Merck KGaA pulls the plug on Ono's MS drug as the market crowds

Merck KGaA is backing out of its multiple sclerosis deal with Japan's Ono Pharmaceutical, deciding not to take the plunge on Phase III development for a drug that would face stiff competition.

Ono's ceralifimod--formerly ONO-4641--no longer meets Merck KGaA's "threshold for continued investment," the company said. The oral drug is a once-daily treatment for relapsing-remitting MS, and while it met its primary endpoint in a Phase II study, the partners agreed that market changes and the potential cost of late-stage studies made further development unwise, according to Ono.

Merck KGaA first got its hands on the treatment in 2011, handing Ono $20 million up front and agreeing to a slate of undisclosed milestone payments. The following year, ceralifimod aced its Phase II study, eliminating 92% of MS-caused brain lesions compared to placebo.

But that was before Biogen Idec ($BIIB) won FDA approval for Tecfidera, an MS pill that beat Novartis' ($NVS) Gilenya and Sanofi's ($SNY) Aubagio in safety and efficacy. After debuting in April 2013, Biogen's drug soared to blockbuster status in its first months on the market, bringing in nearly $1.5 billion and quickly becoming the standard of therapy.

Biogen's success creates a serious barrier to entry for oral MS treatments, and Merck KGaA, in the midst of a top-to-bottom rethink of its R&D investment strategy, sees no use in throwing more money at ceralifimod. Ono, now in sole possession of the drug, said it would "explore any further development."

The German drugmaker has now twice struck out in trying to develop a successor to Rebif, its MS-treating injection that is quickly losing ground to Tecfidera. Merck KGaA was once considered a leader in the race to commercialize the first oral treatment for the muscle-destroying disease with its candidate cladribine, but serious safety issues led to regulatory rejections in the U.S. and Europe, and the company nixed the program in 2011.

- read Merck's release (PDF)
- here's Ono's statement (PDF)