Merck Stumbles: Cancer Drug Failure Sends Shares Sinking

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Shares in Germany’s Merck KGaA fell sharply by 8.9% at the opening on Tuesday after the company announced late on Monday that it would halt a trial testing its head and neck cancer drug, xevinapant, due to a lack of efficacy. This is the latest in a series of high-profile development setbacks for Merck KGaA, shifting the focus to the company’s other divisions, which produce specialty chemicals for the electronics industry and lab gear and supplies for the biotech sector.

Barclays analysts commented on the setback, stating, “This is (another) surprising setback for the healthcare pipeline. We continue to like the Merck story but concede the company will need to rebuild credibility regarding its pipeline prowess.”

For Merck’s pharmaceutical division, the aborted trial marks another significant development setback. This follows the failure of its experimental multiple sclerosis (MS) drug to meet the primary goal in a highly anticipated late-stage trial in December. Additionally, in 2021, Merck experienced disappointment when its experimental cancer treatment, bintrafusp alfa, fell short in a trial, leading to the termination of its alliance with GSK.

The focus will now likely shift towards the performance and potential of Merck’s other two divisions. The specialty chemicals division serves the electronics industry, while the life sciences division supplies lab gear and materials for the biotech sector.