Merck's Troubled Cholesterol Drug Vytorin Awaits Rescue -- Three Years Too Late

In the silent movie era, a villain would often tie a damsel to the railroad tracks, only to see her rescued in the nick of time. At Merck (MRK), a tortured version of that scenario is emerging in its beleagured Vytorin cholesterol franchise, except that the rescue party won't arrive until two years after the train crash.

Merck has waited years for good news on about Vytorin, and now some will finally arrive -- in 2013. Which, unfortunately, will be many months too late.

At one time, Vytorin and a companion pill, Zetia, sold more than $5 billion a year. (Vytorin is actually a combination of Zetia and Merck's statin Zocor.) Those sales were down to $400 million $1.7 billion* last year after it emerged in 2008 that Vytorin didn't prevent or reduce thickening of artery walls, and that management at the company -- then called Schering-Plough -- may have known that for months without disclosing the information. Since then, Vytorin and Zetia have been wearing virtual "Kick Me!" signs on their backs. Zetia was even beaten by Abbott Labs (ABT)'s lowly Niaspan drug -- essentially a form of vitamin B -- in a recent study.

Today, Merck announced that its massive 17,000-patient study of Vytorin had reached a midpoint, and that as not too many people have died it will go to the end, in 2013. The test, which carries the cutesy moniker "IMPROVE-IT," is designed to see if Vytorin is better than Zocor, which has gone generic.

Normally, emerging with positive results in such a huge study would be cause for Merck to buy its own money-printing machine. But waiting in the wings is Pfizer (PFE)'s Lipitor, the most popular drug on Earth, a freight train with $11 billion in revenues every year. It goes generic -- and therefore becomes extremely cheap -- in 2011, well before Vytorin's results come out. Sanford Bernstein analyst Tim Anderson wrote in a note to investors:

Vytorin will probably remain in permanent decline given the fierce competition both from alternative brands and generics. Also, technically it is true that there are as of yet no hard clinical outcomes on Vytorin to prove its value. This is what IMPROVE-IT is studying, but results won't likely report out until 2013 and even if positive, it will probably be too late to really matter.

Joining the pile-on was Cleveland Clinic cardiology chief Steven Nissen, a professional big drug naysayer whose safety pronouncements can move markets:

... he thinks public release of the interim analysis -- a normally confidential step in a study -- "was unwise and probably intended to support the commercial goals of the company."
Nissen said in an e-mailed statement that Merck's announcement tells "very little about the likelihood that the drug is actually effective."
"More than a decade after introduction, we still don't know whether the drug actually improves patient outcomes," Nissen wrote.

Image from "The Perils of Pauline." *Correction: A reader points out that due to the way Merck accounted for Vytorin sales before and after the merger with Schering-Plough, this item originally understated Vytorin's revenues. The correct number -- about $1.7 billion -- can be found on page 138 of the company's annual report, and not on page 69, where product sales are listed as just $440 million. Previously:

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