Merck Drops Oral Vernakalant

Biopharmaceutical company, Cardiome Pharma Corp. (CRME - Snapshot Report), recently announced that its partner, Merck (MRK - Analyst Report), has decided to discontinue the development of an oral formulation of vernakalant. Merck decided to stop developing oral vernakalant based on its assessment of the regulatory environment and the time involved in the development process.

Merck and Cardiome were studying the candidate as a maintenance therapy for the long term prevention of atrial fibrillation recurrence.

Partnership Goes Back to 2009

The Merck - Cardiome agreement dates back to April 2009, when the companies announced a collaboration and licensing deal related to the development and commercialization of vernakalant. While Merck Sharp and Dohme Corp. gained exclusive global rights to oral vernakalant, Merck Sharp & Dohme (Switzerland) GmbH (another Merck affiliate) acquired exclusive rights to the intravenous (IV) formulation of vernakalant outside the US, Canada and Mexico. Merck acquired North American rights as well to the IV formulation in 2011.

Merck’s discontinuation of the oral formulation of vernakalant will not affect its support for the IV formulation. The IV formulation is approved in the EU and Latin America under the trade name Brinavess. However, Brinavess’ development path in the US has not been smooth with the US Food and Drug Administration (FDA) placing a clinical hold on the development program for the IV formulation. A phase III study, ACT V, which was suspended in 2010, was terminated later. Merck and the FDA will analyze the terminated study - results should be out in the second quarter of 2012.

Brinavess is currently approved in 37 countries – Merck intends to launch the product in about 30 countries throughout 2012.

Our Take

Oral vernakalant is not the first candidate to be discontinued by Merck in the last few quarters. Last year, the company had discontinued the development of telcagepant (treatment of acute migraine) as well as MK-0431C (treatment of diabetes). Earlier this year, the company discontinued the EU development program for Zenhale (asthma). Merck’s decision to discontinue the development of oral vernakalant reflects the company’s efforts to streamline its pipeline and allocate funds across its entire portfolio.

As far as Cardiome is concerned, the discontinuation of the development of oral vernakalant is a huge setback. The company has a weak pipeline consisting of a few early stage projects and oral vernakalant (phase I). With Merck dropping oral vernakalant, Cardiome’s shares were down more than 50%. Cardiome said that it intends to cut its cash burn by almost 50% to $11 million.

We currently have Neutral recommendations on both companies, which carry a Zacks #3 Rank (short-term ‘’Hold’’ rating).