Merck tanks after it says MS drug fails in late-stage trials

** Shares in Merck MRK sink 11% in early Frankfurt trade after the pharmaceutical company said its experimental multiple sclerosis drug evobrutinib did not meet the primary goal in late-stage trials

** The company said evobrutinib failed to reduce the annualized relapse rate compared to Sanofi's SAN Aubagio in patients with relapsing multiple sclerosis (RMS) in the Phase III trial

** J.P.Morgan says that taking evobrutinib's sales out of the picture could potentially lead to a 1% impact on 2025 group sales, rising to 3% for 2028-2030

** The broker estimates a 2% impact on group EBITDA (pre) rising to a 8-9% for 2028-2030, assuming no offsetting cost savings

** JPM also anticipates that Merck could take a provision for the close out of the trials with fourth-quarter results, which could reduce EBITDA (pre) for 2023 by around 2% to around 5.8 billion euros ($6.26 billion)

** It sees a potentially limited read-across to the other BTK inhibitors trials in RMS in development from Sanofi SAN, Roche RO and Novartis NOVN

** "We retain our concern that these assets are all high risk in RMS given the risk of liver injury and the partial clinical holds place on the development programs for the FDA for the Sanofi and Roche products" - JPM

** HSBC cuts its rating on Merck to "hold" from "buy", trimming its PT by 8% to 170 euros

($1 = 0.9272 euros)