Merck (NYSE:MRK), maker of the first-ever HPV vaccine, Gardasil, announced positive phase 3 study results for its next-generation HPV vaccine V503 this week.
The new vaccine is purported to protect against nine HPV strains, an improvement at least numerically from Gardasil, which protects against four strains.
HPV, or human papilloma virus, is a sexually transmitted pathogen that is known to cause cervical cancer and genital warts. Two "high grade" strains of HPV, types 16 and 18, account for about 70% of all cervical cancer cases, 85% of all anal cancer cases, and close to half of vaginal, vulvar, penile and oropharyngeal cancers. Two "low grade" strains, types 6 and 11, account for 90% of all genital warts. Gardasil and GlaxoSmithKline's (NYSE:GSK) Cervarix both protect against the two high-risk cancer-causing strains, and Gardasil also protected against types 6 and 11. Most HPV infections are self-resolving after one to two years and do not cause cancer.
Given these statistics, it is not clear if Merck's V503 will have a substantial enough clinical benefit over current HPV vaccines for physicians to justify switching to the new agent. The five additional strains covered by V503 are all cancer-causing "high risk" types, for a cumulative protection against 90% of cervical cancer. Given the variation in prevalence and oncogenicity of the different strains, it is unclear how many cases of cervical cancer would actually be prevented with V503 over Gardasil.
While some analysts estimate annual sales of over $1 billion if V503 is to be approved, these projections are deja vu. Initial estimates during Gardasil's 2006 launch ranged from $4 billion to $10 billion, but in actuality, Merck reported only $1.6 billion in Gardasil sales last year. It should be noted that the estimates for V503 sales would also necessarily come out of otherwise projected Gardasil sales, with the estimated sales of Gardasil projected to be just $525 million by 2018.
Gardasil is nearly synonymous with HPV vaccination -- an advantage in name recognition that could hold value given the tumultuous history of stigma and political fanfare associated with HPV vaccination. Since its introduction seven years ago, Gardasil has battled suggestion that vaccination meant an implicit endorsement of promiscuity. This stigma continued into debates in state governments as they struggled to make the vaccine mandatory. Now that the dust has been relatively settled, with the Centers for Disease Control and Prevention recommending the vaccine in children of both genders aged 11 and 12, vaccination rates have hit a plateau. As children steadily enter the age range of suggested vaccination, Gardasil and similar agents will have a steady market but not necessarily an expanding one from year to year.
Meanwhile, Glaxo is attempting to expand its scope with the possibility of single-dose delivery of its vaccine Ceravix, which would make it a much more attractive agent in developing countries. Compared with the U.S., cervical cancer ranks higher there as a cause of death, and compliance for multiple dose vaccines is much less reliable. Both Gardasil and Ceravix require three injected doses, and of those who received at least one dose of Gardasil or Cervarix in the U.S., only one third received the full regimen of three doses -- even in the U.S.
The National Cancer Institute is studying Ceravix's potential as a single-dose vaccine. With the focus on public health not corporate competition, the NCI is looking to also study Gardasil as a single-dose regimen. It is unlikely approval of a single-dose administration of Ceravix, which accounted for only $66.4 million for Glaxo last quarter, would be enough to overtake the much more successful Gardasil.
As Merck undergoes rounds of layoffs, restructuring, and cost-cutting measures, it is hardly a picture of health. Perhaps most concerning is the declining sales of its diabetes top sellers Januvia and Janumet, both facing strong competition from Johnson & Johnson's recently approved Invokana . Since Invokana's approval in April, Merck has seen its prescriptions decrease while J&J reports strong sales of their new diabetes drug. With struggling sales and strengthening competitors, it seems unlikely that a new Merck HPV vaccine would gain it immunity against deficiencies in other sectors of its business.