Merck's next-gen HPV vaccine looks good in PhIII, but sales may disappoint

Merck believes it has the goods to win near-term approval for a new HPV vaccine that will do better than Gardasil in guarding women against the virus that causes cervical cancer. But the back-of-the-envelope math being used to estimate peak sales potential won't relieve its migraine over weakening drug sales.

Prepping for a medical conference in Italy this week, Merck ($MRK) officials outlined the results of clinical studies for V503 with Peter Loftus at The Wall Street Journal. Gardasil protects against two strains of HPV responsible for the bulk of cervical cancer cases along with two other strains that spur genital warts. But V503 was developed to guard against 9 strains of HPV, which would significantly expand its protective reach, and late-stage clinical research work has demonstrated that it's comparable with Gardasil in what it does and far superior in combating the extra 5 strains.

"The case for using V503 is even stronger than the case for using Gardasil, which was already strong," Merck R&D chief Roger Perlmutter tells the Journal.

Merck has highlighted the program as one of a handful of top late-stage efforts. But V503 could just as easily illustrate the pharma giant's clinical floundering over the past 6 years. If approved, Leerink Swann has estimated that it could go on to achieve $1.9 billion in sales, but much of that would be carved out of a fading Gardasil franchise, which would shrink from $1.6 billion to about $525 million over the next 5 years, reports the Journal. Combined, that would still be a solid plus for Merck, but not enough to counter growing generic competition to some of its top therapies.

Merck and GlaxoSmithKline ($GSK), which markets the competing Cervarix, have been forced to confront the fact that sales of their vaccines have leveled out, even after an approval for boys was added. And some experts have questioned whether anything can improve vaccination rates in the U.S. now. Back in 2006 and 2007, some analysts were projecting revenue ranging anywhere from $4 billion to $10 billion a year for these vaccines, a mix of classic overreaching by analysts encouraged by some starry-eyed projections from the company.

There's no reason to believe that V503 will do much better than Gardasil in garnering sales revenue. That would make it another disappointment to add to a full slate of setbacks for a weak pipeline. While Merck has spotlighted its vaccine effort as one of a few core areas where it plans to stay aggressive, the R&D wing of the company is being restructured as the company carves out $2.5 billion in annual operating expenses.

A single dose of Cervarix, meanwhile, came out of a new study looking quite effective. Investigators say that a single-dose approach could make the vaccine less expensive to use, which would play a big role in expanding its use in developing countries if it's made available at a much lower price point.

- here's the story from The Wall Street Journal (sub. req.)
- here's the report on the new Cervarix study

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