Xevinapant

Merck KGaA on Thursday reported its annual results for 2024, although investors eager for an update on a potential deal with SpringWorks Therapeutics were left frustrated. The German drugmaker simply reaffirmed that it is in advanced discussions about a possible acquisition of SpringWorks, although there is no certainty that an agreement will be signed. Rumours of a transaction between the parties first surfaced on February 10, with Merck confirming later the same day that talks were ongoing. A purchase of SpringWorks would give Merck the oral gamma secretase inhibitor Ogsiveo (nirogacestat), which is approved for desmoid tumours, as well as the MEK inhibitor mirdametinib, currently under review by the FDA for neurofibromatosis type 1-associated plexiform neurofibromas.The acquisition of SpringWorks would revitalise Merck's pipeline, following a number of recent setbacks, including the failure of a pair of Phase III studies for its lead oncology candidate xevinapant. While the company's healthcare segment posted 5% growth last year to €8.5 billion ($9.2 billion), driven by oncology — which was up 10.5% to €2 billion — it is heavily reliant on its 20-year-old drug Erbitux.Erbitux biosimilars on the horizonThe anti-EGFR monoclonal antibody generated sales in 2024 of €1.2 billion, up 13.3% over the prior year. Merck noted that growth for Erbitux was led by Latin America, particularly Mexico, as well as Europe and China, tempered by negative pricing effects in Japan.Asked on an analyst call about the growth potential of Erbitux, particularly in China, Peter Guenter — CEO of Merck's healthcare unit — noted that sales of the product are forecast to increase this year, with biosimilars not expected to launch before 2026. Guenter indicated that China, which accounts for about 25% of Erbitux revenue, is "an important growth driver, but actually the brand is very dynamic across the world."While Erbitux faces competition in China from Simcere Pharmaceutical's Enlituo, Guenter clarified that the product — approved last June — is not classified as a biosimilar, but rather a non-comparable biologic. "And that has, of course, relatively important implications in terms of, you know, lack of substitution," Guenter explained, as well as inclusion on the reimbursement drug list and volume-based procurement programme.Merck's other key drug, the multiple sclerosis (MS) therapy Mavenclad, achieved blockbuster status in 2024 for the first time, posting an 11.1% increase in revenue to €1.1 billion. Meanwhile, its older MS treatment Rebif declined 11.6% to €626 million in line with the wider interferon market.For the current year, the firm expects sales in its healthcare unit to be between €8.3 billion and €8.9 billion, representing organic growth of up to 5%.Pipeline questions continueMerck also disclosed Thursday that the oral TLR7/8 inhibitor enpatoran failed to meet the primary endpoint of the systemic lupus erythematosus cohort of the mid-stage WILLOW study. Despite what Guenter called "a near miss" in the trial, the company plans further development of the drug, given "promising responses" in patient subgroups and the totality of data, including positive results from the cutaneous lupus erythematosus arm of WILLOW.Guenter explained "the good news is that we see clear responses in predefined subpopulations. So we can really say that the drug clearly hits the target." These subgroups include patients with skin manifestations within the lupus cluster, those with a strong interferon gene signature and also those with high steroid use at baseline.Meanwhile, chief financial officer Helene von Roeder noted that Inspirna "informed [us] about negative top-line data" from an ongoing Phase II trial of ompenaclid in RAS-mutated advanced or metastatic colorectal cancer. The SLC6A8 inhibitor — also known as RGX-202 — was the focus of a licensing agreement between the parties last year. However, von Roeder indicated that the mid-stage failure means "we will not exercise the US option" on the drug, but will instead record an impairment charge of around €15 million in the current quarter.

Merck KGaA (MRCG.DE), the German healthcare and technology powerhouse, announced on Monday that it is in advanced negotiations to acquire U.S. biotech firm SpringWorks Therapeutics (SWTX.O), known for its focus on cancer and rare diseases. This move could significantly bolster Merck's oncology portfolio, especially following recent setbacks in its late-stage drug trials. In a statement, Merck confirmed that discussions are ongoing but noted that no legally binding agreement has been reached, and the outcome remains uncertain. The talks follow an earlier report from Reuters, which indicated that a deal could be finalized in the coming weeks, with sources requesting anonymity due to the confidential nature of the negotiations. SpringWorks shares soared 34% on Monday, pushing the company's market value to approximately $4 billion. The stock initially jumped nearly 49% after news of the talks broke, reaching its highest levels since April 2022. However, shares of Merck KGaA closed down 3.7% amid broader market fluctuations. The U.S. healthcare sector is witnessing a resurgence in deal-making activity after a slowdown in 2024, largely due to pharmaceutical companies focusing on integrating past acquisitions. For example, Johnson & Johnson recently agreed to acquire Intra-Cellular Therapeutics for about $14.6 billion. SpringWorks, based in Stamford, Connecticut, is a commercial-stage biotech company that develops treatments for various cancers, particularly rare tumors and uterine cancer. Its drug for treating desmoid tumors has already received U.S. approval, and it anticipates another approval for a product addressing neurofibromatosis type-1 later this month. Should the acquisition succeed, it would represent one of Merck's largest pharmaceutical transactions in recent years, enhancing its cancer treatment pipeline at a crucial time. The company has faced significant challenges, including halting development on its Xevinapant drug for head and neck cancer and experiencing failures in trials for its Evobrutinib multiple sclerosis treatment. Analysts at JPMorgan expressed optimism regarding the potential acquisition, noting that it could complement Merck’s existing oncology operations, which account for about 25% of its healthcare sales in 2024. They believe that the products offered by SpringWorks could counterbalance the impact of competition and loss of exclusivity that Merck is currently facing. Merck has a history of ambitious acquisitions, including its $17 billion purchase of Sigma-Aldrich in 2015 and the €5.8 billion acquisition of Versum in 2019. In a recent interview, Merck's CEO mentioned that improving sales growth would allow for a more cautious approach to future acquisitions, especially in a market where valuations remain high. As the discussions progress, the pharmaceutical industry will be watching closely to see if Merck KGaA can successfully finalize this transformative deal.