Zetia trial worries deflate Merck

Are investors and analysts jumping to conclusions about the halted Niaspan/Zetia trial? As Merck's shares dropped on news that the study was stopped early, a Deutsche Bank analyst said that the negative reaction was "extremely premature and probably unwarranted." After all, there's no public information about just why the trial was stopped, besides an assurance that it wasn't for safety reasons.

Other analysts had predicted that the trial was stopped because it showed the superiority of Zetia competitor Niaspan, made by Abbott Laboratories, which partly funded the trial. One analyst, Jon LeCroy of Natixis Bleichroeder, went so far as to downgrade Merck shares.

Not so fast, Deutsche Bank's Barbara Ryan says. "If the study were terminated for overwhelmingly positive result from Niaspan, I would expect that Abbott would have announced that," Ryan pointed out to Reuters. (Abbott maintains that it doesn't know why the trial was stopped, however.)

Of course, as JP Morgan's Chris Schott notes, the data themselves might not even be significant. But that doesn't mean the news won't drive Zetia down: "As we have seen in the past, media scrutiny/reaction can have more of an impact on the cholesterol franchise than the relevance of clinical data." He's referring, of course, to the series of studies last year of Zetia and the Zetia combo drug Vytorin, which attracted beaucoups media attention and seriously stalled the growth of both drugs. We'll have to wait and see what this latest data actually says--and just how it affects the drugs themselves.

- get Matthew Herper's take in Forbes
- check out the PharmaTimes piece
- read the Reuters story