Merck's vaccine approval poses threat to one of Pfizer's top-selling products

By Eleanor Laise

Merck's shot, designed to protect against pneumonia and other bacterial infections, is set to compete with Pfizer's Prevnar 20

Merck & Co. Inc. on Monday gained U.S. regulatory approval for a vaccine that could become a tough competitor to one of Pfizer Inc.'s top-selling products.

The Food and Drug Administration on Monday approved Merck's Capvaxive pneumococcal vaccine - a shot designed to protect against certain types of pneumonia and other infections caused by streptococcus pneumoniae bacteria. The single-dose vaccine, approved for adults age 18 and older, covers strains that cause about 84% of invasive pneumococcal disease in adults age 50 and older, Merck said.

"We'll provide protection that's broader than anything that's out there," Art Hirt, senior vice president of Merck's U.S. vaccines unit, told MarketWatch.

The FDA nod puts Capvaxive on track to compete with Pfizer's blockbuster pneumococcal vaccine Prevnar 20. Pfizer generated about $6.5 billion in global sales from its Prevnar family of vaccines in 2023.

Just how tight the competition will be may become clearer later this month, when the Centers for Disease Control and Prevention's immunization advisory committee meets to make recommendations on the use of Capvaxive in adults. While FDA approval of Capvaxive was expected, the subsequent CDC committee recommendations "could further expand access, depending on the breadth of ages the vaccine is recommended for," BMO Capital Markets analysts said in an April research note.

The CDC currently recommends pneumococcal vaccination for all adults age 65 and older and for younger adults who are immunocompromised or have certain other risk factors.

Pneumococcal bacteria come in about 100 different types, known as serotypes, and cause diseases ranging from noninvasive pneumonia - where the disease is confined to the lungs - to invasive infections in the bloodstream, coverings of the brain and spinal cord, and other illnesses. The bacteria cause more than half of all bacterial meningitis cases in the U.S., and there are over 150,000 hospitalizations from pneumococcal pneumonia each year, according to the CDC.

"Complications from invasive pneumococcal disease can lead to hospitalization, organ damage and even death," Walter Orenstein, professor emeritus at Emory University and a member of Merck's scientific advisory committee, said in a statement. "Many cases of adult disease are caused by serotypes not included in other approved pneumococcal conjugate vaccines."

Last year, Merck released late-stage trial data showing that in adults age 50 and older, Capvaxive prompted noninferior immune responses compared with Prevnar 20 for 10 serotypes that are common to both vaccines, and superior immune responses for 10 of the 11 serotypes included in Capvaxive but not in Prevnar 20.

"We expect to compete very well and gain majority market share," Hirt said. Capvaxive could be available late in the third quarter or in the fourth quarter of this year, he noted.

Asked to comment on the potential competition, Pfizer pointed to executives' comments on its first-quarter earnings call last month. Aamir Malik, Pfizer's chief U.S. commercial officer, said on the call that the company was "continuing to see very good performance" in the adult pneumococcal vaccine segment, with 98% market share. Many customers prefer to stock one vaccine that satisfies all the current recommendations of the CDC's immunization advisory committee, he added, "so until we know more, I think the best way to defend our share in the adult segment is to continue to do what we're doing."

Merck shares (MRK) dropped 0.9% Monday and have gained 17% in the year to date. Pfizer's stock (PFE) fell 2% Monday and is down 6.3% so far this year, while the S&P 500 SPX has climbed 14.8%.

-Eleanor Laise

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06-17-24 1706ET

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