Merck (NYSE: MRK) said today that its insomnia drug suvorexant had passed two phase 3 trials, putting it on track for an FDA filing this year. But that doesn't mean investors can sleep easy; filing a marketing application doesn't guarantee an approval, and an approval doesn't guarantee sales.

Investors will have to wait until Merck presents data from the trials at medical meetings later this year to know how well the drug works. The efficacy is likely good enough for approval, since it passed both clinical trials, so safety is the most likely issue that could derail an approval. Insomnia isn't an immediately life-threatening disease, so there's a higher standard for the risk-benefit analysis than there would be for more serious diseases. Sanofi (NYSE: SNY) failed to get FDA approval of its sleeping aid Ciltyri a few years ago because the risk-benefit profile was out of whack, causing the French pharmaceutical company to eventually to give up on the molecule.

On the other hand, efficacy will be very important for selling suvorexant. Merck only compared suvorexant to placebo, but there are plenty of other sleep aids available. Without head-to-head trials, doctors will be forced to compare two placebo-controlled trials, which isn't ideal, but they'll do it. In order to cut into market share held by Dainippon Sumitomo Pharma's (OTC: DNPUF) Lunesta, Sanofi's Ambien CR, Takeda's Rozerem, and others, suvorexant needs to be clearly better, otherwise doctors will just stick with what they have experience with. The sleeping aid market is further complicated by generic versions of Ambien and Pfizer's (NYSE: PFE) Halcion, which might not be the best drugs, but still get used because they save patients money.

Somaxon Pharmaceuticals' Silenor is a prime example of how a nothing-special drug can get approved but struggle in the marketplace. For the third quarter of last year -- its fourth full quarter on the market – sales of Silenor amounted to a whopping $3.7 million. And that's with the help of heavyweight marketing partner Procter & Gamble (NYSE: PG).

Suvorexant is in a new class of drugs, which will help a little. Since it works under a different mechanism of action, it's possible that suvorexant will treat patients not helped by other drugs. But being used as a second- or third-line treatment isn't going to make suvorexant a blockbuster. The only way investors will be able to rest easy is if the data support its use before other treatments.

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