Merck's Oral Immunotherapy For Allergic Rhino-Conjunctivitis

| About: Merck & (MRK)

This year's meeting of the American Academy of Allergy, Asthma, and Immunology has been rather quiet from an investment point of view. While there have been scientific advances, few companies have presented exciting new data. About the only company with significant data was Merck (NYSE:MRK) that presented two abstracts on its oral/sublingual immunotherapy in allergic rhinoconjunctivitis. It was interesting that the data was presented as posters and not in a plenary session - whether that was because AAAAI is trying to limit the reach of pharmaceutical companies or because the academy did not consider the data particularly significant, I don't know.

ARC is a common disease in the Western world, with estimates of prevalence ranging from 15% to 25% and a market in excess of $10 billion. Just about anything can lead to sneezing, watery eyes and nose, itchy eyes and nose, and the drip, drip, drip down the back of the throat. Common causes include pet dander, grasses, mold, dust mites, tree pollen and weeds. ARC is initially treated with oral anti-histamines, nasal steroids, and nasal anti-histamines (and rarely oral steroids). If those don't work, a trip to the friendly allergist becomes painfully necessary who then proceeds to inject the allergen into the suffering patient in weekly or lesser intervals to convince the immune system to change from an allergic phenotype to a non-allergic phenotype. The problem is that sub-cutaneous immunotherapy (SCIT), celebrating 100 years this year, is painful, inconvenient, and expensive. So the hunt has been on for a way to achieve the same results with oral immunotherapy (OIT) or sub-lingual immunotherapy (SLIT).

Merck has conducted two programs with its OIT/SLIT program - one with Ragweed and the other with Timothy Grass, each among the common allergens afflicting those with ARC.

The first program was with a sublingual Ragweed formulation. Two Phase III studies were presented. The first was a placebo controlled double blind study in subjects with ARC with or without asthma, comparing three doses of the Ragweed formulation to placebo over 52 weeks. The trial was conducted in U.S., Canada, Russia, Ukraine, and Hungary. 784 subjects were randomized equally into four cohorts and evaluated after one year of treatment. In all endpoints tested, including daily total combined score, daily medication score, and daily symptom score, there was an improvement of treated cohort over placebo cohort, with the highest dose showing statistical significance in all parameters tested. Treated cohorts had more numerical safety issues than placebo, especially with pruritus in ears, throat, tongue. A second Phase III study with 560 subjects was conducted in only North America with similar results.

Another poster detailed two Phase III studies with oral Timothy Grass tablets. These studies were conducted in the U.S. only, one with adults (439 subjects) and the other with kids (345 subjects) suffering from ARC with or without asthma. The randomization was 1:1 of experimental cohort versus placebo. The OIT was able to reduce nasal and ocular symptoms in adults and kids, though not all experimental cohort scores at all time points were statistically significantly superior to placebo. The safety profile was similar to the previous program, with numerical increase in pruritus, mouth edema, stomatitis and erythema.

Several interesting observations stand out:

1. Efficacy was modest, not knock your socks off. The efficacy could have been better understood had there been a positive control arm of SCIT. It is understandable why Merck did not do that - if SCIT would have been better, it could have killed the drugs. Also, the studies would have been logistically more difficult to do, especially blinding and double dummy medications. An alternative would have been to compare to an anti-histamine, since these patients were not taking anti-histamines during the study but only as rescue medications.

2. Safety issues do exist: though the SLIT/OT was better than SCIT, it was not as good as anti-histamines. Again, since this was not a head to head study, it is hard to say, but using historical data, anti-histamines appear safer.

3. From a practical viewpoint, who will prescribe these drugs? Allergists would be reluctant to - after all, they make a living off skin tests and allergy shots. What incentive do they have to change, especially with the efficacy not being exceptional?

4. Another practical consideration - most patients suffer from multiple allergens. So if they have allergies to cats and Ragweed, they would still have to go to the allergist for SCIT to cats. How does this SLIT/OT help that patient?

5 Looking into the future, lets say Merck or some other company is able to develop OIT for multiple allergens, lets say cats, Elm, Sycamore, Sorrell, Rye Grass, Fescue Grass and Ragweed. Are patients going to pop a different pill for each allergen? At least for SQIT one shot can have all the allergens. Or are they going to be able to combine these allergens into a single pill?

To summarize, this is a interesting advancement, but not one I would bet the farm on. It is to be seen if this goes down the H2 blockers pathway (where Tagamet, the first H2 blocker, quickly became history as others were developed), the SERM pathway (with Evista still being the only SERM approved, despite the attempts of many others, but with modest sales), the COX2 inhibtor pathway (with Celebrex the only player with great sales) or the Statin pathway (with many players and good sales).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.