Merck announces R&D restructuring after the decision to discontinue the diabetes projekt

02-Jun-2003

In a strategic move to focus clinical development resources even more strongly on its oncology pipeline, Merck KGaA announced today that the company has decided to discontinue further development of two early-stage diabetes projects. The decision involves EML 16336, an insulin mimetic that stimulates glucose uptake, and the aldose reductaseinhibitor IDD 676. Development of both projects has already been on hold since an interim analysis in the first quarter of this year.

The decision follows an announcement made already at the company's Annual General Meeting in March 2003, when Merck CEO Bernhard Scheuble told shareholders that Merck decided to discontinue the cost-intensive development of another anti-diabetic drug, EML 16257, an agent that

"Over the last months, we have seen a lot of good reasons for increasing optimism in Oncology, together with in Diabetes. As a consequence, we have to focus our development efforts even more strongly," Scheuble commented.

As a result, Merck is currently investigating different options regarding its pre-clinical research and clinical development capacities. In the area of Diabetes, R&D activities are mainly located in France. This effort comes in addition to the already announced performance review of its international Pharmaceutical production and supply chain organization. This and the R&D restructuring will lead to exceptional charges.

Merck KGaA also announced today that it has reviewed potential litigation risks and determined that it may post additional exceptional charges in 2003. Merck is involved in on-going legal proceedings in the US and elsewhere, amongst other, through a subsidiary, in regard of allegedly flawed price reporting in connection with the Medicaid health benefits program funded by the US federal government and the states.

Merck expects exceptional charges for Pharma restructuring and in the area of litigation totaling to EUR 100 million to 200 million. Merck refused to give any further specification of this figure.

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