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Protecting kids against STDs
Merck says its new vaccine may prevent cervical cancer, but will parents allow vaccinations?
May 19, 2005: 1:35 PM EDT
By Aaron Smith, CNN/Money staff writer

NEW YORK (CNN/Money) - A cervical cancer vaccine that analysts are calling the biggest potential blockbuster in Merck & Co.'s pipeline passed the first phase in late-stage testing and will be filed with the Food and Drug Administration this year, the company said Thursday.

But, of course, there's a catch.

Gardasil achieved positive results in Phase 3 tests on more than 1,500 boys and girls ages 10 to 15, Merck said. Gardasil prevents the sexually transmitted human papillomavirus, or HPV, and could be a controversial product because it is most effective in children before they become sexually active, analysts said.

"It's a potentially politically charged issue because you're talking about vaccinating people against sexually transmitted diseases when they're 12 or 13," said Barbara Ryan, analyst for Deutsche Bank North America.

Vaccinating adult women who have already been sexually active for years would have a limited effect, because many of them have already been infected or they've settled into marriage, said Al Rauch, analyst for A.G. Edwards. Therefore, as a preventative, the vaccine will be most effective in children.

"Dragging your 10-year-old to get a vaccine for a sexually transmitted disease could have some groups pretty upset," said Rauch.

Nonetheless, Gardasil could become a medical boon serving a large segment of the population. Merck spokeswoman Kelley Dougherty would not provide an estimate on projected sales for the vaccine, but said the virus has infected some 20 million Americans and causes cervical cancer, other forms of cancer and genital warts.

"We'll be presenting more Phase 3 testing this year and we'll be filing with the FDA later this year," said Dougherty.

Merck said earlier this year that Gardasil sales could help the company stabilize growth, after having pulled blockbuster Vioxx, an arthritis painkiller, from the market in 2004.

"It's certainly a major medical need in the ability to prevent cervical cancer," said Rauch. "That gives it the potential to be a blockbuster. We're not expecting a real quick ramp up on this, though it could become a billion dollar drug."

The FDA's approval process for vaccines generally takes at least one year, said Rauch, so Gardasil could enter the market in 2006 if it is approved.

Ryan estimated that Gardasil could achieve annual sales from $1 billion to $3 billion, depending on whether it achieves universal recommendation by the Centers for Disease Control and Prevention.

"If it's universally recommended then obviously people are going to be getting the vaccine much more broadly," said Ryan. Merck still needs to conduct Phase 3 testing on more than 20,000 people before it can submit findings to the FDA, said Ryan.

Analysts said Merck could face competition from GlaxoSmithKline's vaccine Cervarix, which is also being tested for the prevention of HPV. Cervarix is at least one year behind Gardasil in the testing process but would compete with the product once it was introduced, analysts said.

Merck (down $0.20 to $32.75, Research) stock prices were down slightly in afternoon trading.

The analysts interviewed for this company do not own stock in the companies mentioned here. A.G. Edwards does not conduct banking with the companies but Deutsche Bank may have done some business with them.  Top of page

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