Merck and Schering delay 2Q reports to afternoon

Drugmakers Schering-Plough Corp. and Merck & Co. took the highly unusual step of delaying their second-quarter results until after the closing bell Monday so European researchers can present data from a study of the companies' cholesterol drug Vytorin.

The move drove their shares down, with Schering-Plough's diving by as much as 15 percent Monday morning.

The two companies market Vytorin, which combines Schering-Plough's Zetia and Merck's Zocor, through a joint venture. They were to report quarterly results Monday morning but delayed them at the last minute for an update from a patient study called the Simvastatin plus Ezetimibe in Aortic Stenosis, or SEAS. Simvastatin is the generic name for Zocor, while ezetimibe is the generic name for Zetia.

The update will be at 1 p.m. EDT by Dr. Terje Pedersen, the lead investigator in the SEAS trial, which compares Vytorin to a placebo in treating aortic stenosis, or narrowing of the aorta, the heart's biggest artery.

Analyst Steve Brozak of WBB Securities said he sees an 80 percent chance the results will be bad news for the companies.

"They're trying to figure out how to go out there and break it to the shareholders," he said, adding the announcement will be scrutinized both for what is said and for what is not said.

Deutsche Bank analyst Barbara Ryan wrote that the call delay suggests "a definitive outcome may have emerged from the study," even though most analysts expect that the study would find Vytorin performed no better than a placebo in slowing narrowing of the aorta, reducing number of valve replacements needed or reducing heart attacks, strokes and death.

James Kelly, an analyst at Goldman Sachs, wrote in a note to investors that the most likely scenarios are that the researchers found Vytorin didn't reduce cardiovascular risks but slowed narrowing of the aorta, or that Vytorin didn't improve any measures of heart disease. But he noted it's possible the study had a positive outcome or found safety problems with the drug.

It is one of four aftermarket patient studies comparing Vytorin and Zetia to placebos or generic drugs. Another highly anticipated study called IMPROVE-IT, with 18,000 patients, is meant to show whether or Vytorin reduces risk of heart attack, stroke and death in people with heart disease, but it runs until 2012.

Kenilworth, N.J.- based Schering-Plough will hold a conference call with analysts at 4:45 p.m. instead of 8 a.m. Whitehouse Station, N.J.-based Merck will do so at 5:30 p.m. instead of 9 a.m.

Sales of Vytorin and Zetia took a hit in January after a study, called ENHANCE, showed Vytorin is no more effective at reducing plaque buildup in neck arteries than Zocor alone. Cheaper generic versions of Zocor have been on sale for two years.

After more details were released in March, prominent cardiologists urged doctors to go back to older, well-proven treatments for high cholesterol, and many apparently did. Last week, Schering-Plough reported the number of U.S. prescriptions filled for Vytorin and Zetia had both fallen by just over 25 percent from January to June, when total cholesterol drug sales were down about 5 percent. Vytorin prescriptions alone dropped from 1.84 million in January to 1.33 million in June.

Over the first half of 2008, Merck shares fell 35 percent and Schering-Plough shares fell 26 percent.

The ENHANCE study was completed nearly 2 years before the first data were released. The companies have denied charges they deliberately delayed releasing the results, blaming the holdup on the complexity of the analysis.

However, it sparked consumer fraud lawsuits and investigations by the Senate's Finance Committee and the House's Energy and Commerce Committee into how Merck and Schering-Plough handled the study data while they were aggressively marketing Vytorin with "Food and Family" ads. In April, the Senate committee released evidence the companies may have known long ago that research showed Vytorin was no more effective than Zocor but withheld it to pump up sales of Vytorin.

Vytorin costs $100 a month or more, while a generic version of Zocor costs about one-third as much. Cholesterol drugs are the top-selling class in the country.

On average, analysts polled by Thomson Financial expect Kenilworth, N.J.-based Schering-Plough to earn 42 cents per share on $4.77 billion in revenue. They expect an average of 83 cents per share on $6.05 billion in revenue for Merck, which is based in Whitehouse Station, N.J.

In midday trading before the announcement, Merck shares were down 90 cents, or 2.4 percent, at $36.79, while Schering-Plough shares were down $2.16, or 10.1 percent, at $19.28.