Merck Rises Most Since 2009 on Seeking FDA Drug Approval

Jan 13, 2014 4:24 pm ET

(Updates shares in second paragraph.)

Jan. 13 (Bloomberg) -- Merck & Co. rose the most in almost five years after saying it will seek early approval of a new cancer treatment and decide the future of the company’s animal health and consumer businesses this year.

Merck gained 6.5 percent to $53.12 at the close in New York time, the biggest one-day increase since March 2009. Merck, the second-largest U.S. pharmaceuticals company, said it has started the regulatory application for approval of MK-3475 for skin cancer, and the experimental treatment might also be used in lung cancer.

“The news today in advanced melanoma is encouraging, the larger market opportunity for PD1/PDL1 antibodies is in lung cancer and other tumors,” said Mark Schoenebaum, an analyst with International Strategy & Investment Group LLC, referring to the class of immune system-based treatments.

The full application may be with the U.S. Food and Drug Administration in the first half of this year, Merck said in a statement today. The medicine would be used after patients have failed other therapies. The Whitehouse Station, New Jersey-based company plans to decide what to do with the animal health and consumer businesses by the end of the year.

Different Decisions

Merck will “determine the most value-creating option for each and could reach different decisions about the two businesses,” according to the drugmaker’s statement. “The company expects to complete the process and take action, if any, in 2014.”

The U.S. company is said to be in talks with Novartis AG to trade its consumer business for the Basel-based drugmakers vaccines and animal health units. The swap would fit strategies at both companies -- and within the industry -- to focus on core strengths and get rid of other business lines. The companies may each trade about $5 billion in assets to do so, said one of the people, who asked not to be named because the process is private.

Merck has struggled as the company’s top product, the diabetes pill Januvia, has sold below analysts’ expectations. Third-quarter sales of the drug fell 5 percent to $927 million from a year earlier.

--Editors: Bruce Rule, Reg Gale