BY PETER LOFTUS

Merck & Co. said Monday that it plans to apply this year for U.S. regulatory approval to market a potential new treatment for insomnia, based on positive clinical-trial results.

The experimental drug, suvorexant, uses a new mechanism designed to help people sleep, while potentially mitigating the side effects associated with existing sleep aides. Some analysts estimate annual sales of the drug could top $500 million within several years.

Suvorexant is one of five major new drug applications Merck anticipates over 2012 and 2013. The company hopes the introduction of successful new drugs will help soften the hit to revenue expected ...