Analysts are anticipating that Merck will soon have a new write-down to add to the $3 billion fine the pharma giant recorded earlier this year when it discounted its big hep C drug MK-3682.
The pharma giant said this morning that it is dropping two key combos — MK3682B (grazoprevir/ruzasvir/uprifosbuvir) and MK3682C (ruzasvir/uprifosbuvir) — that were seen as successors to its struggling franchise for Zepatier.
Merck balanced the Phase II data it had on hand and a shrinking marketplace dominated by two key players — with Gilead out front followed by AbbVie — and decided to throw in the towel.
At this stage, Merck wants to limit its work to Zepatier (elbasvir and grazoprevir). That move virtually eliminated any potential value that may have come out of its $3.9 billion acquisition of Idenix, when Merck fancied it could be a leader in hep C during one of the hottest R&D competitions in the business.
Gilead, though, stole the show with a game-changing lineup of hep C therapies that can painlessly cure the disease. But curing hep C also shrinks the market, leaving a declining fortune for the key players to go after. And that’s not a game that Merck can play a big role in.
“In a nutshell, it changes everything,” noted Leerink’s Geoffrey Porges this morning. And in a good way for Gilead.
The pace of erosion of Gilead’s HCV revenue should slow (being only based on patient volume and duration but no longer price as well), and this category should now be a meaningful source of revenue for both incumbents for many years to come. The value of Gilead’s sofosbuvir looks even more compelling today, as they now stand alone as the only HCV nuke in the market; AbbVie’s Mavyret lacks a nuke, and still offers compelling efficacy, but in most markets and for most specialists, the most difficult patients to treat will still require a nuke-based combination.
Merck has placed most of its R&D eggs in a massive portfolio of PD-1 combo studies for Keytruda, where researchers have racked up some major gains with a savvy development plan.
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