| NEW YORK
NEW YORK Merck & Co. (MRK.N) and H. Lundbeck
A/S (LUN.CO) said on Wednesday they were ending studies of
experimental insomnia drug gaboxadol due to disappointing
effectiveness and worrisome side effects in late-stage trials.
Merck and Lundbeck said the side effects included
dizziness, headaches, hallucinations and vomiting. In a
mid-stage trial presented last summer, Merck said one of the
most common side effects was tachycardia -- a rapid heartbeat
that can be fatal, especially to patients with heart disease.
Shares of Danish drugmaker Lundbeck closed down almost 17
percent on Wednesday in Copenhagen. Merck, a far larger company
with a wide array of medicines, was little changed in early
"New safety data showed a dramatic increase in psychiatric
adverse events at doses as low as twice the recommended dose,
raising the possibility of real safety issues in sleep-drug
abusers," Joseph Tooley, an analyst with A.G. Edwards, said in
a research note.
Although earlier trials showed effectiveness in sleep onset
and maintenance, the drug failed to do either in the latest
trials, Tooley said. Moreover, he said a recent sleep lab study
failed to show sufficient effects at lower doses.
The medicine was among a number of new products that Merck
has been counting on to ensure double-digit earnings growth by
2010, as the company continues to recover from the withdrawal
in 2004 of its $2.5 billion-a-year Vioxx arthritis drug.
"While this represents a clear setback to Merck's
late-stage pipeline, the company has other compounds in
obesity, cardiovascular health and HIV that should provide
revenue growth in the near term," Tooley said.
The companies said they no longer plan to seek marketing
approval for gaboxadol, a drug that Cowen and Co. had predicted
could garner annual sales of $500 million by 2012. Tooley had
expected it to fetch $463 million in 2011.
Data from the Phase III trials was expected in May, and
Wall Street was counting on the drugmakers to file their
marketing applications by mid-year.
"(We) do not see the loss as a major negative for Merck
shares," said Natexis Bleichroeder analyst Jon LeCroy, noting
he had expected annual peak sales of only $250 million for the
Merck has said gaboxadol, which works through a different
mechanism of action than current treatments, would probably be
handled as a controlled substance. That means its distribution
would have been closely regulated because of a potential for
(Additional reporting by Lewis Krauskopf)