Merck's Drug Fails to Get FDA Nod

Merck ( MRK - Analyst Report ) recently received a complete response letter (CRL) from the US Food and Drug Administration (FDA) for its oncology candidate, ridaforolimus. Merck is looking to get ridaforolimus approved as a maintenance therapy for patients with metastatic soft-tissue sarcoma or bone sarcoma whose disease has not progressed or has improved after at least four cycles of chemotherapy.

The FDA said that the company needs to conduct additional trials evaluating the safety and efficacy of ridaforolimus. The agency said that the candidate cannot be approved based on the submitted regulatory application.

Merck intends to work with the FDA to determine the regulatory path for ridaforolimus. Meanwhile, the company is in discussions with regulatory agencies in the EU and other countries where it is seeking approval for the candidate.

Our Take

The FDA’s decision and requirement for additional studies is not surprising. Earlier this year, the FDA’s Oncologic Drugs Advisory Committee (ODAC) had voted (13-1) against the drug. In its briefing documents, the FDA had asked the committee to analyze the risk-benefit profile of ridaforolimus given the small differences in median progression free survival (PFS) and overall survival (OS) between the ridaforolimus and placebo arms and ridaforolimus’ adverse event profile. Given the concerns regarding ridaforolimus’ safety and efficacy, we were not optimistic about ridaforolimus’ chances of gaining first-round approval.

Merck and ARIAD Pharmaceuticals’ ( ARIA - Snapshot Report ) have an exclusive licensing agreement for ridaforolimus. While Merck is responsible for the development and worldwide commercialization of ridaforolimus in oncology, ARIAD will co-promote ridaforolimus in the US.

We currently have a Neutral recommendation on Merck, which carries a Zacks #3 Rank (short-term “Hold” rating).