Merck & Co. confirmed on Friday that it had discontinued a second Alzheimer's disease trial developed under its partnership with Neuphoria Therapeutics, citing disappointing interim results. An independent monitoring committee reviewed the drug's efficacy data before the decision.

Shares in both firms fell sharply after the announcement, extending declines that began earlier in the week when the first trial cancellation became public. Neuphoria, a smaller biotechnology partner, saw its stock drop steeply as analysts questioned the future of the collaboration.

Merck said it would redirect resources toward other neuroscience programmes in its pipeline. The abandoned candidate targeted mechanisms distinct from the amyloid-clearing approach used by approved drugs such as Eisai and Biogen's Leqembi and Eli Lilly's Kisunla. The compound failed to demonstrate meaningful cognitive benefit in patients with early-stage disease, a hurdle that has defeated numerous experimental therapies over the past decade.

Analysts at Leerink Partners and other investment banks said the twin failures underscored the persistent difficulty of developing effective dementia treatments. They noted that the setbacks would intensify scrutiny of Merck's broader neuroscience strategy as the company seeks to diversify beyond its blockbuster cancer drug Keytruda, which faces patent expiry later this decade.

A Merck spokesperson said the company remained committed to research in neurodegenerative disease and would provide further detail during its next quarterly earnings call. Neuphoria said it would evaluate strategic options in light of the discontinued programmes.