Merck & Co. plans to file five new drug applications this year

Merck & Co. plans to file five new drug applications this year but said it has ended development of its first stab at a follow-on biologic drug, illustrating the risks of this emerging field.

At a meeting with analysts and investors Tuesday, executives touted the company’s drug research pipeline, newly enriched by its $49.6 billion takeover of Schering-Plough in October. The deal was meant to address what had previously been a gap in Merck’s late-stage pipeline of experimental drugs. Merck plans to file for regulatory approval of drugs to treat diabetes, hepatitis C and cancer this year.

But Merck also disclosed a setback in its young foray into the market for so-called “follow-on biologics.” These are new versions of existing biotechnology-style drugs, which are derived from living cells as opposed to the chemicals at the core of most traditional drugs. The segment has drawn the interest of large drug makers including Merck and rival Pfizer Inc.

Merck had announced in 2008 the formation of a new unit, Merck BioVentures, dedicated to follow-on biologics. At the time, it said its first project was MK-2578, a new version of Amgen Inc.‘s blockbuster Aranesp antianemia drug that it hoped to begin selling in 2012.

But on Tuesday, Merck said it discontinued development of the drug because it learned that regulators would require an assessment of the drug’s effects on cardiovascular health for approval, given recent safety concerns about antianemia drugs.

“This additional requirement would entail substantial commitment of resources and, most importantly, result in significant delay,” Peter Kim, president of Merck Research Laboratories, said at the meeting at Merck’s headquarters in Whitehouse Station, N.J.

Miller Tabak analyst Les Funtleyder said he wasn’t surprised regulators would ask for safety data since this class of drugs had experienced numerous safety issues in recent years.

He said the initial selloff in Merck shares Tuesday probably had more to do with investor disappointment that Merck didn’t reveal more new drugs in its pipeline.

Still, Merck plans to continue its push into follow-on biologics, which Mr. Kim said would be aided by provisions of the recently enacted U.S. health-care overhaul. Also, he noted that biologics collectively generating $60 billion in annual sales will have lost patent protection between 2008 and 2014, giving Merck an opportunity to come out with similar versions of these drugs. Merck plans to have five such drugs in its late-stage pipeline by 2012.

Product development is a big issue for drug makers because patents on some of the industry’s biggest drugs are expiring, making them vulnerable to much cheaper generic competition. Merck itself has faced significant generic competition for big sellers, most recently with the patent expiration for hypertension drugs Cozaar and Hyzaar.

On Tuesday, Merck Chief Executive Richard Clark acknowledged another challenge: the lingering weakness of the economy. “The economic crisis and deficit spending by governments around the world will create new challenges” as they look to health-care programs to reduce spending, he said. But he added that he believed Merck is in a good position to weather such cuts.

Merck reiterated what it said in March—that it has more than 20 drug candidates in Phase 3 development or under regulatory review. It said in Tuesday’s statement ahead of the meeting that it is “growing faster than the competition in many markets and has multiple launches under way in key countries.”

Meanwhile, the company said it plans to file an application for vorapaxar, a drug many analysts think could be a big seller, in the U.S. in 2011. Vorapaxar is an anticlotting drug that would be given to heart patients. Merck obtained the drug in the Schering deal.

The drugs Merck plans to submit for regulatory approval this year are: boceprevir for hepatitis C; an extended-release version of diabetes drug Janumet; oral contraceptive Nomac/E2; a single-dose combination of the diabetes drug Januvia and cholesterol drug simvastatin; and cancer drug ridaforolimus.

Merck also disclosed Tuesday it plans to start next year a clinical trial to test the ability of experimental cholesterol drug anacetrapib to prevent heart attacks and related events. The drug belongs to a class known as CETP inhibitors, which came under a cloud after Pfizer scrapped development of a similar drug in 2006 due to safety concerns. CETP inhibitors primarily raise the level of good cholesterol, which Merck hopes will complement the effects of statin drugs, which primarily lower bad cholesterol.

Merck last week reported a decline in its first-quarter profit as it incurred costs in digesting the Schering acquisition. But earnings topped Wall Street’s forecasts as eight of its top 10 product groups posted sales growth, with flagship allergy treatment Singulair up 10%.

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Nathan Becker contributed to this article.
Write to Peter Loftus