Recently, the US Food and Drug Administration (FDA) cleared Merck & Co., Inc.’s (MRK) skin cancer (melanoma) drug, Sylatron (peginterferon alfa-2b). The once-weekly injectable drug has been approved by the US regulatory body for subcutaneous use.
Sylatron has been approved as an additional therapy to treat skin cancer patients (with microscopic or gross nodal involvement) within 84 days of surgery including the removal of lymph nodes. The US agency has cleared Sylatron on the basis of data from the European Organisation for the Research and Treatment of Cancer (EORTC) study (n=1,256).
The drug is prohibited for treating patients who are historically allergic to peginterferon alfa-2b or interferon alfa-2b. Moreover, the drug has not been cleared to treat skin-cancer patients suffering from autoimmune hepatitis and also those affected by hepatic decompensation. The FDA stated that Merck’s drug should be stopped permanently by patients showing symptoms of their depression worsening or persisting. Furthermore, the drug should be stopped for treating patients suffering from psychosis or encephalopathy.
The approval of Sylatron is a huge positive for Merck as the melanoma market represents significant market opportunity. Merck will compete with established players like Bayer (BAYRY) in the market. Moreover, the FDA approval of Bristol-Myers Squibb’s (BMY) Yervoy earlier in the year has intensified competition in the market.
Vaccine Development Halted
Recently, Merck and partner Intercell AG stopped enrolment of a phase II/III study being conducted with their vaccine, V710. The vaccine is being studied for the prevention of infections caused by the Staphylococcus aureus bacteria. Patients infected by the bacteria can be affected by infections acquired from hospitals.
The decision was based on the recommendation of an independent data monitoring committee. The committee recommended that enrollment for the study be stopped pending further evaluation of the vaccine's benefits versus the attendant risks.
Neutral on Merck
We currently have a Neutral recommendation on Merck supported by a Zacks #3 Rank (short-term Hold rating). Merck is currently facing issues such as patent expirations of key drugs, EU pricing pressure, US health care reform 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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