SGP Schering-Plough Corp.

Sales of embattled cholesterol drugs co-marketed by Merck & Co. (MRK) and Schering-Plough Corp. (SGP) could decline further after eagerly awaited clinical-trial results are released in mid-November.

Although the data aren't yet known, some doctors and investors suspect the "Arbiter 6" trial will show that Abbott Laboratories' (ABT) Niaspan cholesterol drug was superior to Merck's and Schering's Zetia at slowing the thickening of the arteries. The study is to be presented Nov. 16 at the annual scientific meeting of the American Heart Association in Orlando, Fla.

A negative finding would mean more trouble for Zetia and Vytorin, which is a single-pill combination of Zetia and the drug simvastatin. Bernstein analyst Tim Anderson said sales of the drugs could tumble more than 20% next year to about $3.2 billion--and that's on top of the 14% decline so far this year due to prior studies that raised questions about the drugs' efficacy and safety.

The new data could increase pressure to remove the drugs from the market, though Anderson said he thinks that outcome is unlikely. Separate studies last year found that Vytorin was no better than simvastatin alone at slowing artery thickening, and that cancer occurred more frequently in Vytorin users than those on a fake drug. Merck and Schering--which are in the process of merging--have defended the drugs' efficacy and safety.

Merck shares have dropped 8% since Oct. 20, recently trading around $30.90, partly in anticipation of negative results for the latest study.

Conversely, the data could give a "shot in the arm" to Niaspan sales, said Wells Fargo analyst Larry Biegelsen, predicting combined sales of Niaspan and two related Abbott drugs will rise 13% to about $1.1 billion in 2010.

At the heart of the matter: There is still no hard evidence that the reduction in bad cholesterol from use of Zetia and Vytorin translates into reduction of risk of heart attacks, beyond what can be achieved by the gold standard of cholesterol drugs, statins. A negative finding for Zetia in Arbiter 6 would reinforce this uncertainty and offer up Niaspan--whose active ingredient, niacin, primarily raises good cholesterol levels--as an alternative.

"If there is a signal that niacin seems better than adding on Zetia in this study, I think it will really make people think twice about what their second cholesterol medication is [along with statins], and I think more people will go with niacin," said Danielle Duffy, a cardiologist at Thomas Jefferson University Hospital in Philadelphia.

The study began in November 2006 and was intended to enroll about 400 people with known cardiovascular disease who were already taking statins. Roughly half added Niaspan to their treatment, while the others added Zetia. Researchers compared changes in thickness of the carotid artery using an imaging procedure after 14 months of treatment.

The study was terminated in June, four months earlier than scheduled. The lead investigator, cardiologist Allen Taylor of the Washington Hospital Center, said it wasn't for safety reasons but has declined to elaborate. Abbott co-sponsored the trial but said it was conducted independently by Taylor.

The study may have been terminated because Niaspan showed a clear benefit over Zetia. Some doctors say the trial's design favored Niaspan, and point to previous Niaspan studies led by Taylor with positive outcomes.

Merck is playing down the importance of the study. "It would be inappropriate to draw conclusions about the outcomes from that study regardless of the result," Peter Kim, head of Merck's research arm, told analysts during a conference call last month.

-By Peter Loftus, Dow Jones Newswires; 215-656-8289; peter.loftus@dowjones.com

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