Will New Results on Merck and GSK's HPV Vaccines Ignite Sales Growth?

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Includes: GSK, MRK
by: Mike Huckman

A new study shows that Merck's (NYSE:MRK) Gardasil vaccine protects some young women from a strain of a sexually transmitted disease that can lead to cervical cancer for nearly a decade.

Up until now, there's only been evidence that the series of three shots for the human papillomavirus offers coverage out to five years. The new results from a test on nearly 300 women between 16 and 26 years old indicates the vaccine is still working for, on average, eight-and-a-half years. But overall, protection ranged from 7.2 years to as long as 9.5 years. The findings apply to just one of the four HPV strains covered by Gardasil, but it is one of the strains that is a leading cause of cervical cancer.

Dr. Laura Koutsky with the University of Washington's School of Public Health is quoted in a Merck press release as saying, "We are encouraged by the extended efficacy data for the HPV 16 component of Gardasil." Merck says it's a co-author of the original data and this new analysis which researchers presented at a scientific conference in Sweden Friday morning.

Merck is trying to reinvigorate sales of Gardasil which plummeted 33 percent in the first quarter. It is also hoping to win FDA approval of the vaccine for older women and young males who carry and transmit the virus.

Then, at 4:55 am on Friday, GlaxoSmithKline (NYSE:GSK) emailed a press release, containing the results of the first head-to-head study of GSK’s Cervarix versus Merck’s Gardasil. They’re the shots for the sexually transmitted virus that can cause genital warts and cervical cancer. MRK’s is already on the market. GSK’s has been delayed in getting there. The head-to-head results show Cervarix did pretty well. So, here was an opportunity for Glaxo to tout the efficacy of its potential challenger, but no one from the company bothered to give us a heads up about it.

Merck's test results came out at the same scientific meeting in Sweden at 2 a.m. ET. So, as is common practice between companies and reporters, its point-person reached out to us on Thursday and gave us an embargoed release well ahead of time. That gave me plenty of time to write some copy on it for CNBC.com to post as soon as the embargo lifted in the middle of the night.

The fight over efficacy isn’t the only battlefront here. Sales of Gardasil are going down. By its own admission, Merck is having a tough time getting females in their late teens and early- to mid-20s to get the set of three shots. It’s hoping to find a way to break through with that population and to win approval of the vaccine for older women and males to reignite sales growth. And Glaxo will be late getting into the game. JPMorgan pharma analyst Chris Schott wrote in a research note to clients Friday, “The larger issue for cervical cancer vaccines in the US is the relative stagnation of the US market. We forecast a decline in US vaccinations (and thus US market sales) in 2009 relative to 2008, with 2010 sales returning to roughly 2008 levels.”

Gardasil and Cervarix are given as shots in the arm. Friday, Glaxo kinda shot itself in the foot.

Disclosures: JPM has banked MRK and wants to do it again. It’s also a financial advisor on the MRK/Schering-Plough deal.