More Indications for Merck Drug

Yesterday, an advisory panel of the US Food and Drug Administration (FDA) recommended the use of Merck’s (MRK - Analyst Report) Gardasil vaccine in males 9 to 26 years of age to prevent genital warts. Originally, Gardasil was approved by the FDA in June 2006, as the first vaccine for cervical cancer, caused by human papillomavirus (HPV) for females 9 to 26 years of age.

The panel voted 7-1 in favor of the vaccine’s safety and 7-0 (with one abstention) regarding its effectiveness. Although the FDA is not required to follow the panel’s recommendation, it generally does so. The final decision from the agency is expected by year end. Apart from the favorable recommendation, the panel members have expressed their concern about the lack of long-term data, which would have showed the timeframe of effectiveness of the vaccine.

Gardasil is designed to target four HPV strains; HPV 6, HPV 11, HPV 16 and HPV 18. While two of these (HPV 16, HPV 18) account for about 70% of cervical cancer cases in the US, the other two HPV strains are responsible for genital warts in both men and women.

Merck had been seeking FDA approval for the use of Gardasil in women 27-45 years of age, but has yet to get it. Earlier this year, the FDA asked for data from the company’s 48-month study which is expected to be submitted by year end. According to a study published in a medical journal in June, Gardasil was found to be 90% effective in preventing infection with the virus in women 24-45 years of age.

The broader use of Gardasil would enable Merck to improve upon the slower sales of the product. While sales ramped very quickly following FDA approval in June 2006, sales have struggled recently due to difficulty in penetrating older patients. Gardasil sales fell 5% in 2008 and were down 18% in the second quarter of 2009. We have a Neutral recommendation on MRK stock.

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