ANALYSTS' VIEW: Schering, Merck hit after cholesterol study

CHICAGO (Reuters) - Shares of Schering-Plough Corp SGP.N and Merck & Co (MRK.N) plunged on Monday after doctors at a prominent medical meeting recommended patients try older cholesterol drugs before the companies' newer medicines.

Schering-Plough shares dropped 27 percent, while Merck shares fell 16 percent, as analysts cut their sales forecasts for the companies' shared drugs, Vytorin and Zetia.

The value of Vytorin and Zetia, which generate about $5 billion in combined annual sales, has been questioned since the results of a controversial study were released in January.

Additional data from the study were released Sunday at the American College of Cardiology meeting in Chicago.

JAMES KELLY, ANALYST, GOLDMAN SACHS & CO

"The Enhance data were presented this weekend and were not surprising. The big surprise was the professional commentary, which spoke to limiting the use of the drug (until after other cholesterol-lowering medicines have failed) unless it is proved in an outcomes trial (expected to be completed in 2012). Given the uncertainty around the franchise, we are downgrading Schering-Plough stock to 'neutral.'"

JAMI RUBIN, ANALYST, MORGAN STANLEY & CO

"The Enhance session at the ACC was a setback for Merck and Schering-Plough despite the full release of the data set, which brought out no new surprises. The surprise, and the source of the negative media publicity, was the panel discussion, or rather the lack thereof. While we had anticipated the session to be an opportunity for a scientific debate on the trial design, results and clinical implications, the discussion was dominated by just one of the four panel members."

SEAMUS FERNANDEZ, ANALYST, LEERINK SWANN

"The expected panel discussion ended up being more of a consensus statement that concluded 1) Enhance was a well-conducted high-quality imaging study; 2) there is no evidence from Enhance that the combination performs better than the same dose of statin alone; 3) LDL-lowering is not an infallible surrogate; and 4) Zetia/Vytorin should be reserved for last-line therapy after trying multiple statins and other 'evidence-based' therapies (bile acid resins, fibrates and niacin).

"Since the panel recommended that Zetia be considered as 3rd- or even 4th-line therapy, we believe a recovery in prescriptions is unlikely in 2008 and there could be additional negative impact on U.S. prescriptions post-ACC."

DR. JON LECROY, MANAGING DIRECTOR, NATIXIS BLEICHROEDER

"While there may be a mild decrease in near-term prescriptions in the coming weeks due to a resurgence in press on the Enhance trial, we think Vytorin and Zetia prescriptions should stabilize near current levels for the remainder of the year.

"A Merck/Schering-Plough panel hosted later in the day was more reserved and discussed three possible reasons for the statistically neutral outcome of the Enhance trial. The consensus from the Merck/Schering-Plough panel was that the trial population had been heavily pre-treated and therefore experienced stable plaque progression. With both groups having almost no progression, it was impossible to prove one drug was better than the other."

DR. JOHN KASTELEIN, ACADEMIC MEDICAL CENTER, AMSTERDAM,

LEAD AUTHOR OF ENHANCE STUDY ON CHOLESTEROL DRUG VYTORIN

"I'm not going to change a clinical practice based on a study in 700 people. I think that would be extremely imprudent. On the other hand, I think the companies owe it to us to provide us with as much data as possible that this is not a cosmetic therapy.

"An ongoing study known as Improve-It has just been expanded to answer some of the questions about whether lowering LDL cholesterol using Vytorin helps prevent heart attacks and stokes. But that will delay the results until 2012.

"I think the companies might take a deep look into their research program and see if there is anything we can have between now and 2012 to help people like me with large contingents of patients that are taking this drug to further convince me this is a good thing to do."

MICHAEL KING, ANALYST, RODMAN & RENSHAW, NEW YORK

"In the short term, we would expect sales and scripts of both Vytorin and Zetia to continue to decline. However, the few doctors with whom we spoke at ACC have indicated that they will keep patients on Vytorin if they are doing well on therapy. We believe most physicians will view the strong negative sentiment as premature given that (the) Improve-It (study) will provide a definitive answer, albeit in 2012. We believe that the incremental LDL-lowering of about 17 percent and good safety profile with Vytorin will serve to shield it from the backlash.

"We believe this only challenges the effects of lowering LDL-C with ezetimibe (Zetia) on cholesterol, not statins or other classes. The fundamental paradigm of lower LDL-C should remain intact as there are too many good studies that show it to be a good thing. In addition, the current guidelines have not been changed."

(Reporting by Susan Kelly)