Shares in Merck & Co have fallen significantly after the company revealed a larger-than-expected decline in earnings for the first quarter and lower sales of its asthma treatment Singulair and the cholesterol drugs Vytorin and Zetia.

Net income came in at $1.46 billion, down 57% in the like, year-earlier period when the company booked a $1.4 billion one-time gain from AstraZeneca. Sales were down 8% to $5.4 billion, some $400 million lower than analyst forecasts.

Sales of Vytorin (ezetimibe plus simvastatin) and Zetia (ezetimibe) sank 23% to $945 billion, while sales of the asthma drug Singulair (montelukast) slipped 4% to $1.1 billion, due in part to concerns about a potential link to suicidal behaviour. Revenues from the anti-hypertensives, Cozaar (losartan) and Hyzaar (losartan plus hydrochlorothiazide) were down 1% to $839 million, while sales of the osteoporosis drug Fosamax (alendronate) slumped 44% to $261 million, following the loss of patent protection in the USA.

On the plus side, the diabetes drug Januvia (sitagliptin) generated $411 million for the quarter, up 51%, while Janumet (sitagliptin plus metformin) brought in $128 million, up from $58 million in the first quarter last year. Turnover from the recently-launched HIV drug Isentress (raltegravir) reached $148 million, a three-fold increase compared with $47 million in the first quarter of 2008, but sales of the cervical cancer jab Gardasil slumped 33% to $262 million.

Chief executive Richard Clark said that the results “in part reflect the impact of the difficult global economy on patients, providers and payors”. He added that the firm’s planned merger with Schering-Plough will give Merck “a formidable pipeline, an expanded product portfolio, a broader global presence, and the best talent in the industry”.

Merck reduced its earnings per share forecast for 2009 to $2.84-$3.09, from a previous estimate of $2.95 to $3.17, but "solely as a result of costs related to the proposed merger”. Full-year revenue guidance was lowered to $23.2-$23.7 billion, down $500 million from an earlier projection.

Telcagepant delayed
Further problems for Merck came after the company said it is delaying the US filing for telcagepant (known as MK-0974), its investigational calcitonin gene-related peptide receptor antagonist for the treatment of acute migraine. A filing was due this year and analysts believed it could be a blockbuster but some now believe that development may now be terminated.

Investors were disappointed with the results and telcagepant news and Merck shares ended the day down 6.7% to $23.54.

Antibody deal with Medarex, MBL
Better news came with the announcement that Merck has signed a licensing deal with Medarex and Massachusetts Biologic Laboratories, giving it global rights to develop and market CDA-1 and CDB-1 for the treatment of Clostridium difficile.

The agreement for the investigational human monoclonal antibody combination will see Merck make an upfront payment of $60 million, while Medarex and MBL are also eligible to receive further cash payments of up to $165 million, plus possible sales milestones and double-digit royalties. All payments will be shared equally between Medarex and MBL.