Merck (MRK) recently moved its Alzheimer’s disease candidate, MK-8931, into a phase II/III study (EPOCH). The study will evaluate the safety and efficacy of MK-8931, an oral ?-amyloid precursor protein site-cleaving enzyme (BACE) inhibitor, in mild-to-moderate Alzheimer’s disease patients.
Three oral doses of MK-8931 will be compared to placebo in the 78-week, randomized, placebo-controlled, parallel-group, double-blind study. The safety profile of the candidate will be evaluated in 200 patients before phase III studies are initiated.
We view MK-8931 as a high risk-high return candidate for Merck. The successful development of therapies for the treatment of Alzheimer’s disease is challenging and we note that several companies have failed in developing treatments for the same.
The Alzheimer’s disease market, however, represents huge commercial potential and therefore attracts a lot of interest. A successfully developed product could generate billions of dollars in sales once launched. As per data provided by the Alzheimer’s Association, approximately 5.4 million people have Alzheimer’s disease in the US alone.
Neutral on Merck
We currently have a Neutral recommendation on Merck, which carries a Zacks #3 Rank (Hold). 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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