Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Merck Rallies on Prospects for Bone Drug


An osteoporosis treatment was effective in a company study, giving investors hope for a potential blockbuster product.

MINYANVILLE ORIGINAL If investors weren't paying attention to an osteoporosis drug being developed by the pharmaceutical giant Merck (MRK), they are now.

Shares of the big drug maker rose more than 4% to $42.93 in midday trading Thursday after the company said its experimental therapy odanacatib was effective in reducing the risk of bone fractures in osteoporosis patients who have gone through menopause. The stock, up 14% on the year, is trading at its highest level since 2008.

The drug worked so well that researchers conducting the company study recommended the trial be halted. The late-stage study -- the last of three usually needed to win US approval for a drug -- included more than 16,000 women. Researchers concluded the study can be closed "due to robust efficacy and a favorable benefit-risk profile." Merck plans to file for US approval in the first half of next year.

Osteoporosis isn't a hot drug category. Generic competition and safety concerns about the class of drugs known as bisphosphonates would seem to make the category unattractive to big drug companies looking for the next blockbuster. Branded therapies include Merck's Fosamax, Warner Chilcott's (WCRX) Actonel, Roche's (RHHBY) Boniva, and Novartis' (NVS) Reclast.

However, the problems with the current market for such treatments is exactly why there's an opportunity, says Credit Suisse analyst Catherine Arnold.

"A closer look at the underlying dynamics reveal a significant opportunity for a novel, potentially safe agent (like odanacatib) entering the market," Arnold says in a recent note to clients.

If safety concerns about osteoporosis drugs were eased and generic prescriptions were converted to branded drugs, the worldwide market potential may be close to $10 billion a year, Arnold estimates. An aging population in the US and other markets would bode well for growth, she adds.

Arnold estimates that Merck's drug can be at least a $1 billion product if approved. The company, which already knows the market for such therapies, would benefit initially from a lack of new branded treatments, she says.

As with any drug, there are concerns about odanacatib's potential side effects. Merck says researchers noted safety issues over the drug and this, of course, is a detail investors will want to monitor closely. Merck says final results of the study will be ready for scientific presentations and a journal publication sometime next year. Odanacatib is a drug known as a cathepsin K, or cat-K, inhibitor. Cat-K is an enzyme that can delay bone healing.

Twitter: @brettchase

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos