Vytorin's Value to Improve

Prescriptions for cholesterol fighter Vytorin are stabilising, and even fresh questions over the drug's worth and safety may not deter investors from buying up shares of its makers, Merck & Co and Schering-Plough.

Analysts acknowledge that recent skepticism about Vytorin, including an editorial from the influential New England Journal of Medicine, may weigh on the shares in the near term, but they tout the product's long-term prospects.

"I think the drug's going to remain a very important drug for both companies," believes Morningstar analyst Damien Conover.

While sales will fall this year, he says, they will "accelerate and grow" starting next year.

Shares of Merck and Schering-Plough have been battered this year, largely on Vytorin worries after two clinical studies raised questions about the drug's effectiveness and safety.

But recent prescription trends are promising, suggesting to some analysts that Vytorin may still have life left to live.

"The tree's been shaken so hard that most people who are on (Vytorin) are going to stay on," says Barbara Ryan, a research analyst for Deutsche Bank.

In coming days, Merck is due to give a long-term earnings forecast, which was withheld after a study in July 2008 found a significantly higher rate of cancer cases among Vytorin users. Many researchers have said there is no credible evidence linking cancer to the drug.

If Merck reinstates an outlook similar to its earlier projections, its shares are expected to rally, analysts said, after months of declines.

Stabilising scripts

Vytorin's growth skidded in January after a clinical trial suggested it may not be more effective than a cheap generic statin. New prescriptions, a good indicator of a drug's trajectory, plunged 17% that week and continued to fall for months, according to data research firm SDI.

After the July study, known as Seas, analysts braced for a similarly steep drop-off, but were pleasantly surprised. New prescriptions fell just 7% before edging up the following week, according to SDI.

The stabilisation stemmed partly from a growing group of patients for whom Vytorin is the best, most potent option to cut their "bad" LDL cholesterol.

The group is expanding because the number of people taking steps to control their cholesterol has grown, while guidelines for cholesterol reduction have also become more rigorous, says Edward Jones analyst Linda Bannister.

"The number of people who need to take therapy to lower LDL is increasing," she explains. "This should benefit Vytorin over time as a lot of people can't get their LDL to the recommended goal because of the side effects of statins."

Millions of people take statins to cut their risk of heart attack or stroke. But when these medicines are not enough or cause severe muscle aches, doctors turn to drugs like Vytorin. The drug combines a widely used statin, Zocor, with Zetia, which cuts LDL cholesterol through a different mechanism.

"Usually the people who are on it are ones that we've tried other options with," says Randal Thomas, director of cardiovascular health at the Mayo Clinic. "That list (of other options) is very short."

Morningstar's Conover said prescriptions will eventually grow because Vytorin "can lower cholesterol as effectively as high-dose statins with less risk of muscle toxicity."

Still, questions persist about the drug's safety. The publication of the New England Journal editorial, which urged patients to be cautious about Vytorin, coincided with Europe's biggest medical congress at which top cardiologists also expressed concerns about the drug.

"If people read about this and it spurs them to call their physicians, we could see some decline in prescriptions or we could see docs decide not to start new patients on the drug," says Bannister.

Additionally, the US FDA and US congressmen are investigating the Vytorin studies, and their findings could depress Vytorin sales or otherwise surprise investors.

Gordon Carey, a Cambridge Pharma Consultancy analyst, says the biggest risk is that these new developments will prevent doctors from prescribing Vytorin to new patients because good alternatives exist.

"There's such a huge pool of patients, many of whom are difficult to treat," he says. "Having (Vytorin) as an extra tool they can use makes sense."