Merck Ends Testing of Substance P Depression Drug (Update3)
Bloomberg News
January 22, 1999, 7:24 p.m. ET
Merck Ends Testing of Substance P Depression Drug (Update3)
(Adds analyst comment, background)
Whitehouse Station, New Jersey, Jan. 22 (Bloomberg) -- Merck
& Co., the world's biggest drugmaker, halted tests of an
experimental antidepressant it was counting on to help make up
for loss of patent protection on some of its best-selling drugs.
Merck fell 7 5/16 to 139 after it announced the end of
testing for MK-869 drug against depression. Early studies didn't
provide enough evidence the drug works as an anti-depressant.
Instead, Merck will continue testing it for use in nausea in
cancer patients.
The drug, which works on a brain chemical known as substance
P, was seen as one of Merck's best prospects for offsetting the
loss of patents by 2001 on four drugs with more than $5 billion
in combined annual sales. These drugs include Vasotec with more
than $2 billion in annual sales.
''It's a major setback for Merck,'' said Mike Krensavage, an
analyst with Brown Brothers Harriman, who has a short-term
''neutral'' rating on Merck. ''The insurance policy they were
going to use against the patent exposures has been canceled.''
Merck has said it intends to rely on its own laboratories
and its alliances with smaller partners to come up with the new
products needed to get through the patents losses. Some of
Merck's rivals, such as Astra AB, instead are merging with other
drugmakers as patent losses near.
Still, analysts have not been impressed with the new
products Merck has introduced recently. Merck started sales of
five new medicines in 1998, including the once-a-day asthma
medicine Singulair, the anti-baldness pill Propecia and heart
drug Aggrastat. Although Singulair has done well, this crop of
new drugs might not provide an immediate replacement for
Vasotec's sales.
Merck Vulnerable
''Merck's in a very vulnerable position,'' said Alex Zisson,
an analyst with Hambrecht & Quist, who has a ''neutral'' rating
on Merck. ''Some of their launches, like Propecia and Aggrastat,
haven't done well.''
Now, Merck is looking to one drug alone, its experimental
painkiller Vioxx, analysts said. Vioxx, which is waiting for U.S.
approval, is part of a new class of drug that appear to treat
pain and inflammation without irritating the stomach as does
aspirin and other painkillers.
Rival Monsanto Co. last month won U.S. Food and Drug
Administration approval of a similar drug, Celebrex. It intends
to introduce the drug in late February, although doctors already
are writing prescriptions for it.
Relying on Vioxx
''Without MK-869, Merck will have to rely even more on Vioxx
and it's not good,'' to depend so much on one product, Krensavage
said.
Not only does Monsanto have a head start on Merck, Monsanto
has chosen a marketing partner, Pfizer Inc., that already has
beaten Merck in the marketing battle for a key drug.
Pfizer, which will work with Monsanto to sell Celebrex,
also helps Warner-Lambert Co. sell its cholesterol-reducing drug
Lipitor. Pfizer's assistance helped make Lipitor's 1997
introduction the best ever in the U.S. drug industry, a
record broken only by the 1998 introduction of Pfizer's impotence
pill Viagra.
Merck halted testing of MK-869 after the second of three
phases of testing needed to apply for U.S. Food and Drug
Administration approval of a drug.
In a release, the company said phase II trials of the
compound ''suggest'' it has anti-depressant activity, but that
the drug's effect was not significantly better than the effect
seen with a placebo sugar pill.
Merck's earlier studies had led investors and analysts to
speculate the drug might someday rival some of the world's top-
selling drugs, such as SmithKline Beecham Plc's Paxil. Depression
drugs are among the world's top-sellers. Eli Lilly & Co.'s Prozac
has annual sales of more than $2 billion.
''It's not good news, to say the least,'' said Hemant Shah,
an independent pharmaceutical analyst. ''This was regarded by
many analysts as the next big multibillion-dollar drug, mostly
because of its depression use,'' he said.
Building Expectations
Merck began building expectations for MK-869 in December
1997, taking the unusual step of highlighting early research
about the compound at its analyst meeting. Merck touted its
experimental drug ''as better than Prozac,'' Shah said.
Merck said today in a release that as it pursues development
of MK-869 for nausea, it will continue early trials of a
different, more potent compound that has shown promise in
treating depression.
A study published this week in the prestigious New England
Journal of Medicine found MK-869 to be effective at neutralizing
the waves of nausea and vomiting that most often strike cancer
patients as they are undergoing chemotherapy.
--Kristin Reed in Washington (202) 624-1858 and Kerry Dooley in
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