In a major blow to Merck KGaA, its experimental multiple sclerosis (MS) drug has failed to meet the primary goal in highly anticipated late-stage trials. The German company had high hopes for the compound, known as evobrutinib, which was expected to outperform Sanofi's established drug, Aubagio, in reducing MS relapse rates. However, the trials revealed that evobrutinib was not more effective than its competitor.
Merck was seen as a frontrunner in the race to develop more targeted MS drugs known as Bruton’s tyrosine kinase (BTK) inhibitors, ahead of competitors like Sanofi, Novartis, and Roche. MS affects an estimated 2.8 million people worldwide, and the relapsing forms of the disease, the focus of the evobrutinib trials, are the most common.
There were concerns among investors about the potential for liver damage associated with BTK inhibitors, but analysts still had high expectations for Merck's drug, with peak sales estimates exceeding $2 billion. The sudden disappointment caused Merck's shares to plummet by 14% to their lowest level in five weeks.
JP Morgan analysts expressed surprise at the trial results, as they had expected the drug to be successful. Previous concerns had centered around potential side effects rather than efficacy. The unexpected outcome dealt a significant blow to Merck's revenue prospects, as a successful launch of evobrutinib was crucial for the company's goal of generating €25 billion ($27 billion) in sales by 2025.
CEO Belen Garijo had previously expressed optimism, stating that the MS drug could achieve annual sales surpassing $1 billion. However, in April, the US Food and Drug Administration had temporarily halted new patient enrollment in evobrutinib trials due to concerns over drug-induced liver injury based on lab results. Similar issues were faced by Roche subsidiary Genentech with its BTK inhibitor fenebrutinib.
This setback adds to a series of recent disappointments for Merck's pharma unit, including the underperformance of the cancer drug bintrafusp alfa and the termination of an alliance with GSK. Last month, the diversified group already signaled that its full-year operating earnings would likely fall in the lower range of its target, primarily due to weak demand for specialty materials used in biotech drugs and semiconductors.
Although the failed trials have undoubtedly dealt a significant blow to Merck's growth ambitions, the company may still have other opportunities for success in its pipeline. However, the setback emphasizes the challenges and uncertainty that pharmaceutical companies face in the development of innovative drugs for complex diseases like multiple sclerosis.