Analysts' Puzzling Merck Vorapaxar Reaction: Did They "Forget" That 2010 $1.7 Billion Write-Off?

Peter Loftus is covering a head-scratcher today. While the latest top-line news on Merck's (actually legacy Schering-Plough's) vorapaxar studies doesn't represent the absolute worst case scenario, it is nearly unfathomable that Merck might now seek FDA approval for the candidate -- with a label indicating that it is only for patients with no history of strokes.

Seriously, folks -- this is a candidate that was previously shown to triple bleeding risk, and in a large study, to boot.

Think about that for a minute -- Merck already wrote off $1.7 billion, understanding that the risk of brain-bleeds would doom its prescribing chances. Will a US-licensed-doctor really write a scrip for it, saying "Well, you haven't had a stroke, so your risk of blood clots in the brain from vorapaxar is smaller than other patients. . ."?

C'mon -- given the rather-alarming data on bleed risks (in late 2010), and the presently-available drug alternatives, that simply amounts to a medical-malpractice claim, albeit "still on the hoof."

In addition, it might yet take another $100 million of new money, from Whitehouse Station, to win that "unicorn's" approval -- for a drug with essentially no realistic US market narrative.

Two words: No way. And. No how. [Even so, Merck's stock is rising slightly, on the NYSE, in a generally flat market today.]

Here is a bit of the Pete Loftus by-lined story -- do go read it all (as he is the most experienced of the writers covering it today):

. . . .[A]fter the bleeding risk was observed last year, vorapaxar was discontinued in people with a history of stroke. Patients with a history of heart attack or peripheral artery disease -- about 75% of enrolled patients -- continued to receive vorapaxar.

Tuesday, Merck said the risk of bleeding inside the skull was lower among vorapaxar users with no history of stroke.

This raises the possibility that vorapaxar could get regulatory approval for use in patients with no history of stroke.

ISI Group analyst Mark Schoenebaum said regulatory approval of vorapaxar in this patient population would represent upside from his current forecast of zero sales for vorapaxar. But he discouraged investors from assuming that this would materialize, saying more will be known when full data are presented in March. . . .

It will astound me if Chairman Ken Frazier decides to spend another perhaps $100 million to seek such a narrow label -- and aim for a non-existent market. Even Forbes' Matt Herper is suggesting (by inference) that the $1.7 billion 2010 write-off might have been premature. I am all but certain it wasn't. And in March, we will know with certainty -- as the full study results will be available to the ordinary investing public. For today, though, I's say beware the desperation narratives out of Sanford Bernstein & Co.