Cordaptive seemed it would be the saving grace for the problems Merck (NYSE: MRK) was having with its other cholesterol drugs, Vytorin and Zetia. That is until last night, when the FDA sent the drugmaker a not-approvable letter for its latest creation.

Merck's downward spiral
As of yesterday's close, the big pharma has lost almost 30% of its value since the beginning of the year, after Merck and marketing partner, Schering-Plough (NYSE: SGP) announced that Vytorin, a combination of Zetia and Zocor, failed to decrease the plaque in a neck artery more than Zocor, which is available as a generic.

That caused first-quarter sales of the cholesterol drugs in the U.S. to fall as patients stormed their doctor's offices demanding to be put on a different cholesterol-lowering drug. The bad media attention the companies got certainly didn't help.

Then it got worse for the duo last month when cardiologists recommended that the drugs be used only as a last resort. The drugs still clearly lower cholesterol levels, but doctors prefer to use drugs that save patients' lives rather than ones that lowered numbers on a lab report.

Merck and Schering are testing Vytorin's ability to reduce cardiovascular events like heart attacks, but that data isn't expected until 2012. Until then, Merck's best bet was Cordaptive, a cholesterol drug it had been working on by itself.

Delayed revival
Cordaptive is a combination of Merck's extended-release niacin and laropiprant, a novel flushing pathway inhibitor. Niacin is a wonder drug because it raises good cholesterol and lowers the bad kind. Its only problem is that it makes patients so hot and sweaty (flush) that they often stop taking it. The addition of laropiprant stops the side-effect and was shown to work well in clinical trials.

Unlike small drug developers that typically try to reassure investors that they'll be able to take care of FDA issues, a big pharma tends to give no explanation. That was the case with Merck's announcement yesterday: The company didn't give investors a clue about what the agency didn't like about the drug. Merck only said it would "submit additional information to enable the agency to further evaluate the benefit/risk profile" of the drug.

The only thing we know for sure is that the agency didn't like the name Cordaptive -- maybe because the agency thought it was too similar to another already approved drug. Merck plans to change the name to Tredaptive -- I guess "Failedrescueaptive" was too long.

Merck had asked the FDA to approve the drug for use either by itself or in combination with statins. The combination treatment would help it in the competitive cholesterol market because it wouldn't have to compete directly against drugs like Pfizer's (NYSE: PFE) Lipitor or AstraZeneca's (NYSE: AZN) Crestor -- patients could take both and really get their cholesterol under control.

Merck is also working on its own combination drug that adds its own now-generic statin, Zocor, to Tredaptive. A label that included combination therapy would have raised the chances that this combination drug was approved.

As is often the case, one drugmaker's FDA misery is another's jubilation. Abbott Labs (NYSE: ABT) won't see additional competition in the U.S. for its extended-release niacin drug, Niaspan, for a while. It will have competition in Europe, though, since Merck's drug was given a positive recommendation by the Committee for Medicinal Products for Human Use last week.

The imminent European approval is certainly good news for Merck, but the U.S. market is much larger and clearly the not-approvable letter will hurt its earnings in future years.

Until investors get more information, it's anyone's guess if this is a six-month or six-year delay in getting Merck turned back in the right direction. My best guess is that the reason the FDA is worried about the flushing inhibitor is that not much is known about its long-term safety. That could result in a very restrictive label -- limiting sales to only patients with very high cholesterol levels -- or more clinical trials, which would mean a lengthy delay.