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Merck, Ariad Pharmaceuticals' Cancer Drug Rejected by FDA


The US agency says it wants Merck to perform more human studies on the drug to prove safety and effectiveness. The treatment for the cancer sarcoma is licensed from Ariad.

MINYANVILLE ORIGINAL Merck's (MRK) experimental drug for the cancer known as sarcoma was shot down by the US Food and Drug Administration because the agency wants the company to perform more clinical research to prove the treatment is safe and effective.

The drug Taltorvic is aimed at treating patients with soft tissue or bone sarcoma who have received at least four cycles of chemotherapy. The drug is licensed from biotech company Ariad Pharmaceuticals (ARIA). The rejection isn't a big surprise as a panel of expert advisers to the FDA recommended against the medicine's approval in March.

Ariad licensed the treatment to Merck in 2010 and the big drug maker agreed to pay all costs related to the development, manufacturing, and marketing of the product, according to a securities filing. Ariad would co-market the drug in the US if it is ever approved. Merck paid Ariad $50 million in 2010 and another $25 million last year, the filing shows. The biotech company would get up to $514 million in milestone payments if the drug is approved in the US and Europe and meets sales goals.

While a rejection is a setback for both companies, Ariad investors are more focused on the biotech's lead experimental product, ponatinib for leukemia. Merck says it will continue to push for approval of the sarcoma therapy, which is also known by its chemical name ridaforolimus.

Shares of Ariad rose 3% to $16.68 in Wednesday morning trading. The shares are up 36% this year. Merck rose less than 1% to $37.57. The drug maker's stock dropped more than 3% in the past three months and is flat for the year.

(See Arena Pharmaceuticals, Pfizer, Bristol-Myers Squibb, Onyx Mark Key Dates in June and Medivation, Bristol-Myers Emerge as Winners After Big Cancer Meeting.)

Twitter: @brettchase

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