Merck investors got another reminder today of just how painful a Phase III setback can be for the company's financial prospects. The pharma giant was forced to write off $1.7 billion for the fourth quarter after investigators halted a trial of its blood clot drug vorapaxar.
Vorapaxar was considered the jewel in Schering-Plough's R&D crown when Merck agreed to pay $49.6 billion for the company. Billed as a potential megablockbuster capable of earning $3 billion to $5 billion a year, investigators slammed the brakes on one of two Phase III studies of the drug after noting that stroke patients were apparently exposed to an increased risk of bleeding after taking the drug.
Merck shares slid 3.3 percent this morning as investors digested another bitter dose of vorapaxar news. Merck shares were dented after CEO Ken Frazier opted to drop the company's longterm financial forecast. In stark contrast to Pfizer, Merck is maintaining its R&D budget rather than slashing it further in order to deliver on projected EPS.
Merck prefers to stay focused on its brightest pipeline prospects, including the hep C drug boceprevir and new data showing that Vytorin (ezetimibe/simvastatin) significantly reduced major vascular events in patients with chronic kidney disease. Merck also forged a $500 million deal to buy SmartCells in December.