Merck Unveils Alzheimer’s and Diabetes Projects, Personnel Changes

11/10/11Follow @arleneweintraub

Merck (NYSE: MRK) outlined progress on several of the drugs in its pipeline today during its annual R&D and business briefing for Wall Street analysts and investors, which was held at the drug giant’s Whitehouse Station, NJ headquarters.

CEO Kenneth Frazier began the day by acknowledging that Wall Street has been impatient with the company’s progress in advancing novel drugs to market. Despite the fact that the company has won FDA approval for five new products this year—including boceprevir (Victrelis) to treat hepatits C—the company’s stock has been declining over the last six months, dropping from $36 in May to $33.80 yesterday. “We recognize we can’t ask you—our investors—to wait for us to achieve our long-term aspirations,” Frazier told the audience at R&D Day.  ”I want you to know we intend to perform in the short term.”

Merck’s R&D chief Peter Kim started by highlighting several drug candidates in Merck’s late-stage pipeline. Kim reviewed recent data on a range of drugs to treat such conditions as osteoporosis, atherosclerosis, and chronic insomnia. Kim vowed to submit eight new drugs to the FDA for approval in 2012 and 2013.

During R&D day, Merck outlined recent progress on six novel drug candidates, including two the company detailed for the first time. First is MK-3102, an oral drug to treattype 2 diabetes. The molecule is in a class of drugs called dipeptidyl peptidase-4 (DPP-4) inhibitors. Merck pioneered this class with its blockbuster drug sitagliptin (Januvia), approved in 2006. While sitagliptin is generally taken once a day, MK-3102 is being developed as a once-weekly drug. The company expects to take it into pivotal Phase 3 trials in 2012.

Merck also unveiled MK-8931, a drug it is testing in Alzheimer’s disease. MK-8931 inhibits an enzyme known as BACE1, which is believed to contribute to the amyloid plaques that form in the brains of Alzheimer’s patients. Merck expects to start a Phase 2 clinical trial next year and hopes to be first-in-class with a BACE1 inhibitor.

The company discussed new data on its experimental hepatitis C treatment, MK-5172, which it presented last week at the American Association for the Study of Liver Diseases. In a Phase 2 study, the drug demonstrated activity against mutant forms of the virus that have traditionally not responded to standard treatments.

Kim described changes made in the research process that he believes contributed to the rapid advancement of those drugs and others in the company’s pipeline. He said the company is undergoing a rigorous review of the pipeline, which involves prioritizing the projects that have the biggest potential to offer significant medical advances and a high return-on-investment. The strategy hinges on making early and quick decisions on which pipeline candidates should be pursued, and which should be abandoned, he said.

Merck has been undergoing these changes at a time when many of the executives that drove the company’s innovation strategy in the past have been leaving. A company spokesperson confirmed today that David Nicholson, head of worldwide licensing, would be leaving the company and would be replaced by Roger Pomerantz, senior v.p. for infectious diseases. Merv Turner, the company’s former chief strategy officer (and one of our Xconomists), retired earlier this year.

Frazier ensured the crowd that the culture of innovation that has driven Merck’s growth in the past would persist.”We remain confident in our future,” he said.

At the start of the meeting, Frazier announced Merck would increase its quarterly dividend 11 percent to 42 cents per common share. Shares of Merck were up 2 percent to $34.61 in morning trading.

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