Merck has announced positive results in a phase 3 trial of its insomnia drug. It’s a key player in the companies up and coming products, especially considering the loss of patent protection on its top drugs for asthma and allergys.

The experimental drug known as suvorexant, uses a new mechanism created to help people sleep, but at the same time aiming to mitigate side effects associated with popular sleep aids. Analysts think that annual sales of the drug could top $500 million within several years.

Peter S. Kim, president of Merck Research Laboratories said :

Suvorexant selectively targets an important pathway involved in helping to promote sleep and, if approved, will be a new, first-in-class treatment for patients with insomnia.”

The studies tested whether suvorexant extended total sleep time, and also looked for improvements in other measures of insomnia versus patients taking a placebo.

Merck confirmed that it has now completed two late-stage, or Phase 3 patient studies of the drug, which ended with positive results.

The company didn’t go into details today, but plans to present the findings at medical meetings later this year. Merck will also file a new drug application with the U.S. Food and Drug Administration this year. In fact Suvorexant is one of the five major U.S. filings Merck anticipates for 2012 and 2013.

It’s a more avante garde approach than older insomnia drugs known as benziodiazepines, as well as newer drugs like Sanofi’s (SNY, SAN.FR) Ambien, which targets so-called GABA receptors found in the brain.

These older drugs essentially depress the central-nervous system, but they can lead to dependence, or have withdrawal effects, such as drowsiness in the morning.

Suvorexant instead targets the brain’s arousal symptom, temporarily switching it off, but hoping to avoid depressing the central nervous system.

In earlier testing, the most common adverse events included certain infections, drowsiness after waking up and vivid dreams.

Written by Rupert Shepherd