Merck to Seek 5 New Drug Approvals This Year

12.05.2010 -

Merck & Co plans to seek approval for five new medicines this year, including a closely watched hepatitis C treatment, but has halted development of an experimental anemia medicine, the company said on Tuesday.

At a business briefing for Wall Street, the world's second- biggest drugmaker also projected that more than 25% of its pharmaceutical and vaccine sales would come from emerging markets by 2013 - up from the current 17% - as the industry makes a big push into developing countries. But its shares fell nearly 1% as analysts said no major positive new developments had emerged from the highly anticipated event - the first such meeting for analysts and money managers since Merck completed its acquisition of Schering-Plough in November.

There is nothing "genuinely new or surprising out of the meeting," Leerink Swann analyst Seamus Fernandez said.

The company, which has four other new drugs already under review by U.S. regulators, reaffirmed it intends to increase its focus on biotechnology drugs. It is working to develop its own versions of currently marketed biotech drugs, known as "biosimilars," and still expects to have five in late-stage tests by 2012. But it has halted development of a long-acting form of erythropoietin - an anemia drug similar to blockbuster brands sold by Johnson & Johnson. Merck said it dropped the medicine after weighing which of its experimental drugs was most worthy of being developed.

Merck also said it expects business from emerging markets to drive future growth as diseases typically associated with developed markets, such as diabetes and heart disease, become more and more prevalent in developing nations. It already has a 3,000-strong sales force in China, Merck told investors - an increase of 90% since 2007.

Merck paid $41 billion for Schering-Plough in November after a number of Merck's own medicines failed clinical trials or suffered damaging setbacks during the past few years, including drugs for asthma, heart failure, obesity, migraine headaches and to raise "good" HDL cholesterol. The company said it had completed commercial integration in the majority of top markets in just six months.

"Layering on Schering-Plough's pipeline, it just adds considerable breadth and depth," said Robert Hazlett, an analyst for BMO Capital Markets. "Put all together, Merck has a number of opportunities to grow through the decade."

Experimental drugs acquired in its merger, including a blood clot preventer known as Thrombin Receptor Antagonist, or TRA, and boceprevir, a promising treatment for hepatitis C, have fortified Merck's late-stage drug pipeline.

"We need to see those clinical programs roll the right way for them. TRA is obviously the big one," said Les Funtleyder, an analyst for Miller Tabak & Co. Merck research chief Peter Kim said none of the patients who appeared to have been cured by adding boceprevir to current treatments have relapsed after two years of follow-up. The company also reiterated its commitment to heart medicines, an area that several drugmakers have made less of a priority as more cholesterol and blood pressure treatments become available in cheap generic forms.

"That's one area they're really strategically diverging from everyone else," said Avik Roy, an analyst with Monness, Crespi, Hardt & Co. But Roy noted that cardiovascular research is risky because of the large, lengthy clinical trials required, significant safety hurdles and widespread generic competition. "That's a roll of the dice," he said.

Merck will continue to roll the dice with anacetrapib, an experimental drug to dramatically raise good cholesterol from a class tainted by Pfizer torcetrapib - the most expensive clinical failure in pharmaceutical industry history.

"We have spent a lot of time studying this mechanism and these issues," Kim said of the safety problems that sank the Pfizer drug. "We do not have the toxicities. We are moving forward with confidence that we don't have a torcetrapib effect."

Merck, with more than 20 drugs now in late stages of development, has been deemed since the Schering-Plough merger to have one of the industry's best drug pipelines. The company plans to begin late stage trials of its experimental treatment for Parkinson's disease, preladenant, this year. It also has high hopes for an osteoporosis drug, odanacatib, for which it expects to seek approval in 2012.

Even so, analysts had been hoping the company would provide some unexpected favorable information at Tuesday's meeting. Merck's shares were down 28 cents, or 0.8%, at $33.97 in afternoon trading on the New York Stock Exchange, lagging the the Arca Pharmaceutical Index of large U.S. and European drugmakers, which was up 0.6%.

"Part of the reason is the negative reaction to the biosimilar (being abandoned)," Monness' Roy said. "That's really the major news flow we've had this morning."