Schering-Plough, Merck shares keep clawing back

By Bill Berkrot

NEW YORK (Reuters) - Shares of Schering-Plough Corp (SGP.N: Quote, Profile, Research) and Merck & Co (MRK.N: Quote, Profile, Research) rose on Monday, continuing a slow rebound from the massive sell-off that followed calls from prominent physicians to use other medicines before turning to the companies' cholesterol drugs Vytorin and Zetia.

Schering-Plough shares were up more that 5 percent, marking the third successive trading session of gains, as some of the anti-Vytorin noise has given way to calls for restraint rather than abandonment, while prescription erosion appears to have slowed.

"Significant stock sell-off for both Schering-Plough and Merck after ACC thus far looks drastically disproportionate to the moderate prescription decline," Morgan Stanley analyst Jami Rubin said in a research note, referring to the American College of Cardiology meeting at which data from a controversial Vytorin study were presented.

"The damage to the cholesterol franchise may not be as bad as the market initially feared," she added, noting that the recent stock sell-off appeared to completely write off any future for Vytorin and Zetia.

Rubin noted that the decline in new Vytorin and Zetia prescriptions last week was significantly less pronounced than the decline in the first week after the Enhance study's data were first released in January.

The study showed that Vytorin was no better than Zocor alone at reversing heart disease as measured by thickness of the carotid artery. Vytorin combines Zetia with Zocor, which is now available as a cheap generic.

At the ACC meeting, panelists discussing the data said older, cheaper medicines should be tried before Vytorin or Zetia, which had combined sales of about $5.2 billion a year and account for the majority of Schering-Plough's profit.

Since Vytorin's worth was called into question at ACC, supportive statements from the FDA may have helped stem the tide of prescription erosion.