Merck stock tumbled below its 50-day moving average Thursday after the Food and Drug Administration rejected its Daiichi Sankyo-partnered cancer drug.
If approved, this would have been Merck's first antibody drug conjugate to hit the market. Antibody drug conjugates, or ADCs, send toxic chemicals directly to cancer cells, limiting the damage to healthy nearby tissue. Merck paid Daiichi Sankyo $4 billion upfront last October as part of a deal worth up to $22 billion to collaborate on ADCs for various types of cancer.
The companies developed their drug, patritumab deruxtecan, for patients with an advanced form of lung cancer. But the FDA rejected the drug, citing problems discovered at a third-party manufacturing facility. The agency didn't note any issues related to the safety or effectiveness of the drug.
On today's stock market, Merck stock toppled 1.3% to 129.82. Shares slumped below their 50-day moving average, while still forming a flat base with a buy point at 133.10, according to MarketSurge.
Merck Stock: ADC Space Heats Up
The market for antibody drug conjugates heated up last year, helped by Pfizer's $43 billion acquisition of Seagen.
Consulting firm DeciBio noted there were 76 ADC deals last year.
Merck and Daiichi Sankyo's drug would be a first-in-class antibody drug conjugate targeting a protein known as HER3. They are aiming to treat patients whose advanced or metastatic lung cancer has a mutation in the EGFR gene.
These patients often experience cancer recurrence and have limited treatment options, said Marjorie Green. Green is Merck's senior vice president and head of oncology global clinical development.
"We are committed to working with Daiichi Sankyo and the FDA to prioritize making patritumab deruxtecan available to these patients in need," Green said in a statement.
Merck stock has an improved Relative Strength Rating of 81. This means shares rank in the leading 19% of all stocks when it comes to 12-month performance, according to IBD Digital. A month ago, the stock had an RS Rating of 70. Six months ago, it was 27.
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