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FDA Accepts Merck's Sleep Drug NDA

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Merck (MRK - Analyst Report) recently announced that the US Food and Drug Administration (FDA) has accepted its new drug application (NDA) for its insomnia candidate, suvorexant. The agency granted standard review which means a response should be out in the second half of 2013.

Merck said that the FDA’s Controlled Substance Staff will review the NDA. Once it is approved, the Drug Enforcement Administration (DEA) will assess and assign the schedule for the drug before it is launched.

Suvorexant belongs to a new class of medicines called orexin receptor antagonists which target and block orexins.

Earlier this year, Merck had presented encouraging data on suvorexant from two pivotal phase III efficacy trials. Suvorexant was shown to significantly lower the time it took for patients to fall asleep. Moreover, patients in the suvorexant arm stayed asleep longer as early as the first night as well as at the three-month time point.

Approval would make suvorexant the first orexin receptor antagonist to reach the market. However, we note that the insomnia market is highly competitive and genericized especially given the presence of generic versions of Sanofi’s (SNY - Analyst Report) Ambien.

Merck has several more regulatory filings scheduled for the next few quarters. The company plans to seek US and EU approval for its osteoporosis candidate, odanacatib, in the first half of 2013 and in Japan in the second half of 2013.

The resubmission of the sugammadex (reversal of certain muscle relaxants used during surgery) filing in the US is also slated to take place by year end.

Other candidates for which Merck intends to seek regulatory approval in the coming months include vintafolide (oncology), Tredaptive (cholesterol management) and V503 (a vaccine that expands protection against certain HPV-associated cancers by including additional HPV types).

Neutral on Merck

We currently have a Neutral recommendation on Merck, which carries a Zacks #3 Rank (short-term ‘Hold’ rating). While headwinds remain in the form of the Singulair genericization, EU pricing pressure, unfavorable currency movement, US health care reform, the Remicade/Simponi transition and pipeline setbacks, some of the company’s recent launches should start contributing significantly to the top line in the forthcoming quarters.

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