UPDATED: Merck's 'breakthrough' hep C combo plays catch-up with promising PhII results

Merck may be playing catch-up in the race to develop the first all-oral combo treatment for hepatitis C, but it made a good case over the weekend that it has a real contender in the pipeline. And the pharma giant has caught the attention of at least one prominent analyst who now sees a potential blockbuster in the making.

Merck ($MRK) currently markets Victrelis (boceprevir) for hepatitis C. But it's seeing declining revenue--$502 million last year--as doctors warehouse their patients in anticipation of a new standard of care that will eliminate the need for interferon, which often has harsh side effects.

Now its combination of MK-5172, an NS3/4A protease inhibitor, and the NS5A treatment MK-8742 produced cure rates ranging from 96% to 100% among small groups of genotype 1a and 1b patients. A total of 58 evaluable patients were included in the readout with the combo provided both with and without ribavirin.

In the combo-only group of 11 patients who completed therapy, all of them had undetectable levels of the virus after 12 weeks of therapy, in line with expectations that these new drugs will knock down the disease quickly without a host of side effects.

The data are good, but Merck--which picked up the FDA's breakthrough designation for the combo approach just days ago--is also far back in a field dominated by some impressive late-stage contenders. Gilead ($GILD) is leading this race with sofosbuvir, which has been endorsed by an internal review as well as an independent agency panel, with combo treatments being hustled along as Bristol-Myers Squibb ($BMY) and AbbVie ($ABBV) race to get into the act.

Merck will now expand its studies as it looks to pull off a large late-stage effort. The pharma giant may be late to the hep C party, but it does plan to have a good ticket for entrance. And some analysts are waking up to the commercial potential, spying a possible blockbuster in Merck's pipeline.

"The most important take home message is that we now believe MRK may be just ~18 months behind GILD in the race to develop an all oral regimen for genotype 1 Hep C. MRK's regimen could be the first that is truly clinically competitive with GILD (i.e. 90%+ cure rates and one pill once per day)," notes ISI's prolific Mark Schoenebaum. "There is virtually NOTHING in out-year MRK consensus estimates for this program--if the data continue to hold up, this could begin to change over the next year."

That kind of excitement is exactly what the Wall Street doctor ordered for Merck, which is restructuring its R&D operations after a very weak run in the clinic.

"These data provide further support that we can advance these candidates, which are currently in Phase IIb clinical development, into a broader evaluation in a diverse range of HCV patients," Dr. Eliav Barr, vice president of infectious diseases at Merck Research Laboratories, said in a release.  

- here's the press release

Special Report: Hep C pill race report 2012: Gilead, others rush toward pharma gold