Merck's allergy pill sways an FDA panel but faces a long road to success

Merck ($MRK) skated through an FDA panel for its latest oral immunotherapy for allergies, as a group of agency advisers found the drug to be safe and effective for counteracting ragweed pollen.

The committee voted 6-2 with one abstention in favor of Ragwitek's efficacy and 8-0-1 that the drug proved safe in its pivotal data. The oral treatment is designed to expose patients to gradually increasing levels of ragweed, slowly training the immune system to fight allergic reactions and reducing the occurrence of symptoms. In Phase III studies, Ragwitek met its efficacy endpoints with no serious adverse events.

The FDA isn't required to approve the drug, though that's the most likely outcome, and the same goes for Grastek, a similar grass allergy immunotherapy that won unanimous backing from the same panel last month. For its part, Merck said it expects to hear a final decision on both drugs in the first half of this year.

The two therapies are part of Merck and partner ALK-Abello's effort to launch an oral allergy franchise that can contend with oft-used injection regimens that now dominate the market. And while a daily under-the-tongue pill is more convenient than trekking to a doctor's office for a shot, Merck's offerings face an uphill battle thanks to injections' low cost and well-established reliability. As a result, peak sales estimates for Ragwitek hover around $300 million, while Grastek has a consensus of roughly $150 million.

But Merck, with its marketing heft and physician access, still has a chance to make the most of it, and Morningstar analyst Damien Conover told Reuters last week that Ragwitek could bring in as much as $1 billion a year if the company can convert a critical mass of allergy sufferers.

"We are pleased with the positive votes at today's advisory committee meeting," Merck Respiratory and Immunology Vice President Sean Curtis said in a statement. "We believe Ragwitek has the potential to be an important new oral therapeutic option for allergy specialists and their patients who continue to suffer from ragweed-induced allergic rhinitis."

Merck and ALK are also collaborating on MK-8237, a Phase II treatment for house dust mite allergen-induced rhinoconjunctivitis. Under the terms of their deal, ALK is in line for up to $290 million in milestones, plus a cut of future sales of any approved drugs.

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