Merck Acquires Daxas Rights - Analyst Blog

 
Recently, Merck (MRK) entered into a co-promotion agreement with Nycomed for the commercialization of Daxas (roflumilast) in Canada and certain European countries. The drug is meant to treat patients with chronic obstructive pulmonary disease (COPD). The two companies have also signed a distribution agreement for Daxas in the UK. The drug has been developed with Forest Laboratories (FRX).

Nycomed will receive undisclosed upfront fees and payments on the achievement of certain milestones. The marketing application for Daxas was submitted in Europe, Canada and the US in 2009.

Last week, Nycomed received a positive opinion from the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP), recommending the approval of Daxas in the EU.

Given the huge unmet medical need in the COPD market, Daxas could generate substantial revenues once approved and commercialized. Currently marketed therapies in the COPD market include GlaxoSmithKline’s (GSK) Advair and Pfizer’s (PFE) Spiriva

Although the favorable opinion in Europe is a positive development for commercialization of Daxas, its approval in the US encountered a roadblock recently. Earlier this month, the US Food and Drug Administration’s (FDA) Pulmonary-Allergy Drugs Advisory committee voted 10-5 against granting approval to Daxas.

The FDA had noted that while Daxas achieved statistical significance in the clinical studies, the improvements were modest. Moreover, the agency had also expressed concern regarding the safety profile of the candidate.

Merck, in order to build its long-term portfolio is entering into several in-licensing deals. The company entered into 51 such deals in 2009, a trend which is expected to continue this year as well.

Merck is faced with significant patent cliffs over the next four years. We feel that the Schering merger will require Merck to address certain impending patent cliffs and pipeline failures.

We are currently “Neutral" on the stock.