Merck Bets On Cardiovascular Drugs Vorapaxar And Tredaptive For Future Growth

MRK: Merck logo

Merck (NYSE:MRK) will soon seek approval of the U.S. FDA for two of its investigational cardiovascular drugs, Vorapaxar and Tredaptive. Vorapaxar is a blood thinner while Tredaptive reduces bad cholesterol in the blood. But the potential of these drugs remains uncertain due to safety concerns and competition. [1] However, if approved, these drugs could help the company fend off revenue losses from near-term patents expiry.

Check out our complete analysis of Merck

Merck had a market share above 19% in 2007 before declining to under 11% in 2011 mainly due to Cozaar/Hyzaar losing patent exclusivity. Now, the company is dependent on Zetia and Vytorin as they together bring nearly 8% of its total sales and 50% of cardiovascular sales. The ENHANCE clinical trial however has shown no significant benefits from Vytorin and Zetia, and this has had an adverse effect on the sales. Going forward, the total cardiovascular sales (excluding pipeline drugs) are expected to decline due to these factors. Therefore, the sooner the approvals for these experimental drugs come by, the better for the company’s cardiovascular franchise.

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While our model already reflects expected sales from these drugs, not many people are optimistic about the drugs’ prospects due to a number of reasons. According to clinical studies, while Vorapaxar lowered the risk of cardiovascular diseases, it led to an increased risk of major bleeding, including bleeding in the head. Merck now will seek approvals for use of the drug to prevent cardiovascular events instead of a broader use, including patients who have suffered a stroke. In addition, Tredaptive will see one of its main competitors Abbott Labs‘s (NYSE:ABT) Niaspan going off patent in September 2013. This will lead to launch of cheap generic versions of Niaspan in the market, thus hurting Tredaptive’s sales potential. We have, accordingly, accounted the drugs’ expected sales on the lower side in our model. [1]

We believe another experimental cardiovascular drug Anacetrapib holds more promise than the aforementioned drugs. Anacetrapib preserved HDL function in preclinical studies and increased reverse cholesterol transport. The drug could receive the FDA approval by 2017, just before two major drugs Zetia and Vytorin lose their patent exclusivity. The recent failure of Roche Holdings‘ (PINK:RHHBY) cholesterol drug Dalcetrapib gives Anacetrapib the opportunity to grab a larger share of the addressable market. [2] In addition, another experimental drug MK-0524A has demonstrated the ability to lower LDL-cholesterol (“LDL-C” or “bad” cholesterol) and raise HDL-cholesterol (“HDL-C” or “good” cholesterol) and lower triglycerides with significantly less flushing than traditional extended release of niacin alone.

We are in the process of updating our model and revising our $41 price estimate for Merck to reflect the recent developments.

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  1. Merck will seek approval of 2 heart drugs in 2013, Bloomberg BusinessWeek, August 27 2012 [] []
  2. Roche abandons potential blockbuster cholesterol drug,, May 7, 2012 []