Thursday, January 21, 2010

Mildly-Good News: Merck's Newly-In-Licensed Anti-C. Difficile Drug

This is a nice study result, today, in The New England Journal of Medicine, for a drug candidate now under Merck's wing. If approved, it will be used to treat Clostridium Difficile, especially the increasingly antibiotic resistant strains, that are a problem in may U.S. hospitals.

However, it is not likely to be a very high-margin product for New Merck, when it does reach the market. Why?

Well, Merck came to the game late, here -- and did not develop the drug candidate in-house. No, just last April, it in-licensed the rights to the drug from Medarex, now a unit of Bristol-Myers Squibb. Medarex, in turn, co-developed the drug with the biologics arm of the University of Massachusetts Medical School. In fact, each of these players most-likely have signed lucrative license deals, to get handsomely paid should the drug reach the U.S. marketplace.

So, each of these players will likely receive fairly substantial running royalties, under the attendant development and licensing agreements. Moreover, because Merck did not shoulder much (or any) of the early costs (of the basic research and development effort), entering the picture only once Phase III trials were already well-underway, the royalties New Merck will owe, on each dose, will likely be much higher than if it had done some or all of the early work, or developed the drug in-house, itself. A lower risk approach, true -- but much lower returns, too. Per Bloomberg, reporting this morning:

. . . ."The trial results are impressive," said Lorraine Kyne, a doctor at the Mater Misericordiae Hospital in Dublin, Ireland, in an editorial accompanying the study yesterday. The findings "offer hope in the battle against this increasingly prevalent and difficult-to-manage disease," she wrote.

Merck’s drug consists of two so-called fully human monoclonal antibodies, which are human infection-fighting proteins grown in cells isolated from genetically altered mice and given to patients in an injection. The medicine is designed to neutralize toxins released by C. difficile that damage the intestines. . . .

Good news -- just no game changer for New Merck, here.

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