Merck KGaA says might strike partnership deal this year

MUNICH (Reuters) - German drugmaker Merck KGaA might agree partnership deals to jointly develop two of its most promising experimental medicines with a rival as early as this year, but more likely in 2019, its drug research and development chief said on Sunday.

A logo of drugs and chemicals group Merck KGaA is pictured in Darmstadt, Germany January 28, 2016. REUTERS/Ralph Orlowski

“It’s possible even as early as the end of the year but that’s really a stretch - or sometime in 2019,” Luciano Rossetti told Reuters at the annual congress of the European Society for Medical Oncology in Munich on Sunday.

Merck has a promising drug pipeline for the first time in several years but a decline in operating profit at its high-tech chemicals division has forced it to look into new ways to finance pharmaceutical development.

It is looking to take a collaborative approach for cancer drug M7824 and autoimmune disease treatment evobrutinib, in particular.

Among updates on a range of phase I trial data on M7824 in various cancer types released at ESMO, the drug was shown to delay the progression of a certain type of lung cancer for at least 9.5 months in half of the trial participants.

Merck has already started a phase II trial in non-small cell lung cancer, comparing M7824 directly with Keytruda by U.S. rival Merck & Co, currently seen as the most promising cancer immunotherapy on the market with about $8 billion in sales expected this year.

Although they share historic routes, the two companies have no ownership ties.

M7824, a bifunctional fusion protein, combines the immunotherapy mechanism of Merck’s approved cancer drug Bavencio with a second immune trigger known as TGF-beta trap.

Drugs typically go through three phases of testing before a market launch, but in cancer trials this can be cut to two when regulators see sufficient promise.

“The market is almost myopically focused on whether or not Merck will be successful in partnering its emerging pipeline assets,” such as M7824 in oncology, a Barclays analyst said in August.

The family-controlled company released some initial data from early- and mid-stage trials late in May, bolstering the share price.

Evobrutinib, a so-called BTK inhibitor designed to block white blood cells from launching an immune response at healthy cells, is in the second phase of testing.

Reporting by Ludwig Burger; Editing by Kirsten Donovan