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.
“We expected the drug to get approved,” she said. “It’s not going to have any impact on the earnings outlook for this year, but certainly as we go out in time they could have had an important contribution from the drug.”
Merck said it would meet with the FDA to submit additional information to enable the agency to further evaluate the benefit/risk profile of the drug, which it has gone back to calling MK-0524A after the FDA also rejected the prospective brand name Cordaptive.
“We firmly believe that MK-0524A provides physicians with an important option to manage their patients’ cholesterol,” Merck’s research chief Peter Kim said in a statement.
The company said it did not yet know when a meeting with FDA officials might take place.
In clinical trials, the laropiprant component of the drug demonstrated an ability to significantly reduce the flushing effect of niacin. It had been hoped the combination would enable patients to tolerate niacin at a dose that provides the most therapeutic benefit.
Despite the setback, Merck reaffirmed the 2008 forecast it issued last week and reiterated confidence in meeting its goal of double-digit annual earnings per share growth through 2010, excluding certain items.
Some analysts believed that Cordaptive and a planned follow-up combination drug that also includes Merck’s bad cholesterol lowering Zocor could eventually garner $1 billion to $2 billion in annual sales.
Merck shares fell to $39.40 in extended trading from their New York Stock Exchange close at $41.44, while Abbott shares climbed to $53 from the NYSE close at $51.61.
Reporting by Bill Berkrot; editing by Jeffrey Benkoe