STIMUVAX IS OUT

March 23 (Bloomberg) -- Merck KGaA stopped studies of the experimental cancer vaccine Stimuvax, a shot that the German drugmaker has said may generate as much as $1 billion in sales, after a patient with a blood malignancy developed a brain infection while taking it.

The patient, who was in a trial looking at use of the vaccine in multiple myeloma, was also being given a low dose of cyclophosphamide chemotherapy, the company said in a statement posted on its Web site today. The U.S. Food and Drug Administration has also put a temporary hold on Stimuvax trials.

Merck is studying Stimuvax in a range of malignancies, including non-small cell lung cancer and breast tumors. It’s meant to help Merck replace sales that will be lost when its best-selling multiple sclerosis drug Rebif loses patent protection in 2012. Merck also needs Stimuvax to build on its portfolio of cancer medicines, now led by Erbitux, which posted sales of 697 million euros ($942 million) last year.

“Again, an extremely negative surprise as Stimuvax is one of Merck’s next hopes after Erbitux,” said Markus Mayer, an analyst at UniCredit Research in Munich. “Stimuvax was expected to become the next cancer blockbuster. Therefore, the bad news has certain weight for Merck’s Pharma growth expectations.”

Third Setback

This is the third drug setback for Merck as it seeks to get more medicines to the market. Last year, European regulators rejected the company’s request to widen approval for Erbitux to include lung tumors. In November, the FDA rebuffed its application for the experimental multiple sclerosis therapy cladribine, leaving the company lagging Novartis AG in the race to get the first pill for the disease to patients.

Merck fell 56 cents, or 0.9 percent, to 59.73 euros in Frankfurt trading. The stock has lost 5.8 percent in the past year, compared with a 37 percent gain in the Bloomberg Europe Pharmaceutical Index.

Oncothyreon Inc., Merck’s partner on Stimuvax, fell $1.29, or 27 percent, to $3.49 in Nasdaq Stock Market trading. Stimuvax was its most-advanced medicine in testing, according to the Seattle-based company’s Web site.

Darmstadt, Germany-based Merck is working with regulatory authorities to determine what happened. No new patients are being added to the studies and those already enrolled are no longer receiving the experimental treatment, the company said. The patient who developed encephalitis didn’t die from the condition.

“We’ll be investigating what the cause was,” Merck spokeswoman Phyllis Carter said in a telephone interview. “Until we have an answer, the trials will be suspended.”

One Case

Cyclophosphamide, thought to intensify the vaccine’s effect, isn’t being used at the same dose in the company’s other studies of the vaccine. The case of encephalitis is the only one that has been observed in patients, some of whom have gotten the vaccine for up to eight years, Carter said.

“This is a precautionary measure,” Merck’s Carter said. “We’re highly committed to this development program for Stimuvax.”

Stimuvax belongs to a class of cancer drugs known as therapeutic vaccines. The approach involves injecting molecules that are unique to or found in abundance on tumor cells into the body to provoke an immune response. This may offer a way to attack the tumor cells without harming healthy tissue, a drawback of traditional cancer therapies.

Hurdles include experimenting on patients whose immune systems have been weakened by their disease or damaged by radiation or chemotherapy.

Competitors

Two other companies are developing therapeutic lung cancer vaccines. London-based drugmaker GlaxoSmithKline Plc began a final trial of its MAGE-A3 vaccine for lung cancer in 2007.

Transgene SA, the French biotechnology firm backed by the billionaire Merieux family, plans to begin a final test of its TG4010 vaccine this year. The shot, like Stimuvax, targets cancers that express the mucin 1 tumor antigen. Swiss drugmaker Novartis last month bought an option on rights to the experimental vaccine in a deal that may fetch Transgene as much as $960 million.

Transgene dropped 4.4 percent to 17.40 euros in Paris. The company is seeking to raise 150 million euros from investors, according to a report today in France’s Les Echos newspaper.

To contact the reporter on this story: Michelle Fay Cortez in London at mcortez@bloomberg.net
Last Updated: March 23, 2010 16:23 EDT