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.

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His­toric drug pric­ing re­forms pass; Pfiz­er ac­quires GBT; The long search for non-opi­oid pain drugs; 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.

The Endpoints Weekly has officially crossed the 60,000 mark on subscribers — thanks to all of your support. As the editorial team grows, we’ve been able to do a lot more, with many of those on display this week. Be sure to check out Lei Lei Wu’s deep dive on pain R&D. If you missed it, you may also rewatch her companion panel here.

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Gold for adults, sil­ver for in­fants: Pfiz­er's Pre­vnar 2.0 head­ed to FDA months af­ter Mer­ck­'s green light

Pfizer was first to the finish line for the next-gen pneumococcal vaccine in adults, but Merck beat its rival with a jab for children in June.

Now, two months after Merck’s 15-valent Vaxneuvance won the FDA stamp of approval for kids, Pfizer is out with some late-stage data on its 20-valent shot for infants.

Known as Prevnar 20 for adults, Pfizer’s 20vPnC will head to the FDA by the end of this year for an approval request in infants, the Big Pharma said Friday morning. Discussions with the FDA will occur first and more late-stage pediatric trials are expected to read out soon, informing the regulatory pathway in other countries and regions.

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No­var­tis re­ports two pa­tient deaths af­ter treat­ment with Zol­gens­ma

Two children with spinal muscular atrophy have died after receiving Novartis’ Zolgensma, a gene therapy designed as a one-time treatment for the rare fatal disease.

The deaths, which resulted from acute liver failure, occurred in Russia and Kazakhstan, Novartis confirmed in a statement to Endpoints News. Having notified health authorities across all the markets where Zolgensma is available, it will update the drug label “to specify that fatal acute liver failure has been reported,” a spokesperson wrote.

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House pass­es his­toric drug pric­ing re­forms, lin­ing up decades-in-the-mak­ing win for Biden and De­moc­rats

The US House of Representatives today voted along party lines (all Dems voted for it), 220-207 to pass new, wide-ranging legislation that will allow Medicare drug price negotiations for the first time ever, and cap seniors’ drug expenses to $2,000 per year and seniors’ insulin costs at $35 per month.

Setting up a major victory for President Joe Biden, representatives returned from their summer recess to pass the Inflation Reduction Act, even as many noted the bill would only modestly reduce inflation.

Senate Finance Committee Chair Ron Wyden (D-OR) (Francis Chung/E&E News/POLITICO via AP Images)

Sen­ate Fi­nance chair con­tin­ues his in­ves­ti­ga­tion in­to phar­ma tax­es with re­quests for Am­gen

Amgen is the latest pharma company to appear on the radar of Senate Finance Committee Chair Ron Wyden (D-OR), who is investigating the way pharma companies are using subsidiaries in low- or zero-tax countries to lower their tax bills.

Like its peers Merck, AbbVie and Bristol Myers Squibb, Wyden notes how Amgen uses its Puerto Rico operations to consistently pay tax rates that are substantially lower than the U.S. corporate tax rate of 21%, with an effective tax rate of 10.7% in 2020 and 12.1% in 2021.

FDA ap­proves sec­ond in­di­ca­tion for As­traZeneca and Dai­ichi's En­her­tu in less than a week

AstraZeneca and Daiichi Sankyo’s antibody-drug conjugate Enhertu scored its second approval in less than a week, this time for a subset of lung cancer patients.

Enhertu received accelerated approval on Thursday to treat adults with unresectable or metastatic non-small cell lung cancer (NSCLC) whose tumors have activating HER2 (ERBB2) mutations, and who have already received a prior systemic therapy.

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J&J to re­move talc prod­ucts from shelves world­wide, re­plac­ing with corn­starch-based port­fo­lio

After controversially spinning out its talc liabilities and filing for bankruptcy in an attempt to settle 38,000 lawsuits, Johnson & Johnson is now changing up the formula for its baby powder products.

J&J is beginning the transition to an all cornstarch-based baby powder portfolio, the pharma giant announced on Thursday — just months after a federal judge ruled in favor of its “Texas two-step” bankruptcy to settle allegations that its talc products contained asbestos and caused cancer. An appeals court has since agreed to revisit that case.

CSL is gathering its four business units under a unified brand identity strategy (Credit: CSL company site)

CSL brings Se­qirus, Vi­for un­der par­ent um­brel­la brand in iden­ti­ty re­vamp

CSL is gathering its brands under the family name umbrella, renaming its vaccine and newly acquired nephrology specialty businesses with the parent initials.

CSL Seqirus and CSL Vifor join CSL Plasma and CSL Behring as the four now uniformly branded business units of the global biopharma. The Seqirus vaccine division was formed in 2015 with the combination of bioCSL and its purchase of Novartis’ flu vaccine business. CSL picked up Vifor Pharma late last year in an $11.7 billion deal for the nephrology, iron deficiency and cardio-renal drug developer.

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