Merck Withdraws Arcoxia NDA

25 March 2002 00:00  [Source: ICB Americas]

In the hotly contested $5.7 billion COX-2 inhibitor market, Merck & Co. Inc. has delayed potential Food & Drug Administration (FDA) approval for its next-generation arthritis drug Arcoxia (etoricoxib). The drug was to compete against Pharmacia Corp. and co-marketing partner Pfizer Inc.'s Bextra (valdecoxib).

Merck withdrew its new drug application (NDA) for Arcoxia in order to include efficacy data to support a new indication for ankylosing spondylitis, a chronic inflammatory disorder primarily involving the spine.

Merck revised first quarter 2002 earnings per share (EPS) estimates to 69 cents to 72 cents. The company maintains full-year 2002 sales guidance for its COX-2 inhibitor franchise, namely Vioxx (rofecoxib), of $2.8 billion to $3.1 billion, and double-digit growth in 2003.

JP Morgan maintains 2002 EPS estimates for Merck, yet will likely lower 2003 estimates by 2 cents to 4 cents, with Arcoxia sales at $420 million prior to the 10-month delay.

Lehman Brothers projects an expanded NDA filing for Arcoxia by the second quarter of 2002, with approval and launch in the second quarter of 2003. COX-2 inhibitor franchise estimates were revised downward in 2003 from $4.15 billion to $4.0 billion.

Analysts say second-generation COX-2 inhibitors, Arcoxia and Bextra, have potential to reach $2 billion each by 2006. Bextra, successor to Pharmacia/ Pfizer's $3 billion Celebrex (celecoxib), was FDA-approved in November.

Key to the success of Arcoxia, analysts say, is a broad label at launch to distinguish it from competitors. The greatest ramp-up in patient use and sales of Vioxx and Celebrex occurred when the drugs first entered the marketplace.

"With pain drugs (including three other COX-2s) already on the market for osteoarthritis, rheumatoid arthritis and acute pain, Arcoxia's differentiating characteristic rested on the chronic pain indication, a huge market opportunity. Merck's move signals that the FDA may have injected pessimism into the probability of a chronic pain approval, given the data sets submitted in the current NDA," says Lehman Brothers analyst C. Anthony Butler.

Similarly, Pharmacia appears to have stalled marketing support of Bextra until April 2002, adds Mr. Butler, to coincide with publication of a study comparing the drug to Vioxx in an acute pain setting. Celebrex is indicated for acute pain, unlike Bextra.

Merck may also seek to delay Arcoxia until 2003 to accelerate Vioxx use. Approval is potentially imminent for label expansion for Vioxx in gastrointestinal safety.

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