July 9 (Bloomberg) -- Merck & Co. fell in New York trading after researchers halted a study comparing Abbott Laboratories’ cholesterol drug Niaspan with Zetia, sold by Merck and Schering- Plough Corp.

The researchers said there were no safety concerns and chose to stop the study, called Arbiter 6 Halts, after a “prespecified, blinded interim analysis,” according to a posting in the National Institutes of Health’s clinical trials database. Abbott doesn’t know why the study was ended early and wasn’t involved in the decision, said Elizabeth Hoff, a spokeswoman for the company, based in Abbott Park, Illinois.

The study may have shown Niaspan was more effective at unclogging arteries than Zetia, according to analysts from Natixis Bleichroeder Inc. and Wells Fargo Securities LLC. A finding favoring Niaspan may further erode sales of Zetia, which fell 22 percent in the U.S. last year after studies, said Jon Paul LeCroy, an analyst with Natixis, who downgraded Merck today.

“We are now assuming that this trial significantly favored Niaspan and, as a result, we are decreasing our sales estimates for both Zetia and Vytorin,” LeCroy said. “If this trial favors Niaspan, it would be the third blow against Zetia. We would expect Zetia and Vytorin prescriptions to show further declines.”

Previous Trials

Last year, results of a trial called Enhance showed Zetia may work no better at unclogging arteries than an older, cheaper pill, and a study called SEAS showed Zetia may increase the risk of cancer. Zetia and Vytorin, which combines Zetia and the cholesterol pill simvastatin, had $4.6 billion in sales in 2008.

Merck declined $1.03, or 3.7 percent, to $27.01 at 4 p.m. in New York Stock Exchange composite trading. The company has lost 27 percent of its value in 12 months.

LeCroy said trials are typically stopped early for safety issues or when one drug works so much better that it would be impossible for the other to outperform it by the end of the study.

Researchers looked at whether using Niaspan to raise HDL cholesterol was more effective than lowering LDL cholesterol with Zetia, judging by the thickness of patients’ neck arteries.

Barbara Ryan, a Deutsche Bank analyst, said the trial may have been ended early because researchers were having trouble enrolling patients or thought the study wasn’t necessary following the Enhance study. Had there been a positive outcome for Niaspan, Ryan said the results probably would have been released by now.

‘Unwarranted’ Weakness

“Any substantial weakness in Merck shares today on this development is unwarranted, in our view, based on the available information,” Ryan said today in a note to clients.

The research was funded by Abbott and conducted at Walter Reed Army Medical Center, in Washington.

The Simcor drug combines Niaspan and the older cholesterol pill simvastatin. Niaspan had $786 million in sales last year.

Lead researcher Allen Taylor, co-director of noninvasive cardiovascular imaging at Washington Hospital Center, declined to comment.

To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net;

Last Updated: July 9, 2009 17:11 EDT