We are now increasingly cautious on the U.S. opportunity, where an FDA decision is expected in the fourth quarter,” said Piper Jaffray analyst Sam Fazeli.

    Merck division head Schnee said he does not expect the opinion issued by the EU body to affect the FDA’s assessment.

    Cladribine has been approved in Russia and in Australia. (Additional reporting by Frank Siebelt in Frankfurt and Ben Hirschler in London; Editing by Mike Nesbit)

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