Zacks_Analysts' Blog : Merck Strong in Cardiovasculars - Analyst Blog

The drug candidate, betrixaban, is currently undergoing phase II studies. Merck has agreed to undertake all costs relating to the development and commercialization of the drug. According to the American Heart Association, about 2.2 million Americans suffer from atrial fibrillation.

We believe the deal reinforces Merck’s already established pipeline which includes many cardiovascular drugs. The New Jersey-based company has a significant joint venture with another large pharmaceutical player Schering-Plough (SGP) for cardiovascular drugs Zetia and Vytorin.

However, we feel that this deal is a huge positive to Portola as it enables the California-based firm to be associated with a pharmaceutical major and innovator in cardiovascular medicine. The deal also strengthens its balance sheet substantially.

Merck’s cardiology candidate, Vernakalant, was in-licensed from Cardiome Pharma (CRME) in April. The candidate is being developed for atrial fibrillation in both oral and IV forms. The oral form is in phase II testing. An NDA for the IV form met with an approvable letter in August 2008 despite receiving an approval recommendation from an FDA advisory board.

Cholesterol drugs drag Merck down

On the same day, Merck’s shares fell nearly a 4% following the news from the HALTS study that compared its cholesterol drug Zetia with Abbott Laboratories' (ABT) Niaspan. The study, which was funded by Abbott, was stopped based on results of a pre-specified, blinded interim analysis and not due to safety concerns.

However, it gave rise to speculation that Zetia performed badly in comparison with Niaspan in the clinical trial. As such, we maintain a Hold recommendation on Merck shares.