DUBLIN – Merck KGaA is terminating its interest in ATX-MS-1467 just ahead of a read-out from a phase II trial in multiple sclerosis and is handing back global rights to its original developer Apitope International NV.

The timing of its move would appear to indicate that Merck's decision is driven by strategic considerations rather than a loss of faith in the potential of the asset. "Merck has been involved in a lot of portfolio review," Keith Martin, CEO of Diepenbeek, Belgium-based Apitope, told BioWorld Today. "Looking at their pipeline, they've made a decision about where they prioritize their resources."

During an investor event last week, Darmstadt, Germany-based Merck outlined its roadmap to 2022, which is targeting €2 billion (US$2.2 billion) in additional sales from new product or indication approvals. A sizeable fraction of that number is expected to come from avelumab, its PD-L1 inhibitor, which is nearing its first regulatory submission, in metastatic Merkel cell carcinoma, a rare type of skin cancer. In all, nine pivotal studies of the drug – the principal asset Merck's global immuno-oncology alliance with New York-based Pfizer Inc. – are underway.

Apitope has welcomed the move as it now has complete control over the development trajectory of the asset. MS is a crowded market these days, but the company is positioning ATX-MS-1467 as a safer alternative to some of the current therapies that have powerful immunosuppressive effects but also accompanying safety risks. The drug, which consists of a cocktail of four peptide epitopes derived from myelin basic protein (MBP), acts by inducing immune tolerance in a highly selective fashion, targeting autoimmune CD4+ T cells that recognize the same epitopes. "We can very specifically switch those off while keeping the rest of the immune system intact," Martin said.

Each of its peptides can bind a major histocompatibility complex (MHC) class II receptor on the surface of immature dendritic cells. In the absence of a B7-mediated co-stimulatory signal, the interaction between these dendritic cells and naïve T-cells triggers the differentiation of the latter into regulatory T-cells that recognize the same MBP epitopes. These down-regulate effector T-cells that are also MBP-specific.

The original deal, which the two companies entered in 2009, had a total potential value of €154 million (US$169 million). Apitope is not divulging the amount of funding it actually earned under the agreement. "We did receive the up-front payment and the phase II milestone – and significant research funding," Martin said. Merck is conducting the current trial, and it will close out the study and conduct the analysis before handing back the program to Apitope.

The handover will introduce another delay in the drug's development. Although ATX-MS-1467 has been in clinical development for almost a decade, it has yet to be tested in a controlled trial – all of the studies conducted to date have been open label. Assuming the upcoming data are good, the company will spend most of 2017 preparing for a placebo-controlled phase II trial and raising finance for the study. It is open to another deal or to further equity funding, Martin said. It closed a €12 million Series B round last year, although that cash was earmarked for two other pipeline programs, focused on treating "inhibitors" – reactive antibodies – to Factor VIII in hemophilia A and on Graves' disease.

MS remains a core focus for Merck, notwithstanding its withdrawal from the Apitope alliance. Rebif (interferon-1a) is still its top-selling product. The venerable drug – it first gained approval in Europe back in 1998 and in the U.S. in 2002 – attained sales of €441 million in the second quarter, down slightly from the €461 million for the same period in 2015.

Although it is losing market share to new competitors, price increases have lessened the impact on the company's top line. A second MS asset, the oral purine analogue cladribine, which is currently used for hematological cancers, is undergoing regulatory review in Europe in MS. The drug has several decades' worth of clinical history in MS. The EMA rejected an application in 2010 because of the emergence of several cancer cases in the treated population. Merck rebooted the process last year, when further research allayed the cancer fears.