Priority Review for Merck's HCV Drug - Analyst Blog

Merck (MRK) recently announced that the US Food and Drug Administration (FDA) granted priority review status to the company's hepatitis C virus (HCV) candidate, boceprevir. This means that a response from the FDA regarding the approvability of the HCV candidate will be out in six months instead of the standard review period of ten months.

Merck completed the submission of the rolling new drug application (NDA) for boceprevir in late 2010. A response from the FDA should be out in mid-2011. Priority review status is usually granted to candidates which provide major advances in treatment or which target areas lacking adequate therapy.

Meanwhile, the European Medicines Agency (EMA) also accepted the Marketing Authorization Application (MAA) for boceprevir for accelerated assessment.

Merck had presented full data from two pivotal late-stage studies for boceprevir in late October 2010. Boceprevir achieved significantly higher sustained virologic response rates in treatment-failed as well as treatment naïve patients.

Race to Market between Merck and Vertex

The fast track status for boceprevir provides Merck with a slight edge over its primary competitor Vertex Pharma (VRTX) which is seeking FDA and EU approval for its HCV candidate, telaprevir. Both boceprevir and telaprevir are protease inhibitors. While telaprevir has accelerated assessment status in the EU, the candidate is yet to receive priority review status in the US. Telaprevir has been developed in collaboration with Johnson and Johnson (JNJ) and Mitsubishi Tanabe Pharma.

The HCV market represents huge commercial potential. According to the World Health Organization (WHO), HCV infection is responsible for more than 50% of all liver cancer cases and two-thirds of all liver transplants in the developed world. The WHO estimates that about 170 million people are chronically infected with HCV worldwide with an additional 3 million to 4 million people being infected each year. According to The Centers for Disease Control and Prevention, about 3.2 million people in the US are chronically infected with HCV.

Neutral on Merck

We currently have a Neutral recommendation on Merck, which is supported by a Zacks #3 Rank (short-term “Hold” rating). Merck is currently facing issues like patent expirations of key drugs and EU pricing pressure. However, the company has a deep pipeline that should act as a cushion when its key products lose patent protection in the next few years.

Moreover, some of Merck's recent launches should start contributing significantly to the top line in the forthcoming quarters. The restructuring initiatives undertaken by the company should also improve its bottom line. We are also positive on Merck's efforts to expand its portfolio through acquisitions and in-licensing deals.

 
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