Merck KGaA's Erbitux Faces Hurdle - Analyst Blog


Merck KGaA ( MKGAF ) recently reported disappointing interim data from a late-stage study (PETACC-8) on Erbitux (cetuximab), which is being evaluated as an adjuvant treatment of stage III colon cancer. The data did not support the use of the drug for the aforementioned indication.

Results from the study, a multinational European trial, revealed that Erbitux when given in combination with standard chemotherapy (FOLFOX 4) did not prolong the disease free survival of patients, as compared to those treated with FOLFOX 4 alone.

We note that these results do not have any impact on the availability status of Erbitux for other approved indications. The drug is currently marketed worldwide for the treatment of patients with KRAS wild-type metastatic colorectal cancer and squamous cell cancer of the head and neck (SCCHN).

Merck KGaA licensed the rights to market Erbitux outside the U.S. and Canada from ImClone, a subsidiary of Eli Lilly and Co. ( LLY ). Merck KGaA markets Erbitux in these markets with Bristol-Myers Squibb Co. ( BMY ). Eli Lily, Bristol Myers and Merck KGaA co-promote Erbitux in Japan.

Erbitux is one of the leading revenue contributors at Merck KGaA, with the drug sales increasing 1.3% during the first quarter of 2012. However, the cancer treatment market is heavily crowded with players like Roche Holdings Ltd. ( RHHBY ), Pfizer Inc. ( PFE ), Sanofi ( SNY ), AstraZeneca ( AZN ) and Amgen Inc. ( AMGN ).

Our View

We currently have a Zacks #2 Rank (short-term Buy rating) on Merck KGaA. Despite the negative data, we believe that Erbitux along with Rebif and the Merck Millipore division will help drive growth at Merck KGaA.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AMGN , AZN , BMY , LLY , PFE

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