WHITEHOUSE STATION, N.J. (

TheStreet

) --

Merck

(MRK) - Get Report

gained an unlikely ally in the hyper-competitive battle to market a new crop of hepatitis C drugs.

Roche

said Tuesday that it will promote in the U.S. Merck's newly approved drug Victrelis in combination with its own hepatitis C drug Pegasys under a broader marketing and research alliance signed between the two drug giants.

What makes this partnership unusual is that Roche and Merck have been long-time hepatitis C treatment competitors. The new arrangement aligns the interests of two pharmaceutical marketing powerhouses, which for Merck is especially helpful as it strikes out to compete against

Vertex Pharmaceuticals

(VRTX) - Get Report

and its new hepatitis C drug.

Roche's Pegasys, or weekly interferon injection, has about 80% market share to Merck's own long-acting interferon injection, Peg-Intron, which has about 20% market share.

Under this new agreement, Roche will be promoting the use of Merck's Victrelis in combination with Pegasys as a new, triple-combination therapy against hepatitis C. Victrelis was approved in the U.S. last Friday, making it the first in a new class of direct-acting antiviral agents against hepatitis C.

Vertex is expecting to receive similar U.S. approval on or before May 23 for its drug, Incivek. The launch of two new and similar

hepatitis C drugs promises to ignite one of the fiercest drug marketing battles in years

.

The Merck-Roche deal is not exclusive, which means that Roche, at some point, could agree to a similar deal with Vertex to promote Incivek. Vertex, however, may not necessarily need Roche's direct help because Incivek is already closely tied to Pegasys. Incivek's pivotal clinical trials used Roche's Pegasys as the long-acting interferon backbone, whereas Merck tested Victrelis in combination with its own Peg-Intron.

Still, bringing Roche on board to promote Victrelis is a coup for Merck because it adds a new and experienced sales force that will be able to educate doctors about how to best use Victrelis. One of the issues weighing on Merck is the complex and often confusing dosing schedules required with Victrelis as compared to a much simpler dosing schedule for Vertex's Incivek.

Victrelis and Incivek have never been compared in a head-to-head study but the Vertex drug is also widely viewed as more effective -- able to cure upwards of 80% of newly treated patients compared to an approximate 60% cure rate for Merck's drug.

Merck and Roche did not disclose financial terms of the deal but a Merck spokesman said that Merck retains 100% of the Victrelis economics even with the Roche marketing deal in place. Presumably, that means Roche will not receive a royalty on Victrelis sales but will gain as more doctors choose to use its Pegasys with either Victrelis or Incivek. Roche may have also been worried that Merck was planning to tempt doctors with a discounted bundle of Peg-Intron with Victrelis that could have hurt Pegasys market share.

Under terms of the agreement, Merck and Roche will also cooperate on new studies that will seek to combine Victrelis with Roche's experimental hepatitis C drugs. This new research alliance can include experimental drugs that Roche licensed from other companies, including one from

Pharmasset

(VRUS)

, according to a Roche spokeswoman.

--Written by Adam Feuerstein in Boston.

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