Merck Abandons New Hepatitis C Drugs Amid Crowded Market

Merck & Co. is halting development of new hepatitis C treatments after reviewing their effectiveness and determining an abundance of treatments, including its own drug, Zepatier, were already available.

The market to treat the liver disease afflicting 3.5 million Americans has become increasingly competitive, prompting Merck and others to focus their attention elsewhere.

Johnson & Johnson's Janssen unit earlier this month discontinued development of its own hepatitis C treatment, which analysts said had good but not competitive results. The company said it would focus on hepatitis B treatments, an area where there are fewer options.

Merck, which made its decision after Phase 2 trials of two combination regimens, said Friday it will study Zepatier in efforts to bring it to more patients.

The FDA approved the use of Zepatier, a once-daily, single-tablet combination of two drugs, grazoprevir and elbasvir, to treat adults with two types of hepatitis C in 2016.

Merck shares, up 9.2% so far this year, were inactive in premarket trading.

Merck recently recorded a $2.9 billion impairment charge related to research and development of uprifosbuvir, the antiviral used in the abandoned regimens, after lowering its value to $240 million due to competition. Merck had acquired the drug-development program through its purchase of Idenix Pharmaceuticals Inc. for $3.9 billion in 2014.

Gilead Sciences Inc., the market leader in hepatitis C, derived 40% of revenue in its latest quarter from hepatitis C treatments. But those sales have been declining since 2015 as pricing pressures increase.

AbbVie Inc. in August said it had received Food and Drug Administration approval to sell its next-generation hepatitis C treatment, Mavyret. The company said up to 95% of hepatitis C patients will be eligible for the drug, which at $24,600 for a standard course of treatment will cost less than older drugs from AbbVie, Merck and Gilead.

Analysts at Leerink said Merck's announcement, combined with J&J's plan, "changes everything" in terms of new treatments for the virus.

"The commoditization of the category is likely to stop almost immediately, and AbbVie and Gilead should establish some sort of stable duopoly in this still massive disease indication," Leerink said in a research note.

Gilead shares rose less than 1% premarket, while AbbVie shares were little changed.

Write to Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

September 29, 2017 09:18 ET (13:18 GMT)