Schering stock nearly crawls out of its hole

NEW YORK (CNNMoney.com) -- Schering-Plough's stock almost crawled out of its hole Wednesday after a two-day lashing sparked by the results of a cholesterol drug trial, but the shares fell just before the market's close.

The stock price of Schering (SGP, Fortune 500) dropped more than 6 percent at the start of trading but quickly recovered by midday. After the end of the day, the stock fell 1.22 percent to close at $23.49, down 29 cents from the previous day's close.

The drugmaker's stock plunged 14 percent over Monday and Tuesday, following the release of a Vytorin study that failed to meet its objective. Merck (MRK, Fortune 500), which is seen as less dependent on Vytorin sales, fell 4 percent over Monday and Tuesday and finished up slightly Wednesday.

James McKean, analyst for Atlantic Equities, called Schering's stock drop "a bit of an overreaction." He said investors were treating the study as if it involved a safety issue, which it did not. But McKean said that investor reaction was understandable, because the drugmakers didn't release the study results for two years, giving rise to the theory that the results were worse than they actually were.

"There's been a lot of speculation that they've been sitting on negative results," said McKean. "There's been a lot of press speculation about why it took so long."

Les Funtleyder, analyst for Miller Tabak, said that the loss to Merck's stock was also "overdone." He said that any bad news associated with Vytorin was "far less of a problem for Merck than for Schering," because Merck has a stronger pipeline to fall back on.

The study, from the New Jersey-based partners Schering and Merck, showed no significant difference between the cholesterol drugs Vytorin and simvastatin in preventing the clogging of arteries. The companies had hoped to prove that Vytorin was better.

Simvastatin is a generic form of Merck's Zocor, a former blockbuster that lost patent protection in 2006. Vytorin is a combination of simvastatin and Schering's Zetia and its primary goal is to lower harmful types of cholesterol. Sales for the combo have grown quickly and are split between the two drugmakers. Sales totaled nearly $4 billion in 2006, marking a 60 percent jump from the prior year.

Reaction to the study prompted the American College of Cardiology to announce: "There should be no reason for patients to panic."

The ACC said, in a statement, that "this is not an urgent situation and patients should never stop taking prescribed medications without first discussing the issue with their health care professional."

Schering spokesman Lee Davies said that it was wrong to interpret the study results as saying that Vytorin was unsafe.

"This needs to be placed in perspective," said Davies. "[The study] was looking at arterial thickness. We did not look at major cardiovascular events, such as heart attacks or strokes."