Merck & Co. rose to its highest value in four years after the company said it will stop testing an experimental drug meant to prevent bone fractures in women with osteoporosis because the therapy worked so well in a trial.
Merck, based in Whitehouse Station, New Jersey, increased 4.1 percent to $42.91 at the close in New York, its biggest gain since August 2011 and highest price since March 2008.
The drug, odanacatib, has been tested in post-menopausal women with osteoporosis since 2007, and an advisory panel monitoring results recommended closing the phase 3 study early “due to robust efficacy,” Merck said yesterday said in a statement. The therapy would compete with Amgen Inc.’s bone-strengthening drug, Prolia. That medicine, approved in 2010, generated $203 million in 2011 sales, Thousand Oaks, California-based Amgen reported.
“The likelihood is that odanacatib will be more effective,” said Barbara Ryan, a Greenwich, Connecticut-based analyst with Deutsche Bank, who said today’s announcement will make investors realize the stock is undervalued. She has a buy rating on the stock and $47.25 price target.
“We have revenues for the product in 2016 of $800 million, it could certainly be more than that,” she said.
Merck is seeking new products while cutting jobs in preparation for facing generic competition next month in the U.S. to its best-selling asthma treatment Singulair. The company plans to submit the drug for regulatory approval in the U.S., European Union and Japan during the first half of next year.