Merck KGaA ditches BTK, reaffirms deal-driven pipeline strategy

07 Mar 2024
License out/inPhase 3Immunotherapy
Merck KGaA has discontinued development of evobrutinib after the BTK inhibitor failed a pair of Phase III studies in relapsing multiple sclerosis (RMS). Despite the pipeline setback, the German drugmaker remained bullish on its healthcare business prospects during a call with investors Thursday, highlighting a growth spurt in sales of recently reclaimed Bavencio (avelumab).
The pharma had originally announced the miss in December when evobrutinib failed to meet the two studies’ primary endpoint of reducing annualised relapse rate in patients with RMS versus Sanofi's Aubagio (teriflunomide). For more, see - KOL Views Q&A: Leading neurologist says evobrutinib setback may force a rethink for BTKs in MS.
Merck disclosed in its 2023 earnings report that in the fourth quarter, it recorded a programme termination cost of €95 million ($104 million).
Chief executive Belén Garijo said on the investor call that Merck’s healthcare division is nevertheless “very well positioned” despite the evobrutinib termination, and posted “a very strong commercial performance” for 2023, adding that the company continues to be confident in its internal pipeline.
Stifel analysts similarly sounded an upbeat note, describing the evobrutinib write-off – as well as the end of Merck’s licensing deal with Pfizer for rights to the PD-L1 inhibitor Bavencio –  as “net positives” for 2024.
Bavencio and beyond
Merck regained exclusive, global rights to Bavencio in July after Pfizer terminated a nine-year licensing deal earlier last year (see - Spotlight On: Pfizer officially abandons Bavencio). This has proved a boon for the German drugmaker, as the cancer immunotherapy helped boost its oncology revenues up 17% over 2022 levels.
Merck’s healthcare business brought in a little more than €8 billion in sales for 2023, compared with €7.8 billion in 2022.
Garijo said the company is now in “the second wave of the R&D transformation” and that moving forward, more than 50% of its drug launches are expected to come from external innovation.
Licensing deals “allow us to pick the desired assets to complement our portfolio,” Garijo explained, adding that Merck also plans on “eventually” exploring “value-creating bolt-on acquisitions.”
Those partnerships will most likely be in therapeutic areas where Merck already has a presence, or in adjacent opportunities such as an expansion into other neurological diseases, she said.
Merck has already begun executing on this deal-driven strategy. Earlier this week, the German drugmaker paid C4 Therapeutics $16 million upfront to discover two targeted protein degraders; the biotech could rake in about $740 million in milestones.
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