UPDATE 3-U.S. FDA clears new Merck drug for hepatitis C

Fri May 13, 2011 6:29pm EDT

* Victrelis seen as major advance against liver disease

* Analysts forecast blockbuster sales

* Merck shares gain 0.6 percent (Adds analyst comment)

By Lisa Richwine and Bill Berkrot

WASHINGTON/NEW YORK, May 13 (Reuters) - Merck & Co (MRK.N) won U.S. approval on Friday to sell a new drug considered a major advance against the liver-destroying hepatitis C virus.

Victrelis is expected to help transform treatment of the potentially fatal disease with higher cure rates and shorter courses of therapy for some patients.

A similar medicine from Vertex Pharmaceuticals Inc (VRTX.O) is poised to win FDA clearance later this month. Industry analysts predict sales of more than $1 billion annually for each drug with the Vertex product dominating the market.

Merck shares rose 0.6 percent in after-hours trading to $37.33, up from their $37.08 close on the New York Stock Exchange. Approval of Victrelis was widely expected after a Food and Drug Administration advisory panel recommended the drug in an 18-0 vote in April. The Vertex drug also got a unanimous panel recommendation for approval.

"I'm expecting Vertex's telaprevir to get approved shortly, but I think people are probably underestimating the marketing power of Merck versus Vertex," said Morningstar analyst Damien Conover.

He is anticipating a 60-40 market share split in favor of Vertex -- a somewhat higher share for Merck than other analysts have projected.

"Merck is first out of the gate and the experience of Merck's marketing machine, especially in hep C, is going to be very helpful for the product," Conover said.

Doctors say tens of thousands of patients have been delaying treatment in anticipation of the new medicines, which still must be taken in combination with older hepatitis drugs. About 170 million people around the world are infected with hepatitis C.

"There are so many patients who are just waiting for a new treatment option. There hasn't been anything new in 10 years," said Dr. Eliav Barr, Merck's head of infectious diseases research.

"We're just thrilled and can't wait to get the medicine out the door to patients," Barr said, adding that Merck was ready to begin shipping the drug within the week.

The cure rate for Victrelis reached 66 percent in Merck's studies, an improvement over the 35 to 40 percent seen with current drugs, but less than the 79 percent reported for newly treated patients given the Vertex drug, telaprevir.

"Victrelis is an important new advance for patients with hepatitis C," Dr. Edward Cox, head of the FDA office of antimicrobial products, said in a statement.

The FDA approved Victrelis for adults with hepatitis C who were never treated or who failed previous treatments.

In the United States, 3.2 million people have hepatitis C, a blood-borne disease that can lead to chronic liver problems, liver cancer, cirrhosis and death. The disease is the leading cause of liver transplants in the U.S.

Both the Merck and Vertex medicines in combination with standard drugs cured some patients in half the time of the current therapy of the injectable drug interferon and a pill called ribavirin. The older drugs require almost a year of treatment and often cause flu-like symptoms that are tough to tolerate.

Prescribing instructions for Victrelis suggest that some patients with early responses to the drug can stop treatment after 28 weeks, while some others can stop at 36 weeks.

The most common side effects reported with Victrelis were fatigue, anemia, nausea, headache and taste distortion, the FDA said.

The drug label recommends monitoring for anemia.

Hepatitis C is spread mainly through sharing needles such as those used for illegal drugs and tattoos, or through blood transfusions before 1992 when screening began. Many people who are infected do not know they have the virus and show no symptoms.

The new medicines work by blocking a protein called protease that the virus needs to replicate. The generic name for the Merck drug is boceprevir. It must be taken three times a day with food. (Reporting by Lisa Richwine and Bill Berkrot; Editing by Carol Bishopric)