Tak­ing dou­ble Covid-19 hits, Mer­ck writes off $170M for scrapped drug, high­lights $600M in missed sales

Mer­ck ac­quired MK-7110, the Covid-19 drug orig­i­nal­ly de­vel­oped by On­coIm­mune, for $425 mil­lion in cash. The de­ci­sion to scrap it has cost at least $170 mil­lion on pa­per.

The write-off amount was among a few de­tails the phar­ma gi­ant di­vulged in its lat­est quar­ter­ly fil­ing, which of­fered a clos­er look at its ill-fat­ed pan­dem­ic R&D cam­paign.

Here’s what we’ve learned: The $50 mil­lion that Mer­ck had in­vest­ed in the new ven­ture that On­coIm­mune spun out with every­thing that’s not re­lat­ed to MK-7110 was good for a 20% stake, mark­ing a $17 mil­lion pre­mi­um for On­coIm­mune’s shares.

“Mer­ck al­so rec­og­nized oth­er net li­a­bil­i­ties of $22 mil­lion,” the fil­ing read. “The Com­pa­ny record­ed Re­search and de­vel­op­ment ex­pens­es of $462 mil­lion in 2020 re­lat­ed to this trans­ac­tion.”

While Mer­ck had been im­pressed with the Phase III da­ta On­coIm­mune post­ed last Sep­tem­ber — sug­gest­ing that its drug, then known as CD24Fc, could re­duce the risk of res­pi­ra­to­ry fail­ure or death in se­vere Covid-19 pa­tients by 50% — the FDA thought oth­er­wise. The reg­u­la­tors’ re­quest for ad­di­tion­al da­ta would push any po­ten­tial EUA to 2022 the ear­li­est, Mer­ck not­ed back in April, and even then they would be faced with “tech­ni­cal, clin­i­cal and reg­u­la­to­ry un­cer­tain­ties.” So in­stead of run­ning that new tri­al, they de­cid­ed to drop it.

That was af­ter Mer­ck al­ready dis­con­tin­ued its vac­cine pro­gram, pledg­ing in­stead to lend its man­u­fac­tur­ing mus­cle to oth­er Covid-19 vac­cine mak­ers in­clud­ing J&J. The on­ly re­main­ing pro­gram, Ridge­back and Emory-de­vel­oped an­tivi­ral mol­nupi­ravir, is be­ing test­ed in the out­pa­tient set­ting while in­ves­ti­ga­tors de­cid­ed not to pro­ceed with a Phase III in hos­pi­tal­ized pa­tients.

It’s all about con­cen­trat­ing Mer­ck’s re­sources on the most vi­able ther­a­peu­tics and vac­cines, the com­pa­ny em­pha­sized.

The pan­dem­ic, af­ter all, has tak­en a toll on Mer­ck’s bot­tom line — with the neg­a­tive im­pact on sales es­ti­mat­ed at $600 mil­lion in the first quar­ter alone. The dip in sales marked a sour note for out­go­ing CEO Ken Fra­zier’s fi­nal earn­ings call af­ter a 29-year ca­reer.

From the 10-Q:

Rough­ly two-thirds of Mer­ck’s Phar­ma­ceu­ti­cal seg­ment rev­enue is com­prised of physi­cian-ad­min­is­tered prod­ucts, which, de­spite strong un­der­ly­ing de­mand, have been af­fect­ed by so­cial dis­tanc­ing mea­sures and few­er well vis­its. Re­duced ac­cess to health care providers com­bined with the pri­or­i­ti­za­tion of COVID-19 vac­cines and pub­lic health guid­ance on co-ad­min­is­tra­tion with oth­er vac­cines has re­sult­ed in re­duced ad­min­is­tra­tion of many of the Com­pa­ny’s hu­man health prod­ucts, no­tably vac­cines in the Unit­ed States, which the Com­pa­ny an­tic­i­pates will con­tin­ue while pan­dem­ic-re­lat­ed ac­cess mea­sures re­main in place.

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

No­var­tis de­vel­op­ment chief John Tsai: 'We go deep in the new plat­form­s'

During our recent European Biopharma Summit, I talked with Novartis development chief John Tsai about his experiences over the 3-plus years he’s been at the pharma giant. You can read the transcript below or listen to the exchange in the link above.

John Carroll: I followed your career for quite some time. You’ve had more than 20 years in big pharma R&D and you’ve obviously seen quite a lot. I really was curious about what it was like for you three and a half years ago when you took over as R&D chief at Novartis. Obviously a big move, a lot of changes. You went to work for the former R&D chief of Novartis, Vas Narasimhan, who had his own track record there. So what was the biggest adjustment when you went into this position?

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Covid-19 vac­cine boost­ers earn big thumbs up, but Mod­er­na draws ire over world sup­ply; What's next for Mer­ck’s Covid pill?; The C-suite view on biotech; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

You may remember that at the beginning of this year, Endpoints News set a goal to go broader and deeper. We are still working towards that, and are excited to share that Beth Snyder Bulik will be joining us on Monday to cover all things pharma marketing. You can sign up for her weekly Endpoints MarketingRx newsletter in your reader profile.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 119,800+ biopharma pros reading Endpoints daily — and it's free.

Susan Galbraith, Executive VP, Oncology R&D, AstraZeneca

As­traZeneca on­col­o­gy R&D chief Su­san Gal­braith: 'Y­ou're go­ing to need or­thog­o­nal com­bi­na­tion­s'


Earlier in the week we broadcast our 4th annual European Biopharma Summit with a great lineup of top execs. One of the one-on-one conversations I set up was with Susan Galbraith, the oncology research chief at AstraZeneca. In a wide-ranging discussion, Galbraith reviewed the cancer drug pipeline and key trends influencing development work at the pharma giant. You can watch the video, above, or stick with the script below. — JC

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Amit Etkin, Alto Neuroscience CEO (Alto via Vimeo)

A star Stan­ford pro­fes­sor leaves his lab for a start­up out to re­make psy­chi­a­try

About five years ago, Amit Etkin had a breakthrough.

The Stanford neurologist, a soft-spoken demi-prodigy who became a professor while still a resident, had been obsessed for a decade with how to better define psychiatric disorders. Drugs for depression or bipolar disorder didn’t work for many patients with the conditions, and he suspected the reason was how traditional diagnoses didn’t actually get at the heart of what was going on in a patient’s brain.

Roche's Tecen­triq cross­es the fin­ish line first in ad­ju­vant lung can­cer, po­ten­tial­ly kick­ing off gold rush

While falling behind the biggest PD-(L)1 drugs in terms of sales, Roche has looked to carve out a space for its Tecentriq with a growing expertise in lung cancer. The drug will now take an early lead in the sought-after adjuvant setting — but competitors are on the way.

The FDA on Friday approved Tecentriq as an adjuvant therapy for patients with Stage II-IIIA non small cell lung cancer with PD-(L)1 scores greater than or equal to 1, making it the first drug of its kind approved in an early setting that covers around 40% of all NSCLC patients.

Rahul Singhvi, Resilience CEO

A Bob Nelsen start­up turns to Har­vard to help sharp­en its tech, in­spir­ing first spin­out

One of Bob Nelsen’s latest projects is headed to Harvard.

Resilience, a company started with the goal of establishing itself as a “one-stop-shop” for companies looking to scale manufacturing, including for hard-to-develop cell and gene therapies, is less than a year old. Friday, it announced a five-year R&D deal with Harvard University that includes $30 million to develop biologics, including vaccines, nucleic acids and cell and gene therapies.

Tillman Gerngross, Adagio CEO

Q&A: Till­man Gern­gross ex­plains why his Covid mAb will have an edge over an al­ready crowd­ed field

If anyone knows about monoclonal antibodies, it’s serial entrepreneur, Adimab CEO, and Dartmouth professor of bioengineering Tillman Gerngross.

Even the name of Gerngross’ new antibody startup Adagio Therapeutics is meant to reflect his vision behind the development of his Covid-19 mAb: slowly, he said, explaining that “everyone else, whether it’s Regeneron, Lilly, or AstraZeneca, Vir, they all valued speed over everything.”

Endpoints Premium

Premium subscription required

Unlock this article along with other benefits by subscribing to one of our paid plans.

Susan Galbraith speaking at Endpoints News' virtual EUBIO21 summit

Imfinzi/treme­li­mum­ab com­bo scores As­traZeneca an­oth­er OS win — this time in liv­er can­cer

Is the tide turning on AstraZeneca’s battered PD-L1/CTLA4 combo?

A single priming dose of the experimental tremelimumab, followed by Imfinzi every four weeks, beat Nexavar (sorafenib) in helping a group of liver cancer patients live longer in a Phase III study, the company reported, meeting the primary endpoint.

Specifically, the two drugs extended overall survival for patients with unresectable hepatocellular carcinoma who had not received prior systemic therapy and were not eligible for localized treatment.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 119,800+ biopharma pros reading Endpoints daily — and it's free.