Merck Up on Encouraging HCV Data - Analyst Blog

Merck MRK presented additional data from an ongoing phase II study on its once-daily, all-oral hepatitis C virus (HCV) combination regimen – MK-5172 (100 mg, a NS3/4A protease inhibitor) and MK-8742 (50 mg, a NS5A replication complex inhibitor). The additional data was presented at the annual meeting of the European Association for the Study of the Liver (EASL). Investors reacted positively to the news with the stock moving up 3.74%.

The two-part, parallel-group, randomized (within group) phase II C-WORTHy study is evaluating the efficacy and safety of MK-5172/MK-8742 in patients with chronic HCV genotype 1 infection (GT1). The study assessed MK-5172 plus MK-8742 for different treatment durations with or without ribavirin (RBV).

As per interim data from the study, sustained virologic response (SVR) rate after 12 weeks of treatment was 98% in the MK-5172/MK-8742 arm as compared to 94% in patients who received MK-5172/MK-8742 plus RBV. The MK-5172/MK-8742 and RBV combination showed an SVR rate of 83% at 8 weeks of treatment.

Based on encouraging data from the phase II studies, Merck has initiated a phase III program, C-EDGE, which will evaluate the safety and efficacy of MK-5172/MK-8742 with and without RBV in several genotypes and a range of patient populations with chronic HCV.

Meanwhile, Merck also announced new data from the dose-ranging phase II PN038 study evaluating MK-5172 (25 mg, 50 mg, and 100 mg) with peginterferon alfa-2b and RBV in treatment-naïve, non-cirrhotic patients with GT1 infection. At 12 weeks of treatment, SVR rates of 83.3%, 75% and 48.3% were observed in patients receiving 100 mg, 50 mg and 25 mg of MK-5172, respectively.

Our Take

We believe that Merck's investigational therapy has a good chance of gaining approval based on high response rates. A new successful HCV treatment would provide a boost to Merck's sales. We note that Merck's HCV drug, Victrelis, recorded revenues of $428 million (down 15%) in 2013.

Several companies are working on getting their all-oral treatment regimens for HCV patients with GT1 in the market. Gilead Sciences Inc. GILD is looking to get its once-daily fixed-dose HCV cocktail treatment, ledipasvir plus Sovaldi, approved in the U.S. The company has already submitted the marketing application to the FDA. Meanwhile, Bristol-Myers Squibb Company BMY is not far behind. A few days back, the company submitted the marketing application for its all-oral combination of daclatasvir and asunaprevir. The FDA has granted Breakthrough Therapy designation to the combination. AbbVie Inc. ABBV is also developing an oral investigational fixed-dose combination regimen (phase III) targeting this lucrative market. We believe that apart from efficacy and safety, dosing and pricing will play crucial roles in determining the winner.

Merck currently carries a Zacks Rank #3 (Hold). Bristol-Myers is a better-ranked stock with a Zacks Rank #2 (Buy).