Merck & Co. Inc. (MRK) recently entered into an exclusive commercialization agreement with H. Lundbeck A/S for its antipsychotic drug, Sycrest (asenapine). The deal, which is for an undisclosed amount, will allow Lundbeck to commercialize Sycrest in all markets excluding the United States, China and Japan. Merck has retained the commercialization rights for these markets. Merck is also entitled to receive product supply payments on the drug in future.
Sycrest is marketed in the US as Saphris for the acute treatment of schizophrenia in adults and the acute treatment of manic or mixed episodes associated with bipolar I disorder with or without psychotic features in adults. The drug was recently approved by the US Food and Drug Administration (FDA) for the treatment of schizophrenia in adults.
Sycrest is approved in the European Union (EU) for the treatment of moderate to severe manic episodes associated with bipolar I disorder in adults. Product launch in the EU is scheduled to commence from 2011.
Neutral on Merck
We currently have a Neutral recommendation on Merck. Lundbeck is a suitable choice for the commercialization of Sycrest, given its strong presence in the central nervous system disorder market.
Merck is currently facing issues such as patent expirations of key drugs and recent pipeline failures. However, the company has a deep pipeline which should act as a cushion when its key products lose patent protection in the next few years.
Moreover, some of Merck’s recent launches should start contributing significantly to the top line in the forthcoming quarters. The restructuring initiatives undertaken by the company should also improve its bottom line.
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