Merck KGaA (MKGAY) shares tested one-year highs Friday after the U.S. Food & Drug Administration approved rare form of skin cancer treatment that could cost patients as much as $13,000 per month.
The FDA said late Thursday that Merck, along with Pfizer Inc. (PFE) - Get Report , can begin treating patients with metastatic Merkel cell carcinoma, a rare and aggressive form of skin cancer, with a new drug called Bavencio.
Rvials Bristol-Myers Squibb (BMY) - Get Report, Merck & Co (MRK) - Get Report. and Roche Holding AG (RHHBY) all have similar treatment forms on the market, while AstraZeneca plc (AZN) - Get Report is awaiting final approval. However, Bavencio will treat patients suffering from the disease after it has spread to other parts of the body, making it the only drug approved to do so by the FDA.
Merck KGaA CEO Stegfan Oschmann called the approval "a very important milestone for our company and for patients who have had very few therapeutic options for treatment of this potentially fatal disease," in an interview with Bloomberg TV.
The drug was developed with Pfizer as part of an agreement from 2014 that paid Merck $850 million at the time, with the potential to receive regulatory and commercial milestone payments up to approximately $2 billion," according to a statement.
"Both companies will jointly fund all development and commercialization costs and all revenues obtained from selling any anti-PD-L1 or anti-PD-1 products generated from this collaboration will be shared equally," the statement said. Bavencio is the commercial name for the human anti-PD-L1 antibody.
Treatment costs range from between $6,000 and $13,000 per month, according to industry research group QunitilesIMS, while the FDA says around 1,600 patients are diagnosed with Merkel cell carcinoma each year.
Merck shares were marked 2.88% higher from Thursday's close at €105.20 each, extending their three-month gain to around 6.17%, modestly ahead of the 5.63% advance for the Stoxx Europe 600 Health Care Index.