Thursday, December 14, 2006

Merck on a Roll

Merck is on a roll these days.

For one thing, it's stock price has almost recovered from its low point after Vioxx was withdrawn from the market:
Who among us -- who did NOT cast the first stone -- bought stock in Merck around December, 2004?

What has contributed to this reversal of fortunes?

Was It Victory in Vioxx Litigation?
The Wall Street Journal reports today that Merck "prevailed in the 12th Vioxx trial since the painkiller [Vioxx] was pulled from the market, convincing a New Orleans jury that it shouldn't be held responsible for a heart attack suffered by a man who took the drug." You can download the WSJ Vioxx Trail ScoreCard here, which gives some details of this and other Vioxx cases that have been decided in court.

The WSJ article also mentions that there are some 27,200 trials that Merck vows to fight one by one. At the current rate of 6 trials per year, that could take quite a while (4,533 years to be mathematically precise).

But if you look at it another way -- ie, percent of past trials won (blue), lost (red), or tied (gray) -- and if you believe that future expectation is based on past experience (as many investors seem to do), then it looks rosy for Merck.
Was It the PR?
Soon after the Vioxx debacle, Merck initiated its "Patients Come First" campaign, which I am sure the PR agency will cite as a major contributor to the upswing in Merck's stock. I criticised that campaign back in June, 2005 and questioned its veracity (see "Patients Come First?").

I doubt that positive spin alone would have helped. I was skeptical and I am sure the majority of TV viewers of the ads also were skeptical.

It Was Gardasil, Stupid!
It wasn't the Vioxx Victories or the PR that killed the Merck beast (aka, negative public image), it was Gardasil, Merck's new cervical cancer vaccine.

Although the Gardasil DTC campaign may need improving (see Rich Meyer's criticisms at The World of DTC Marketing blog: "Gardasil launches DTC with little fanfare"), it was effective for me. And I am sure that word of mouth will spread quickly.

For me, the launch of Gardasil sent the message that Merck is a leader in the area of disease prevention, which puts people first. That should have been the PR message -- "people come first" -- not "patients come first." We all want to avoid becoming patients. In any case, Gardasil gave the PR campaign veracity.

In the background for me is the fact that Merck is not shying away from taking on the religious right that above all wants to deny that teenagers have sex. In every Gardasil ad I've seen, there's a young girl and the message is clear: protect her!

It is said that vaccines are not a profitable business for pharmaceutical companies and few are pursuing that area of development (unless they gets oodles of bucks from the Bioshield Boondoggle
). Gardasil says that Merck remains a leader in vaccine development, which is another plus in my book.

Redemption or Bumps Ahead?
So, it is possible for a drug company to redeem itself -- even in my eyes. I sincerely hope that years from now we don't discover some problem with Gardasil and that it is shown to be truly effective. There's always a risk, but I am glad Merck took it.

Still, all may not be rosy for Merck ahead. Merck confirmed for the first time yesterday that it is developing a cholesterol drug in the same class as torcetrapib, "the once-promising compound for which Pfizer Inc. halted development earlier this month due to a higher-than-expected death rate in a patient trial. The study's halt raised concerns that other so-called CETP inhibitors in development would have safety problems." (WSJ)
"But the Merck compound, MK-0859, showed no serious cardiovascular problems in an eight-week mid-stage trial, Peter Kim, president of Merck's research arm, told analysts and investors..." (see "Merck Gives Glimpse Of Its Drug Pipeline").
I hope that isn't just another spin of the facts designed to pump up investor confidence.

For more on Pfizer's torcetrapib failure, see "Pfizer's torcetrapib: Who Knew What, When?"

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  1. Anonymous9:21 AM

    RE: Gardisil
    Yes, teenagers have sex, but I strongly believe that a vaccine, the long term side effects of which are unknown, is a very risky, let's-give-more-money-to-pharma solution -- not the best way to protect women from a disease which kills only 250,000 people per year in the whole world. (FDANews Daily International Pharma Alert 12/13/06) Free and easy access to sex education, sexual health counseling and birth control is a far better solution.

  2. Anonymous11:56 AM

    A. True, long-term side effects are not known, nor are they known for most drugs at the time of approval. But they studied almost 20,000 patients for up to 4 years. How much more should they do before approval? That seems like a pretty robust dataset, not to mention post-marketing AE reports.

    B. In the current political era, free and easy access to sex education, sexual health counseling, and birth control is not always a given.

  3. Merck took the unusual step of fighting each lawsuit individually, rather than succumbing to the pressure of a class action. Whatever you may think of Vioxx or Merck, by doing this it has made it just a little more difficult for lawyers to go for suits, and they may think twice before assuming that a big corporation will simply settle for billions (of which they can take 20%)

    Allowing such lawsuits, and allowing the FDA to pressure Merck to pull Vioxx, misses the larger strategic problem: who decides if a drug's risks outweigh the benefits? I thought that was the doctor? So why bother having doctors if the FDA will decide?

    Vioxx is an easy target because it seems frivolous, we don't "need" it. But how do we know they weren't going to discover that Vioxx was, for example, the cure to cancer? Now we'll never know, because the government has decided we can't be trusted with it.

    Oh, by the way: when Merck pulled Vioxx, they were in the middle of a trial for precisely that: preventing colonic polyps.


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