Merck says FDA rejects its new cholesterol drug

By Bill Berkrot

NEW YORK (Reuters) - U.S. health regulators have rejected Merck & Co Inc's new drug designed to raise the level of HDL, or "good" cholesterol, the company said on Monday, sending its shares down 5 percent.

The company declined to discuss details in the so-called not approvable letter from the Food and Drug Administration. It would not comment on whether the agency had asked for further data or new clinical trials.

The drug, which was expected to be called Cordaptive, combines long-acting niacin with a new drug that prevents the flushing side effect common to niacin -- an uncomfortable sensation of burning in the face and neck that leads many patients to discontinue taking it.

Analysts widely expected the drug to be approved, especially after a committee of European regulators last week recommended it be cleared for sale there.

The rejection was another blow for Merck, whose share price has fallen about 30 percent this year amid a controversy and debate over the effectiveness of the cholesterol drugs its sells in a joint venture with Schering-Plough Corp.

The FDA decision should be a boon to Abbott Laboratories, whose franchise of niacin-based cholesterol drugs would have been in direct competition with Merck's proposed new entry into the lucrative market.

Abbott shares rose 2.7 percent following the Merck news.

Deutsche Bank analyst Barbara Ryan called the news a disappointment.