Vaccine May Be a Winner for Merck

An experimental Merck (MRK) vaccine designed to protect women from cervical cancer was completely successful, according to the findings of a company-sponsored research program.

The vaccine, Gardasil, is being developed to fight the human papillomavirus, or HPV, which can lead to cervical cancer. The research found that Gardasil recorded a 100% prevention rate of certain early cancers and precancerous lesions for two types of HPV that account for 70% of cervical cancers.

Laura Koutsky, principal investigator of the HPV research group at the University of Washington, said the results are the first pivotal data to show that vaccination with Gardasil reduced cervical precancer and noninvasive cervical cancer associated with HPV 16 and HPV 18, the two major types of HPV.

Merck's news sent its stock up 33 cents, or 1.2%, to $27.22 in heavy trading Thursday. The drugmaker's shares rose as high as $27.84 as trading began, but eased after a New Jersey judge rejected a Merck request to dismiss a Vioxx-related lawsuit midway through the trial.

John Boris of Bear Stearns wrote in a research note that the Gardasil test results are "compelling," and the timing of the clinical trial gives the vaccine a competitive advantage over Cervarix, a product from GlaxoSmithKline (GSK). Merck appears to be in the lead to convince regulators of the effectiveness of its vaccine.

Boris expects Gardasil to reach the U.S. market in late 2006 and Cervarix to become available in 2008. That two-year lead is "potentially a significant opportunity for Merck," he says. Boris has a peer perform rating on Merck. He doesn't own Merck shares, and his firm doesn't have an investment banking relationship with the company.

Merck said it remains on schedule to seek marketing approval for Gardasil during the fourth quarter from the Food and Drug Administration.