UPDATE 3-Merck cholesterol drug fails; risks seen

* Cites increase in nonfatal side effects

* Says it will not seek U.S. approval of high-profile drug

* Failure is latest setback for HDL-raising drugs

* Merck shares fall 2.5 percent

(Adds analyst comment, updates shares movement)

Dec 20 (Reuters) - A major trial of Merck & Co Inc's

Tredaptive medicine to increase "good" HDL cholesterol has

raised safety concerns and showed it was no better at preventing

heart attacks, deaths or strokes than traditional statin drugs

that lower "bad" LDL cholesterol, the company said on Thursday.

Merck said the experimental medicine had significantly

raised the incidence of some types of nonfatal but serious side

effects in the study, which followed more than 25,000 patients

for almost four years.

Merck shares fell 2.5 percent to $42.56 in midday trading on

the failure of one of its most closely watched experimental

drugs.

Tredaptive combines an extended release form of niacin, a

nutrient that has been used for decades to raise HDL

cholesterol, with a drug called laropiprant, which is meant to

reduce the incidence of facial flushing that is a side effect of

niacin therapy.

Merck said it no longer planned to seek regulatory approval

for the drug in the United States and is advising doctors in

other countries against starting new patients on it. The

medicine was approved in the European Union in 2008, but U.S.

regulators were unwilling to approve it until Merck conducted

the costly long-term study to better assess its safety and

effectiveness.

The U.S. Food and Drug Administration has been especially

concerned about potential heart risks from laropiprant.

The failed study, called HPS2-THRIVE, is the latest

high-profile trial that has called the heart-protective value of

niacin into question.

Merck said Tredaptive had sales of about $13 million for the

first three quarters of 2012 in the 40 countries where it is

already sold. Had the drug been successful in the HPS2-THRIVE

study, brokerage Cowen and Co predicted its annual global sales

would have jumped to $300 million by 2016.

Sanford Bernstein analyst Tim Anderson had forecast

Tredaptive sales of $1.1 billion by 2020, had it been approved

in the United States.

"It seems conceivable that the drug could be removed from

the market" overseas, he said in a research note.

Merck is developing another drug, anacetrapib, which raises

HDL cholesterol by a greater magnitude than niacin, to see if it

can reduce risks of heart attacks and stroke. If that trial is

successful, many industry analysts believe anacetrapib could

become a huge seller.

Anderson said data from late-stage testing of anacetrapib

should become available in 2017, while results from trials of

evacetrapib, a similar drug from Eli Lilly, should be

unveiled in late 2015.

Garret FitzGerald, chairman of pharmacology at the

University of Pennsylvania, said negative findings for

Tredaptive should not lessen enthusiasm for anacetrapib and

evacetrapib because they raise HDL through a different mechanism

from niacin. Instead, they block a protein called CETP.

(Reporting by Caroline Humer and Ransdell Pierson; Editing by

Gerald E. McCormick and Lisa Von Ahn)

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