Seeking Alpha
Long/short equity, biotech, healthcare
Profile| Send Message|
( followers)  

There are three selective benzodiazepine-like drugs on the market for insomnia. The first on the market, Zolpidem (Ambien and Ambien CR) was marketed by Sanofi-Aventix (NYSE:SNY). Zaleplon (Sonata) is made by King Pharmaceuticals and Eszopiclone (Lunesta) is made by Sunovion. The drugs are chemically distinct from benzodiazepines, but the pharmacological mechanism of action is the same as the benzodiazepines. The benzodiazepines and non-diazepines are positive allosteric modulators of GABA-A receptors. In a nut shell, they enhance the action of endogenous GABA, the major inhibitory neurotransmitter in the CNS and, simply put, reduce firing rates of neurons involved in wakefulness and anxiety. However, the non-benzodiazepines drugs approved for sleep disorders selectively bind GABA-A receptors that have the alpha 1 subunits, whereas the broader family of diazepines bind most to most of the receptors in the GABA-A receptor family. Because of their selectivity, Zolpidem, Zaleplon, and Eszopiclone promote and maintain sleep, but are less habit forming and less likely to have anxiolytic effects than the broader benzodiazepine class of drugs. But there are still adverse effects, next day drowsiness, sleep walking, and dependency to mention a few. A drug with reduced adverse effects, especially a drug that did not require DEA scheduling, could have blockbuster sales. Merck (NYSE:MRK) is developing a drug, suvorexant, for sleep disorders with a novel mechanism of action that may meet these criterion. Suvorexant has completed a phase 3 trial.

Sales of prescription sleep aids, mostly these three drugs, Zolpidem, Zaleplon, and Eszopiclone, were around 3.6 billion in 2006. But on April 23, 2007, the FDA approved 13 generic versions of Zolpidem, which caused a decrease in sales to around $2 billion by 2010. Also, Eisai's (OTCPK:ESALY) Lunsesta faces a 2012 patent expiration. Sales of the prescription drugs, Ramalteon (Rozerem) from Takeda (OTCPK:TKPHF) and Doxepin (Silenor) from Samaxon (NASDAQ:SOMX) are not significant by comparison. Rameltion is a melatonin agonist which works by the same mechanism as over the counter melatonin supplements and Doxepin is an antihistamine which works by a mechanism similar to diphenhydramine (Benadryl). It's difficult to estimate if an effective drug for sleep disorders could take a serious bite out of the current $2.7 billion plus market, or, on the other hand, achieve sales similar to the former $3.6 billion plus. Merck's drug, suvorexant, has just met most goals in a phase 3 trial amd Merck expects submission for approval in late 2012. Suvorexant is an Orexin antagonist. Orexin is a hormone involved in maintaining wakefulness or consciousness. Blocking Orexin promotes sleep. In a disorder opposite insomnia, narcolepsy, patients have lost the ability to produce Orexin in a specific area of the brain. Research on th potential for an Oexin agonist for narcolepsy is only in preclinical research.

Breaking news was presented at the Sleep 2012 conference in Boston. According to the pharmaletter, "suvorexant significantly reduced the time it took patients to fall asleep and increased the time that patients stayed asleep as early as the first night and at the three-month time point compared to placebo. The investigational drug met statistical significance for all primary endpoints except for one measurement at month three in one of the trials." Also, the drug seemed well tolerated and was effective up to a year. Also from available online abstracts from the Sleep 2012 meeting, side by side comparison with Zopiclone revealed that Suvorexant did not and Zopiclone did impair daytime driving. Zopiclone is a racemic mixture, sold in other countries. Lunesta is the active enantiomer in this mixture. According to the pharmaletter, "Merck plans to file a New Drug Application for suvorexant with the US Food and Drug Administration in 2012".

According to Reuters, Merck plans to seek approval for two cardiovascular drugs in 2013 and trials of Anacetrapib, which raises HDL cholesterol (the good cholesterol). Anacetrapib could be the first drug in this class approved ( see Seeking Alpha for a discussion of CETP inhibitors). Lily (NYSE:LLY) is developing Evacetrapib. Currently under review, Merck is currently seeking approval of a combination drug, ezetimibe and atorvastatin, for treating hyperlipidemia. These drugs are just part of Merck' pipeline. According to Yahoo Finance, Merck's current PE is about 19. Not cheap by any means, but an analysis of Merck's pipeline is warranted. Merck, like most large pharmaceutical companies has seen fluctuating growth, and share price, for the last decade. Deciding to buy Merck shares, basing a large part of the decision on Merck's pipeline, will require analysis of loss of revenue from drugs coming off patent and the potential for new drugs being approved and revenue from these drugs. Suvorexant is potentially a drug that could have multibillion dollar revenue for Merck and should be part of this continuing analysis of Merck's pipeline, stay tuned.

Source: Merck's Next-Gen Sleep Disorder Drug - A Blockbuster?