Merck KGaA Says Erbitux Fails in Stomach Cancer Trial

Merck KGaA (MRK)’s Erbitux cancer treatment failed to help patients with advanced stomach tumors in a late- stage clinical trial, dealing the company a setback in the effort to expand sales of its second-biggest-selling medicine.

The drug, combined with two other medicines, didn’t extend the length of time that patients lived without their disease getting worse, the Darmstadt, Germany-based company said in a statement today.

The results are the second disappointment this year for Erbitux. The company said May 9 the drug failed to show a benefit for stage-three colon cancer patients when given with chemotherapy as a way to prevent the cancer’s return following tumor removal. Merck’s forecast in May for company revenue to reach as much as 10.7 billion euros ($13 billion) in 2014 didn’t include approval of Erbitux for use in additional cancer types.

“These disappointing results remove a potential upside to Merck’s 2014 guidance,” said Richard Vosser, an analyst at JPMorgan Chase & Co. in London who has an underweight rating on Merck stock. “We now see limited growth for Erbitux going forward.”

Shares Decline

Merck declined 2.3 percent to 78.14 euros in Frankfurt. The stock has returned 5.7 percent including reinvested dividends in the past year, compared with 20 percent for the Bloomberg Europe Pharmaceutical Index.

Patients in the trial, dubbed Expand, had inoperable cancer of the stomach or gastro-esophageal junction and hadn’t received prior chemotherapy or radiation, Merck said. They got Erbitux along with cisplatin, a standard chemotherapy, and the capecitabine cancer drug. Typically, they would receive only palliative chemotherapy, according to Merck.

“We are disappointed that the Expand trial did not show a benefit for patients,” the lead investigator in the study, Florian Lordick of Hannover Medical School in Germany, said in the statement. “Patients with advanced gastric cancer currently have few treatment choices and a poor prognosis, and we will continue to investigate other treatment options for these patients in the hope of being able to offer improved outcomes.”

Erbitux Sales

Merck got 855 million euros in Erbitux sales last year, making it the company’s second-biggest-selling product after Rebif for multiple sclerosis. It’s approved for colorectal cancer as well as head and neck tumors, and Merck said in May it expected growth in Erbitux sales. Bristol-Myers Squibb Co. (BMY) and Eli Lilly & Co. (LLY) market the drug in the U.S. and Canada, while Merck promotes it and sells it elsewhere.

Merck has applied to sell the drug for lung cancer in the European Union. The chances of Merck winning approval in lung cancer are “essentially zero,” Martin Voegtli, an analyst at Kepler Capital Markets, wrote in a report today.

In February, the company said chances of approval were less than 50 percent after a committee of the European Medicines Agency sent the company questions about the application.

“This brings us exactly back to the roots of Merck’s current problems: Slow or declining key drug franchises and weak pipeline to offset future sales declines,” wrote Voegtli, who has a reduce rating on the stock.

The study included 904 patients in 25 countries, Merck said. Gastric cancer is the second leading cause of cancer- related death worldwide, leading to more than 700,000 deaths a year, Merck said.

To contact the reporter on this story: Phil Serafino in Paris at pserafino@bloomberg.net

To contact the editor responsible for this story: Phil Serafino in Paris at pserafino@bloomberg.net

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