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NEW YORK — Merck & Co. shares fell Tuesday after the Food and Drug Administration rejected the drugmaker's cholesterol drug Cordaptive, marking the company's second drug application rejection in four days.

The FDA wants more information on Cordaptive in order to consider approving it; Merck said it plans to meet with the regulatory agency. The news surprised Wall Street, and the stock dropped $4.30, or 10.4 percent, to close at $37.14 Tuesday.

Shares have fallen from a peak of $61.62 in late 2007 to bottom at $36.82 March 31 and have recovered only slightly in the last month, as Merck has received a nonapprovable letter on an allergy drug and continues to suffer fallout from a study in which its cholesterol drug Vytorin was found to be no more effective than cheaper generic treatments.

Meanwhile, rival drug developer Abbott Laboratories' shares jumped $1.87, or 3.6 percent, to $53.48 as possible competition to its Niaspan and Simcor drugs faded away with the Merck rejection.

"This is a big surprise given no red flags seen in available clinical data and in light of a positive view by a European Union advisory panel last week," said UBS Investment Research analyst Roopesh Patel, in a note to investors.

He said the issue could be related to an unknown long-term safety risk and noted that the rejection could delay approval by up to three years. That would also threaten the company's developing drug MK0524B, a combination of Cordaptive and the cholesterol drug Zocor.

Still, Patel reaffirmed a "Buy" rating on Merck shares, but lowered his price target to $45 from $54.

Lehman Brothers analyst C. Anthony Butler also expressed surprise and cut his price target to $53 from $58, but reaffirmed an "Overweight" rating.

Several analysts, meanwhile, boosted their sales outlooks for Abbott's cholesterol drugs.

"We think it is safe to assume that the Cordaptive approval is delayed at least two years, as is MK-0524B, the product that we had expected to compete with Simcor in 2009," said Cowen and Co. analyst Sara Michelmore, in a note to investors.

The Merck products could face further delays, she added, if the FDA requires results from an already ongoing outcomes study. She reaffirmed a "Outperform" rating on Abbott.

Meanwhile, Citi analyst Matthew J. Dodds forecast sales growth for Abbott's Niaspan and Simcor. But, he reaffirmed a "Sell" rating on the stock, citing concerns over generic competition and the timing of company's launch of its Xience V stent.

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