Merck ($MRK) scored a muted victory on Wednesday when the FDA approved its insomnia remedy suvorexant at four doses--the largest of which is half what the company initially hoped to be able to market. The drug, which will be sold under the brand name Belsomra, was initially rejected by the FDA a year ago because of concerns that at high doses, it could cause next-day drowsiness and raise the risk of car crashes. The FDA said it asked Merck to do driving studies with patients taking what would ultimately become the largest approved dose, 20 mg, and the agency was concerned about the results.
"The testing showed impaired driving performance in both male and female participants when the 20-mg strength was taken," a statement from the FDA said. "Patients using the 20 mg-strength should be cautioned against next-day driving or activities requiring full mental alertness."
Analysts expect that the FDA's cautiousness will limit Belsomra's market potential. The drug is now expected to bring in about $305 million in sales in 2017, compared to the $516 million that was forecast prior to the FDA's negative verdict last year, according to 6 analyst estimates compiled by Bloomberg.
Belsomra is the first FDA-approved insomnia drug that works by targeting orexins, chemicals in the brain that promote wakefulness. Other widely used sleeping pills, such as Sanofi's ($SNY) Ambien and Sumitomo Dainippon Pharma's Lunesta, work instead by inhibiting GABA--a mechanism of action that promotes sleep but that can also interfere with memory, attention, and cognition.
Last spring, Merck scientists told the media they had animal studies showing that Belsomra was less likely to cause those adverse events, but the FDA isn't buying it: The statement warns that the drug is just as likely to cause people to perform complex tasks while not fully awake, such as driving, eating, and making phone calls. That warning, coupled with the low approved doses, could make it challenging for Merck to compete against older sleep medicines, many of which are available as generics. Sales of sleep aids totaled $1.5 billion last year, with the bulk of prescriptions being written for generic Ambien, according to data compiled by Bloomberg.
Merck has made it clear it's counting on much more than Belsomra to boost its top and bottom lines. During the company's recent quarterly earnings call, R&D chief Roger Perlmutter instructed analysts to focus on the company's plans to boost its research spending in the second half of the year. Among the potential upcoming milestones Perlmutter cited were Merck's accelerated filing for its PD-1 immuno-oncology drug pembrolizumab and its plans to speed up a hep C trial combining two Merck drugs with Gilead's ($GILD) runaway blockbuster Sovaldi.