Merck shocks ALK by returning rights to allergy immunotherapies

Merck ($MRK) has shocked ALK-Abello (CPH:ALK-B) and its investors by returning the rights to three sublingual allergy immunotherapy tablets. The decision, which comes partway through a clinical trial and regulatory approval process, leaves ALK without a partner in the U.S. and triggered an 18% drop in its share price.

Hørsholm, Denmark-based ALK expects to regain the rights to the immunotherapies--which address grass, ragweed and house dust mite allergies--early next year. Between now and then, Merck and ALK will work together on a 6-month transition period. ALK has said it will use its resources in North America and its base in Denmark to smooth the transition, but with sales and marketing, registration activities and clinical development all in mid-flow, there is potential for a bumpy ride.

Merck has committed to wrapping up the clinical trial it is overseeing, freeing ALK from the challenge of transferring oversight mid-study. However, some mid-process transfer will be required to ensure the house dust mite immunotherapy approval process stays on track. Merck submitted a BLA for the drug in February, following up with a filing in Canada in May. ALK is hoping to win approval in 2017 and is set to up its involvement in the process to ensure Merck’s action doesn’t scuttle this ambition.

What happens if ALK wins approval is less clear. The plan is to perform a strategic review of the North American markets before deciding how to commercialize the grass, ragweed and house dust mite immunotherapies. This could result in ALK seeking a new partner in the territories, or marketing the products itself. ALK promotes the products itself in Europe, but taking on the North American market would mean going up against the issues that have hindered Merck’s progress to date.

Merck has paid out more than DKK 700 million ($100 million) to ALK as part of the deal it struck in 2007 for the rights to the drugs, but its returns to date have been small. Faced with healthcare professionals that are reticent to shift away from existing treatment options, Merck has struggled to gain ground. In the first half of 2016, ALK earned approximately $2 million through sales royalties, R&D services and product supply under the Merck deal.

- read the release

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