dimeLast year, Merck was the darling of the industry, as sales of some new products grew at a healthy clip and the company turned the corner in litigation over Vioxx. Shareholders rewarded Merck handsomely, driving its share price up 33% in 2007, making it the second-best performer in the Dow Jones Industrial Average.
Wyeth, meanwhile, couldn’t seem to do anything right, at least in the second half of 2007, when it had a string of pipeline disappointments, among other headaches. Its shares fell 13% over the year as its executives tried to do damage control.
But now, Merck can’t seem to break out of a streak of bad news — of course, Vytorin, but also some sales weakness of other products and failure to win approval of a new cholesterol drug[Cordaptive]. As of yesterday’s close, the shares were off 39% for the year, and they’re down another 11% in afternoon trading. [At Tuesday’s close, MRK shares are down 46% during 2008.]
In a conference call with investors today, Deutsche Bank analyst Barbara Ryan put it bluntly about Merck:
“This has been death by a thousand cuts this year, and every time you think it’s safe to step into the water and the stock is cheap enough, yet another surprise comes out — a negative one — and the stock goes lower still.”
Wyeth, meanwhile, is the one that’s on the upswing. Most significantly, its share price is being bolstered by investor hopes around an Alzheimers drug, bapineuzumab, the company is developing with Elan. “There clearly is a premium in the [share] price for the enthusiasm behind bapineuzumab,” Ryan said. Unlike a number of Big Pharma players, Wyeth’s shares are actually up so far this year, to the tune of 5%. That’s not huge, but it’s an accomplishment in a year of broad market turmoil.
Stay tuned next week when Wyeth elaborates on bapineuzumab’s mid-stage study results. So far they’ve looked good, but not great.‹
A study released this week held bad news for a Merck & Co. cholesterol drug, but another Merck drug may ultimately benefit from the development.
The study found that Abbott Laboratories' Niaspan was superior to Merck's Zetia in clearing clogged arteries. The study bolstered the case for a one-two punch against heart disease that marries Niaspan's ability to raise good cholesterol with the power of drugs known as statins to lower bad cholesterol.
But for a lot of heart patients, Niaspan's active ingredient, niacin, isn't easy to take. A side effect is flushing, which makes the skin red and itchy and is unpleasant enough to have limited niacin's use over the years. Doctors say users can mitigate flushing by taking aspirin first.
But Merck thinks it has a better answer to niacin's flushing problem. It has developed a version of niacin that comes with an agent designed to reduce the severity of flushing.
The drug, originally code-named MK-0524A, went on sale earlier this year in some countries outside the U.S. under the brand Tredaptive. Merck hasn't yet reported sales for Tredaptive.
But Merck has hit hurdles getting the drug to Americans. Last year, the Food and Drug Administration rejected MK-0524A[#msg-30170058], and the agency is unlikely to approve it before the expected completion by 2013 of a 25,000-patient trial tracking the drug's effect on risk for heart attacks and related events. Previous studies tracked only the drug's effect on cholesterol levels and flushing.
The exact reasons for the FDA's rejection of MK-0524A haven't been disclosed. But it may be that the agency was uneasy with the experimental anti-flushing agent. Merck previously acknowledged a theoretical risk of the anti-flushing agent hurting blood platelet function due to its mechanism of action.
Yale Mitchel, vice president of cardiovascular disease in Merck's research unit, said there has been no evidence of an effect on platelet function in clinical studies of MK-0524A.
Nevertheless, Merck and some analysts continue to believe the drug can eventually clear the FDA hurdle and become a big seller. Leerink Swann analyst Seamus Fernandez estimated the drug could generate $3 billion in peak annual sales. Barclays analyst Tony Butler thinks the Merck drug has potential to capture a bigger market than Niaspan due to the anti-flushing component.
"We knew niacin was a good drug. That's why we're so heavily committed to it," said Merck's Mr. Mitchel. He said Merck's compound tries to address the "flaw" in niacin's tolerability profile.
Abbott spokeswoman Elizabeth Hoff said flushing is a transient effect of niacin that can be managed by taking low-dose aspirin, having a low-fat snack with the drug and by taking Niaspan at bed time[as specified in the FDA label].
A Merck-funded study released last year found that people taking MK-0524A had less flushing than those on Niaspan.
Merck also is developing a single-pill combination of MK-0524A and simvastatin[this combo product is codenamed MK-0524B], the statin cholesterol drug that has been proved to reduce risk of cardiovascular disease.
Still, MK-0524A isn't a slam dunk--there's always a risk that the large trial due to be completed by 2013 will reveal a problem with the drug.‹
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