I'm blogging today from outside the New York Stock Exchange where I'm trying to round up "man-on-the-(Wall) street" reaction to the markets. In the meantime, back on the beat, for the second day Merck and Schering-Plough have taken out two-page ads in major newspapers (see below) defending their cholesterol drugs Zetia and Vytorin whose efficacy is under attack.
The campaign takes direct aim at the fallout from the ENHANCE study showingthe two drugs may not work significantly better than Zocor alone.
The ad offsets the most important line in boldface: "All of us at Merck and Schering-Plough proudly stand behind the established efficacy and safety profiles of ZETIA and VYTORIN." And then it's "signed" by the Chief Medical Officer of SGP and MRK's VP of External Medical and Scientific Affairs.
But has the horse already been let out of the barn?
The most scathing research comes from Leerink Swann's Seamus Fernandez. He's downgrading SGP from Outperform to Market Perform calling the stock "dead money".
That phrase is based on a survey of 111 cardiologists and primary care physicians which he says suggests a 15 percent drop in Vytorin/Zetia prescriptions versus his previous forecast for a 10 percent decline.
Goldman Sachs' Jim Kelly in a note to clients writes, "...negative media and market reaction continues, which may alter prescription writing...."
GS did an internet survey of more than 50 docs which shows nearly half of them are not going to change their Vytorin/Zetia prescription-writing behavior. Leerink may trade in MRK and SGP. Goldman Sachs has done and wants to do more investment banking for both companies and makes a market in their stocks.
The companies reportedly spent more than $100 million marketing Vytorin and Zetia last year. You know, the ubiquitous commercials with the folksy violin music and the "colorful" relatives dressed to look like food to hammer home the point of cholesterol being related to what you eat and your family history. Now, they're going for a very matter-of-fact advertising approach. We'll see if it works.
Questions? Comments? Pharma@cnbc.com