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Despite securing Food and Drug Administration approval for Gardasil, the first cervical cancer vaccine,


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still needs more endorsements to ensure big sales.

An advisory group to the Centers for Disease Control and Prevention and state legislatures will play major roles in Gardasil's future, demonstrating to investors that there's more to assessing a drug's prospects than FDA clearance.

Gardasil prevents major types of human papillomavirus, or HPV, which causes cervical cancer and genital warts, and the vaccine was greeted upon approval with considerable fanfare because of its potential. Just how far that potential will take it could soon become easier to gauge.

On June 29, Gardasil goes before the Advisory Committee on Immunization Practice which consists primarily of experts in public health, infectious diseases and pediatric care. Although states have the ultimate say in what vaccines are required of school-aged children, the ACIP's opinion carries considerable influence in the public health arena for vaccinating children and adults.

Failure to win ACIP support would likely doom Gardasil. Lukewarm or narrowly defined support could deflate sales of a vaccine that many analysts believe will be an annual $1-billion-plus seller. Some peak sales estimates are upward of $3 billion.

Influential Group

"While the ACIP recommendation is very significant, the ultimate decision as to whether HPV vaccination will be mandated as a condition of school attendance is the responsibility of each state," says Jason Schwartz, a researcher at the University of Pennsylvania Center for Bioethics, in recent comments on the Web site that he edits for the university's Ethics of Vaccines Project.

"Since that appears to be the key point of contention for critics of the vaccine," Schwartz adds, "the federal actions expected in

late June will likely only mark the start of months of deliberation, lobbying and scrutiny centering on each state's department of health."

The ACIP's vote will influence insurers as well as government agencies that could help people who can't afford $360 for the three-shot Gardasil regimen. Insurers "usually cover" vaccines endorsed by vaccine advisers, says the CDC. "However, while some insurance companies may cover the vaccine, others may not," the agency says.

The ACIP will govern the response of the federal Vaccines for Children program, which provides free vaccines to children and teens under 19 who are uninsured, Medicaid-eligible, American Indian or Alaska natives. If ACIP votes in the affirmative, Gardasil will be included.

The advisory group's vote also could influence the states that provide free or low-cost vaccines to the uninsured at public health clinics. Merck recently said Gardasil would be part of a new program to provide free vaccines to adults who are uninsured or who can't afford the medications.

Money and Medicine

Earlier this month, the

FDA approved Gardasil to much medical acclaim for fighting HPV, the most common sexually transmitted disease in the U.S.

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"This vaccine is a significant advance in the protection of women's health in that it strikes at the infections that are the root cause of many cervical cancers," Dr. Andrew von Eschenbach, acting FDA commissioner, said on June 8 when the agency cleared Gardasil.

Gardasil is approved for females between the ages of 9 and 26. It covers two types of HPV that account for 70% of cervical cancers and two types of HPV that cause 90% of genital warts. The vaccine doesn't protect women against other types of HPV, and it doesn't help women who are already infected.

Needless to say, a lot is riding on the ACIP vote.

"The ACIP is a distinct, stand-alone entity," says Susanna Matter of Leerink Swann in a June 9 research report. "Therefore, despite the FDA's strong endorsement of Gardasil, its placement on the national immunization schedules is not guaranteed."

Matter expects Gardasil "to be a significant contributor to Merck's future growth" and predicts $3 billion in sales in 2009. Matter has an outperform rating. She doesn't own shares, and her firm doesn't have an investment-banking relationship.

Gardasil's revenue will come not only from the U.S. but from foreign markets. The vaccine has been approved in Mexico, and applications are under review by regulators in large markets such as the European Union and Brazil. Merck also is working with health officials and with the Gates Foundation to bring Gardasil to developing countries where the rates of HPV and cervical cancer are much higher.

The CDC estimates 6.2 million Americans become infected with genital HPV each year. An average of 9,710 cases of cervical cancer and 3,700 cancer deaths are linked to the virus annually. Worldwide, the CDC adds, there are 470,000 new cases and 233,000 deaths from cervical cancer each year.

John Boris of Bear Stearns says the FDA's strong support plus Merck's higher-than-expected pricing prompted him to raise his Gardasil sales estimates. For 2009, he predicts $2.4 billion, up from a previous estimate of $2 billion and well ahead of what he says was the Wall Street consensus of $1.5 billion.

Boris says


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is probably 18 months behind Merck in the U.S. market for

a competing vaccine called Cervarix. GlaxoSmithKline plans to seek FDA approval by year end. Gardasil already has one advantage, because it's approved for preventing most HPV-caused genital warts. Cervarix, meanwhile, isn't designed for genital warts.

Boris has a peer-perform rating on Merck. He doesn't own shares, but his firm has had a non-investment-banking relationship with the company.

More Than Science

Because Gardasil doesn't work on people who are infected with HPV, Merck and public health experts say early vaccinations are important.

One federal survey shows that 25% of males and females had sex by age 15, a rate that rises to 70% for females at age 18 and 70% for males at age 19. "Clearly, these data point to a need for vaccination in early adolescence, before sexual initiation and multiple sex partners," said Dr. Nicole Liddon of the CDC's division of sexually transmitted disease prevention, according to the minutes of a February ACIP meeting.

Still, Gardasil may face challenges from religious organizations that say the best defense against HPV is abstinence. Some critics of the drug have said the vaccine could promote promiscuity.

Liddon, at the ACIP meeting, said that claim "is not a new concept." Previously, she said, warnings have been issued about, among other things, the "increased sexual risk if penicillin were used to treat syphilis." Various studies suggest that promiscuity "will be unlikely to result" from HPV vaccinations, Liddon said.

In recent months, some organizations have issued formal statements saying that they don't oppose HPV vaccines, but they also don't want them required for school attendance. The ACIP will review recommendations that Gardasil be provided routinely for girls as young as 11.

One such group, Focus on the Family, says it "supports widespread availability of HPV vaccines but opposes mandatory vaccinations for entry to public school." The Colorado-based group says any decision for vaccinating a child against an STD "should remain with the child's parent or guardian." The best protection against HPV, it says, is abstinence before marriage and faithfulness afterward.

Merck's public response to potential critics has been cautious.

"Support continues to grow" for Gardasil, says spokeswoman Kelley Dougherty, adding that the company will "work with stakeholders" to provide education about HPV and vaccination. Merck provides disease and vaccine information to state health departments, and it will offer Gardasil information after the ACIP vote, she says.

Assuming there's a favorable ACIP vote, Dougherty adds, it would be hard to predict how quickly states would act because each has different public health procedures.