Merck's head-to-head Vytorin trial might be surprisingly flattering

Merck & Co. ($MRK) just disclosed some welcome news for its own investors--and potentially for competitors, too. Not to mention all the market watchers ready for the long IMPROVE-IT trial saga to come to an end.

The company says it got a peek at the long-awaited outcomes data from that trial, which tested Merck's cholesterol drug Zetia and its combo-pill cousin, Vytorin. And now that it has, Merck isn't expecting to write down those two meds as previously feared.

"The company has determined that the Zetia and Vytorin intangible assets are not impaired," Merck said in a Monday Securities and Exchange Commission filing. The company said it based that decision on the "unblinded" study data.

As Bernstein analyst Tim Anderson notes, most experts and investors figured that IMPROVE-IT would be a miss, thanks to questions about trial design and protocol changes. But those assumptions could be wrong. "[I]t increasingly appears to us that IMPROVE-IT might actually be positive," Anderson wrote in a Tuesday note to investors.

Good for Merck, obviously. But it could also be good for companies developing expensive next-generation cholesterol fighters, such as Amgen ($AMGN), which filed its PCSK9 inhibitor evolocumab with the FDA on Monday. If the IMPROVE-IT data is actually positive, then the case for lowering cholesterol to prevent cardiovascular catastrophe is strengthened further. Some cardiologists--and other outcomes studies--have questioned cholesterol numbers as "surrogate endpoints," i.e., lab tests and other present-day measurements accepted as proof of better patient outcomes in the long run.

The trial results have been a long time coming; outcomes trials aren't short-term projects. But this outcomes trial has been watched more closely than others. A previous head-to-head test, focused on arterial narrowing in addition to cholesterol numbers, found that the dual-drug pill Vytorin (which combines the Merck statin Zocor with Zetia) didn't beat monotherapy with Zocor.

That trial was a controversy in itself, but suffice it to say that sales of Vytorin and Zetia went into a downward slide. The drugs still broke the blockbuster barrier--they've together brought in more than $3 billion so far this year. But they were expected to deliver even bigger sales for Merck. And the doubts about Zetia's effectiveness have lingered; one Italian official went as far as to recommend against prescribing Zetia with statin meds.

As The Wall Street Journal points out, Merck said in a February SEC filing that if Vytorin failed to best Zocor in the IMPROVE-IT trial, sales could be "materially adversely affected," triggering a "non-cash impairment charge." The company knows whereof it speaks; it wrote down its hep C drugs PegIntron and Victrelis because new competitors in the field are stealing market share more quickly than expected.

Because of the questions about the IMPROVE-IT trial design, et al., even positive results would be subject to debate, however. Anderson suggests that the data might simply show a statistically significant reduction in cardiovascular risks, rather than an impressive one. Good enough to affirm the utility of aggressive cholesterol-fighting, but not enough to make the two Merck drugs--or Liptruzet, the new Zetia-Lipitor combo--into must-use products. Certainly not before they go off patent in 2017.

As for that set of new cholesterol fighters? Some have feared that the FDA wouldn't approve them without outcomes data. Even if the agency ushers the new meds onto the market, payers may demand that sort of data before agreeing to foot the bill. Pfizer plans a massive outcomes trial to prove that its PCSK9 not only works but also delivers value to payers. Sanofi ($SNY) and Regeneron ($REGN) are spending some half-billion dollars on an outcomes test for their version, alirocumab.

- read the Merck filing
- get more from the WSJ (sub. req.)

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