The 7% drop in Merck & Co’s (NYSE:MRK) shares Thursday to $34.69 seems justified following news that the company is significantly scaling back pivotal research on the anticoagulant vorapaxar. The likelihood that the drug does not work or is unsafe threatens the prospects of the New Jersey group’s biggest pipeline hope and raises new questions about the value of the 2009 merger with Schering-Plough (SGP), the candidate’s originator.
Analysts have downgraded or removed vorpaxar from their forecast models, a significant blow as its net present value of $4.77bn equalled 4% of the company’s market capitalization. As more than $3bn a year in sales is under threat because of legal action by Johnson & Johnson (NYSE:JNJ) over Remicade, vorapaxar’s setback could not have come at a worse time.
The data safety monitoring board (DSMB) overseeing two vorapaxar trials called a halt to the 13,000-patient Tracer trial in acute coronary syndrome and the end of dosing for 6,000 stroke patients in 26,500-patient Tra-2P trial in myocardial infarction, stroke and peripheral arterial disease. Merck executives were tight-lipped about the reasons behind the DSMB's decision, saying they wanted a fuller look at the data before discussing more.
The DSMB disclosed little in its statement, other than that a “target number of endpoint events had been reached,” while the Tra-2P trial's chairman, Dr Eugene Braunwald, was quoted as saying "It (vorapaxar) does not appear to be appropriate in patients who have had a stroke."
The scuttling of the research suggests that either the drug simply did not work or that in those populations there was an elevated risk of bleeding, naturally one of the chief dangers of anti-clotting agents. Most analysts seem to be concluding the latter, with either the revelation of a clear safety signal or a signal sufficient enough that, taken in the context of weak efficacy, did not justify exposing patients to more risk.
Either way, the damage is done – at a minimum, those subpopulations can be written off, and at worst the drug is dead. Further negative news on vorapaxar is bound to affect the remaining clinical programme, as excessive dropouts from the Tra-2P trial could threaten the integrity of the final data.
Losing an edge
Thought to be key to Merck’s future, vorapaxar was brought on board with the $41bn Schering-Plough merger and was a source of much excitement about the tie-up (Schering-Plough clotting drug another bonus in merger, March 16, 2009). It was thought the drug would accomplish what others cannot – a drug that would prevent life-threatening blood clots in patients undergoing angioplasty without increasing risk of major bleeding.
Safety, particularly as it relates to uncontrolled bleeding, has been the major focus in the anticoagulant space in recent years, as drugmakers have jostled for the crown of Plavix, which loses patent protection later this year. Boehringer Ingelheim’s Pradaxa and Bayer’s Xarelto are two which are entering the space in various indications.
The extent to which they would come into direct competition with vorapaxar is not perfectly clear as neither of those two drugs has been approved in all of the indications it has been tested in. Suffice it to say that they all seek to prevent cardiovascular complications by thinning the blood and all had similar expectations built around them: EvaluatePharma consensus forecasts put Pradaxa at $2.4bn and Xarelto at $3.3bn in 2016 sales, and vorapaxar at $1.8bn, a number that is sure to shrink with upcoming forecasts.
Vorapaxar, then, looks like representing a significant missed opportunity for Merck, and it will certainly make the purchase price seem a bit high (Merck succumbs to urge to mega-merge, March 9, 2009).
In a note Friday, analysts from Leerink Swann removed vorapaxar from their Merck forecasts, lowering company sales by $1.95bn in 2016, while analysts from Bernstein Research knocked 75% from their vorapaxar forecasts, from $1.2bn to $300m.
The fact that research continues on the MI and peripheral arterial disease populations in the Tra-2P populations suggests the agent could be salvageable; however, ambitions to file for approval this year clearly have to be tempered.
Analysts from Bernstein note that other than hepatitis C therapy boceprevir, there are no other pipeline hopes for which Merck can rely on to generate excitement – and even boceprevir at this point is considered second-best in the current crop of hep C candidates (Merck playing catch-up with boceprevir hep C data, August 5, 2010).
Thus the ongoing arbitration with J&J over Remicade and Simponi is crucial - a legal issue that emerged when Merck reversed into Schering-Plough in 2009 (Merck continues to play down J&J arbitration but risk remains, August 3, 2010). The current view seems to be that Merck will win, but anything less than an outright win will damage Merck’s shares once again.
The only glimmer of light in the vorapaxar news was that 20,000 of the 26,500 TRA-2P patients continue in the trial. While this may be of some consolation to Merck executives, the news is about as bad as it gets.
Trial IDs ||Tracer ||NCT00527943 |
| ||Tra-2P ||NCT00526474 |