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

08 May 2021
endpts.com
VaccineCollaborate
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:
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