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UPDATED: Watch out, Gilead. Merck is mounting a hep C combo comeback

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Merck may be late to the blockbuster party with its new hepatitis C drugs, but the pharma giant is moving fast with a top contender boasting high cure rates.

Merck ($MRK) unveiled interim Phase II results for an oral combination of MK-5172, its NS3/4A protease inhibitor, and MK-8742, an NS5A, among patients with chronic HCV genotype 1 infection. After 12 weeks of therapy 42 of 43 patients--98%--demonstrated a sustained viral response. The combination plus ribavirin hit a 94% cure rate. And the drugs did it without any injections of interferon, which is widely hated by patients.

In recent months Gilead's ($GILD) Sovaldi has been taking the hepatitis C market by storm as it steams its way to a multibillion-dollar debut. An unqualified success by industry standards, the $84,000 price has produced a storm of controversy. Payers, led by the pharmaceutical benefit manager Express Scripts ($ESRX), have hit back, complaining that the drug is a budget buster and vowing to warehouse patients who can wait for other therapies that can do the job just as well or better.

That backlash has created an opportunity for developers like Merck. But it likely won't be first among the next round of competition. AbbVie ($ABBV) has been barreling along with its oral combo and Gilead also has its combination approach matching Sovaldi with ledipasvir, up for a review at the FDA with a decision due by early October. Still, given the size of this market, with millions of patients in the U.S. alone, even a late arrival by Merck could generate significant income. And the FDA, which has already provided Merck with "breakthrough" drug status for the combo, is likely to be under considerable pressure to hurry along rival therapies.

ISI's Mark Schoenebaum is optimistic that Merck--which has been marketing the fast-fading Victrelis--can break well past the $400 million sales projections circulating on Wall Street.

"As we pointed out yesterday…, consensus hep C numbers for MRK in the out-years seem very low to me," Schoenebaum noted Thursday morning. "Given the strength of today's data, I would expect analysts to begin raising their MRK hep C estimates fairly dramatically (perhaps 3x-8x) over the next year. MRK will very likely have definitive Phase III data in 2015."

Dr. Eliav Barr, VP of infectious diseases, Merck Research Laboratories

The news is also likely to help restore some confidence in Merck's R&D operations, which have been undergoing a major reorganization after a 6-year drought of significant new drug approvals. The immuno-oncology drug MK-3475 has been the star program at Merck. But the pharma giant posted four Phase III trials for the hepatitis C drugs on clinicaltrials.gov, recently, giving it boasting rights for another closely watched late-stage program. The studies are expected to wrap next spring.

"These Phase II results add to growing evidence for the potential efficacy of MK-5172 and MK-8742 for treatment of chronic HCV infection," said Dr. Eliav Barr, vice president of infectious diseases at Merck Research Laboratories. "These findings are integral to advancing our research of these investigational candidates into C-EDGE, the Phase 3 clinical program that will seek to more broadly evaluate the potential of MK-5172/MK-8742 in diverse patient populations."

- here's the release

Related Articles:
Merck's new PhIII hep C program may help repair a damaged R&D rep
Gilead scrambles toward hep C cure-all with next-gen combo pill
AbbVie's hep C cocktail aces its latest PhIII study with a sky-high cure rate

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