{"id":70730,"date":"2023-10-09T19:45:44","date_gmt":"2023-10-09T23:45:44","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/merck-right-on-time-nysemrk\/"},"modified":"2023-10-09T19:45:49","modified_gmt":"2023-10-09T23:45:49","slug":"merck-right-on-time-nysemrk","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=70730","title":{"rendered":"Merck: Right On Time (NYSE:MRK)"},"content":{"rendered":"<div data-test-id=\"content-container\">\n<p><figure class=\"getty-figure\" data-type=\"getty-image\"><picture>  <\/picture><figcaption> <\/figcaption><\/figure>\n<\/p>\n<p>In reviewing the pharmaceutical space, names often keep popping up as we write about other companies\u2019 biggest competition, and Merck (<span class=\"ticker-hover-wrapper\">NYSE:MRK<\/span>) just so happened to be the one that piqued our interest enough to put together a<span class=\"paywall-full-content invisible\"> dedicated analysis. Between the two titans of the oncology and vaccine spaces with Keytruda and Gardasil, respectively, we wanted to peek behind the curtain and see what more was going on at this Big Pharma powerhouse. We can\u2019t exactly say we were blown away, but we weren\u2019t underwhelmed either. This seems like one of those cases where they\u2019re exactly where they need to be, exactly <\/span><em class=\"paywall-full-content invisible\">when<\/em><span class=\"paywall-full-content invisible\"> they need to be.<\/span><\/p>\n<h2 class=\"paywall-full-content invisible\">\u200bThe tentpoles<\/h2>\n<p class=\"paywall-full-content invisible\">Merck\u2019s business for the last several years has been dominated by two names, Keytruda and Gardasil, for better or worse. These strong products have given them the opportunity to sustain their size<span class=\"paywall-full-content no-summary-bullets invisible\"> and market share, but the clock is ticking, and as we\u2019ve discussed with other companies facing loss of exclusivity on their flagship products, it\u2019s a treacherous path to navigate.<\/span><\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bKeytruda<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Despite backing their way into the IO space after Bristol-Myers (BMY) blew the field wide open with Opdivo and Yervoy, Merck executed a masterful pivot to turn Keytruda into a bona fide blockbuster that continued the company\u2019s positive revenue trajectory. Keytruda crossed the $20 billion mark last year, and with label expansions rolling in hand over fist, this year is looking to push that number even higher with $12 billion already recorded in the first half. Management has been pushing the label expansions earlier and earlier into the treatment process:<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>\n<p>They recently secured approval as a first-line treatment for HER2-positive gastric cancer in combination with trastuzumab and chemotherapy; first-line treatment in the HER2-negative case has been filed<\/p>\n<\/li>\n<li>\n<p>First-line treatment for \u201cadvanced or unresectable biliary tract cancer\u201d is under review<\/p>\n<\/li>\n<li>\n<p>First-line treatment for \u201clocally advanced or metastatic Merkel cell carcinoma\u201d is under review<\/p>\n<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Merck has also been pushing Keytruda combination therapeutics to take full advantage of the immuno-oncology cascade:<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>\n<p>LAG-3 inhibitor favezelimab + Keytruda is now in Phase 3 for colorectal and hematological cancers, mirroring Bristol-Myers\u2019 Opdualag and the fianlimab\/Libtayo combination therapy from Regeneron (REGN) for melanoma<\/p>\n<\/li>\n<li>\n<p>CTLA-4 inhibitor quavonlimab + Keytruda in Phase 3 for renal cell carcinoma, joining the <span>long list<\/span> of CTLA-4 inhibitor therapies such as Yervoy, Imjudo (AZN) and other pre-clinicals being tested in combination therapies alongside PD-1 inhibitors (mostly alongside Keytruda, naturally)<\/p>\n<\/li>\n<li>\n<p>TIGIT inhibitor vibostolimab + Keytruda in Phase 3 for melanoma and lung cancer, with the <span>usual PD-1 suspects<\/span> also keeping pace here too<\/p>\n<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Given that Keytruda is the most successful of the PD-1 checkpoint inhibitor therapeutics, Merck got a small boost when Roche (OTCQX:RHHBY) <span>disclosed Phase II results<\/span> that showed their anti-TIGIT therapeutic tiragolumab in combination with their own PD-1 inhibitor Tecentriq demonstrated a small improvement in overall survival to Tecentriq alone.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">All of this label expansion is good news, but at some point the marginal gain for each additional indication may start to wane, especially given that designing trials in earlier-stage patients requires more effort and volunteers in order to demonstrate statistical power. Meanwhile, the clock is ticking on Keytruda\u2019s exclusivity, with the five-year mark we harp on in the lifecycle timeline now in sight (2028 is the earliest quoted date for loss of exclusivity). No doubt the company will patent thicket anyone starting to ramp up the biosimilar pipelines, but with a less business-friendly legal system and increased scrutiny over drug pricing in the US (more on that later), there is a good chance their costs associated with defending Keytruda\u2019s position will start increasing, causing some early erosion of the drug\u2019s returns before the true loss of exclusivity sets in.<\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bGardasil<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Fortunately, the latest iteration of Merck\u2019s HPV vaccine, Gardasil 9, has a long runway ahead of it, with a reduced threat of biosimilar competition for the time being. International expansion has been the star of the show, with management calling out the growth in China on the <span>Q2 earnings call<\/span>, while expanded eligibility to women as old as 45 has also boosted the uptake in the West as well.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture> <img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/49482691-16961961241335614.png\" alt=\"Line chart showing annual revenues for the Gardasil franchise since 2014, when the 9-valent formulation was approved\" width=\"600\" height=\"371\" contenteditable=\"false\" data-width=\"600\" data-height=\"371\" loading=\"lazy\"> <\/picture><figcaption>\n<p class=\"item-caption\"><span>Merck 10-K filings + Author&#8217;s own work<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">At the beginning of September, CFO Caroline Litchfield commented at the <span>Morgan Stanley 21st Annual Global Healthcare Conference<\/span> that they are continuing to ramp up Gardasil manufacturing with a timeline through the end of 2025. She also commented that the company doesn\u2019t think that demand has been fully saturated in the US and the West:<\/p>\n<blockquote class=\"paywall-full-content invisible no-summary-bullets\">\n<p><em>Vaccination rates are in the 70% [range in the US]. For a vaccine that&#8217;s preventing cancers, one could argue that should be in the 90s. So that&#8217;s an opportunity for growth. We have an opportunity for growth by vaccinating more males, and that&#8217;s especially in our ex-U.S. markets as we gain regulatory approval, and we&#8217;ll be driving for people to get that vaccine.<\/em><\/p>\n<\/blockquote>\n<p class=\"paywall-full-content invisible no-summary-bullets\">With that said, the tone of the commentary at the earnings call suggests this jump in the first half of the year is actually growth being pulled forward, with \u201ctiming of shipments\u201d weighing on the potential revenues later in the year.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Vaccine regimens have a distinct business advantage over just about any other form of pharmaceutical, even antibody treatments, in that it\u2019s very hard to replicate the <em>exact<\/em> cocktail of biological material necessary to elicit the desired antibody response in the patient. What\u2019s more, even without patent exclusivity, a competing product (aka \u201csecond-generation vaccine\u201d) is considered a biosimilar and thus has to go through clinical trials, demonstrate non-inferiority, etc. etc., which increases the barrier to entry. Case in point: Merck\u2019s second-most profitable vaccine is their infectious disease mix M-M-R, a shot that even 90s kids like Derek can remember getting during elementary school, which only has one other product listed in the FDA\u2019s Purple Book under the same Proper Name: Priorix from GSK, approved just last June.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/49482691-16961153306446955.png\" alt=\"Search results for \" mmr=\"\" ii=\"\" on=\"\" the=\"\" fda=\"\" purple=\"\" book=\"\" website=\"\" of=\"\" approved=\"\" biological=\"\" drugs=\"\" width=\"640\" height=\"382\" contenteditable=\"false\" data-width=\"640\" data-height=\"382\" loading=\"lazy\"><\/span><figcaption>\n<p class=\"item-caption\"><span>FDA Purple Book<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">However, with Gardasil pulling down so much revenue and patent exclusivity tantalizingly close to expiry (2028, same as Keytruda incidentally), there <em>is<\/em> a biosimilar competitor that has made waves: Cecolin 9, produced by a Chinese manufacturer, using bacteria as the \u201cbioreactor\u201d for the vaccine components instead of Gardasil\u2019s yeast bioreactor. Derek\u2019s experience can attest that bacteria-based workflows are orders of magnitude simpler <em>and <\/em>cheaper than anything using a eukaryotic organism, even a single-celled one. In July, Cecolin\u2019s developers published the <span>results<\/span> of a Phase 3 trial in The Lancet Infectious Diseases, claiming non-inferiority. Given that Merck management was keen to expand into low- and middle-income markets with their vaccine, they now have a potentially huge disruptor entering the fray with a markedly lower-cost-of-production second-generation 9-valent HPV vaccine.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">\u200bNew Opportunities<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Continuing the narrative with the Big Pharma names mid-stream, there\u2019s quite a lot coming up through the pipeline that should maintain the company\u2019s current position, if not modestly accelerate growth some more.<\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bOncology<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">While immuno-oncology is dominated by Keytruda and the combination treatments, there are some interesting new developments coming out of Oncology around hematologic indications and new paradigms for treatment making their way into the clinic.<\/p>\n<h4 class=\"paywall-full-content invisible no-summary-bullets\">\u200bHeme-onc and Small molecule drugs<\/h4>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Merck has pushed into specifically heme-onc on the back of two small molecule treatments they picked up in acquisitions: nemtabrutinib and bomedemstat. Nemtabrutinib is currently in <span>Phase 3 for CLL<\/span>, and given that Lilly\u2019s (LLY) reversible BTK inhibitor Jaypirca received advanced approval earlier this year, hopefully an advanced approval for nemtabrutinib will be forthcoming within the year. The mechanism is intriguing with the paradigm shift from irreversible BTK inhibitors such as Imbruvica (ABBV), which has lost market share to newcomers in the last few years, to reversible but strongly-binding BTK inhibitors.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture> <img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/49482691-16961956004029727.png\" alt=\"Stacked bar chart showing revenues for established BTK inhibitors Imbruvica, Calquence and Brukinsa since 2016\" width=\"600\" height=\"371\" contenteditable=\"false\" data-width=\"600\" data-height=\"371\" loading=\"lazy\"> <\/picture><figcaption>\n<p class=\"item-caption\"><span>Company 10-Ks + Author&#8217;s own work<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Bomedemstat entered Merck\u2019s portfolio when they <span>acquired Imago earlier this year<\/span> after escaping the Phase 1 morass that claimed so many other LSD-1 inhibitors; the FDA\u2019s Clinical Trials website lists <span>16 studies<\/span> that mention LSD-1 inhibitors, none in Phase 3. Of the ones targeting myeloproliferative neoplasms, other treatments such as TCP, INCB059872 and GSK2879552 have all had Phase 1 or 2 studies terminated due to lack of benefit or business decisions. At the <span>Citi 18th Annual BioPharma Conference<\/span>, head of Late Stage Oncology Marjorie Green called out bomedemstat as a rising star in the field:<\/p>\n<blockquote class=\"paywall-full-content invisible no-summary-bullets\">\n<p>&#8220;<em>So those patients have a lot of burden. People who&#8217;ve got essential thrombocythemia myeloproliferative disorders, these are diseases that really have a negative impact on the quality of life and can lead to horrible malignancies. And so to have something as potentially disease modifying is very exciting to me.<\/em>&#8220;<\/p>\n<\/blockquote>\n<p class=\"paywall-full-content invisible no-summary-bullets\">With an estimated 295,000 people in the United States living with these conditions and another 20,000 each year developing such conditions, the business opportunity does appear promising. What\u2019s more, with LSD-1 implicated in <span>other diseases<\/span>, bomedemstat could have indications in immunology, endocrinology and neurology as well, which certainly makes a good story for Merck\u2019s decision to acquire Imago for this pharmaceutical asset.<\/p>\n<h4 class=\"paywall-full-content invisible no-summary-bullets\">\u200bModerna and the INT<\/h4>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In the wake of Moderna\u2019s (MRNA) breakout success with their mRNA-based COVID vaccine, the spotlight is bright on them for the next major mRNA-based breakthrough. Merck has thrown in to the space with their partnership, working to spark an immune response in patients with cancer, tailored <em>to<\/em> that cancer, by introducing a single mRNA formulation encoding <em>multiple<\/em> \u201cneoantigens\u201d which are broken apart during translation and used to program the immune system.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/49482691-1696117709840256.png\" alt=\"Image from Moderna program materials on the Individualized Neoantigen Therapy, showing how the mRNA encodes a chain of \" neoantigens=\"\" cleaved=\"\" after=\"\" translation=\"\" before=\"\" being=\"\" presented=\"\" to=\"\" t=\"\" cells=\"\" width=\"640\" height=\"282\" contenteditable=\"false\" data-width=\"640\" data-height=\"282\" loading=\"lazy\"><\/span><figcaption>\n<p class=\"item-caption\"><span>Moderna program materials<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Reading the transcripts, it\u2019s obvious there are a few ways this treatment could be commercialized:<\/p>\n<ul class=\"paywall-full-content invisible no-summary-bullets\">\n<li>\n<p>Use mRNA-based \u201cindividualized neoantigen therapy\u201d (INT) as an adjuvant therapy to an existing standard of care, such as Keytruda. This mode of treatment is how the therapy got its previous, much snazzier-sounding codename as the \u201cpersonalized cancer vaccine\u201d.<\/p>\n<\/li>\n<li>\n<p>Use INT to awaken \u201ccold\u201d tumors to the mainline treatments such as PD-1 inhibition; we saw similar approaches taken by Regeneron with their \u201cco-stimulatory\u201d bispecific antibodies in conjunction with Libtayo in prostate cancer.<\/p>\n<\/li>\n<li>\n<p>Use INT in places where IO-based therapies have not worked or would have a low probability of working<\/p>\n<\/li>\n<\/ul>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The challenge here is one that sounds quite familiar in Oncology: do you swing for the fences with a rare unmet need or do you play \u201csmall ball\u201d, bolt it on to an existing treatment, and get your foot in the door? Merck opted for the latter out of the gate by going for melanoma in an adjuvant setting, arguably already a \u201csolved\u201d problem space with Keytruda, but the INT seemed to make a difference where it mattered the most; Green called out the hazard ratio in cases of \u201cdistant metastasis\u201d as 0.3 (that is, 70% increased odds of survival with the INT treatment as opposed to just Keytruda). You could probably make the case that Merck needed to see the proof for themselves <em>before<\/em> taking the big swings, which they are now doing in lung cancer and the \u201cwhite whale\u201d, pancreatic cancer.<\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bImmunology<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The other major acquisition Merck made recently was closing the deal for Prometheus Biosciences in June, which gave them a promising IBD drug candidate, MK-7240. Currently being trialed in Phase 2 for Crohn\u2019s and ulcerative colitis, there is definitely still a need for advancements in this space, and Merck is now poised to take advantage of a <span>novel target in IBD<\/span> to go after the massive market cap of names like Humira with a much more targeted therapeutic and a reduced risk of black box warnings, as mentioned by Merck Research Labs President Dean Li at the Morgan Stanley conference.<\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bEndocrinology<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">There are several other smaller budding business opportunities, but the one with the largest upside has to be the GLP-1 agonist efinopegdutide. With so much hype surrounding the weight loss potential for drugs like semaglutide (NVO) and dulaglutide, the opportunity seems ripe to burst on to the scene. As it stands, though, leadership is wisely staying in their lane and trying to secure the initial approval for NASH, which itself affects <span>a quarter of the world&#8217;s population<\/span>. The Phase 2a clinical trial demonstrated significant reductions in liver fat versus semaglutide; whether this reduction translates into what could be considered \u201cdisease modifying intervention\u201d will have to be proven in Phase 3, but the results so far are encouraging.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">\u200b<strong>Risks<\/strong> <\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Naturally, a big pharma like Merck paints a huge target on their back for two reasons: they struggle with the marginal gains on their invested capital for<em> new<\/em> revenue streams,and they struggle to convince regulators that the<em> existing<\/em> revenue streams they make off of their life-saving blockbusters are reasonable.<\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bDrug Pricing and the Inflation Reduction Act<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In typical industrial-political fashion, the drug price negotiation stipulations rolling out in the United States as a part of the Inflation Reduction Act (IRA) passed last year have resulted in some dubious \u201cportfolio management\u201d to minimize the total number of drugs that may even be subject to negotiation in the first place. To wit: small molecule therapeutics like nemtabrutinib have four fewer years of protection from price negotiations versus biologics, a fact explicitly discussed during the Citi conference:<\/p>\n<blockquote class=\"paywall-full-content invisible no-summary-bullets\">\n<p>&#8220;<em>&#8230;when you look historically, 60% of approvals have happened in the time frame where they might have been impacted by the IRA from drugs because of life cycle management. And so for [nemtabrutinib], we are strongly invested in developing this molecule and trying to bring an optimal regimen to patients and there are different ways of developing a small molecule in a way that you can still meet within the IRA time frame, some of them might have increased risk and how you develop that drug\u2026<\/em>&#8220;<\/p>\n<\/blockquote>\n<p class=\"paywall-full-content invisible no-summary-bullets\">That disparity in the immunity window, plus exemptions for things like drugs approved solely as \u201corphan drugs,\u201d is causing fundamental shifts in the way that pharma companies approach their drug discovery and label expansions.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Green\u2019s comments seem to suggest that companies may take a \u201ckitchen sink\u201d approach to label expansions in the future: blast as many label applications as you can within the first few years of approval and then toss the drug into the back drawer once the immunity wears off. Further commentary along this thread of discussion veers into speculation and is not appropriate for this forum.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Merck has opted not to go gently into this new model, however, and has fired back with litigation, alongside many other companies and names in the pharma space. Given drug pricing is top-of-mind for lawmakers and the public, the aging population placing more burden on Medicare, and the myriad stories of pharma companies\u2019 practices of \u201cevergreening\u201d their blockbusters to suppress competition and maximize profit, it might not be a good PR look for these pharma companies to assert any kind of material damage. Given how long it will take for all of this squawking to shake out, we don\u2019t think there will be any significant shifts one way or the other when all is said and done, it\u2019s purely a matter of tactics and PR at this point.<\/p>\n<h3 class=\"paywall-full-content invisible no-summary-bullets\">\u200bOrganic Discovery<\/h3>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The moderator at the Citi conference threw one hardball question at Marjorie Green, and it\u2019s one we\u2019ve seen in other big pharma companies: of the twenty or so Oncology drugs beyond early-stage development, eighteen were either acquired or co-developed under a licensing arrangement. Of the 32 or so unique compounds in the pipeline, only eight appear to be from in-house discovery. It\u2019s absolutely no surprise that Merck would lean on acquisitions to bolster positions or even to bootstrap a new area of research, such as the Prometheus deal bringing them a promising Immunology flagship. The fact that these acquisitions have not appeared to assimilate into Merck proper, however, does seem quite surprising.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Given the easy money environment of the last several years, it was dead simple to start or acquire a clinical-stage startup, meaning healthy supply for the big names and healthy demand for the entrepreneurs. It would also seem that those whose exit strategy is acquisition would likely not be happy in the proverbial \u201cgolden handcuffs\u201d of their new owner and at first chance would go out and repeat the process anew. The proof of the pudding will likely come in the next few years, how Merck\u2019s pipeline fares as tight money restricts both the ability of clinical-stage companies to gestate and their own ability to secure financing:<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"sa-widget sa-ycharts paywall-full-content invisible\"><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/saupload_380a8307aec3c838166866f7bf6026cb.png\" alt=\"Chart\" width=\"635\" height=\"366\" class=\"sa-ycharts-img\" data-width=\"635\" data-height=\"366\" loading=\"lazy\"><figcaption>Data by YCharts<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">In fairness, the goodwill on Merck\u2019s balance sheet as a percentage of assets sits in-line with big pharma peers, so they aren\u2019t massively overpaying for these acquisitions at least:<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><picture> <img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/saupload_29ba72e3f0e1e67c79b1b4518936b3c6.png\" alt=\"Goodwill as a % of Quarterly Assets for Merck, Bristol-Myers, AstraZeneca and Pfizer\" contenteditable=\"false\" loading=\"lazy\"> <\/picture><figcaption>\n<p class=\"item-caption\"><span>YCharts<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">\u200bValuation<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">The puts and takes in Merck\u2019s pipeline and operations seem to be balancing out, leaving us with a fairly-valued company to assess. Owner\u2019s earnings have been growing steadily over the long term at roughly a 6.4% CAGR, a 30 basis point improvement from when we looked at them at the end of 2022 as a peer to Roche. At current prices, inverting the Gordon model gives us a 14.15% discount rate, up 138 basis points from ten months ago. Last year\u2019s number, rounded to say 12.8%, feels a fairer premium to ask for Merck. The current price feels slightly on the pessimistic side, and the sheer number of bearish technical indicators seem to corroborate the price momentum at present:<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">\n<figure class=\"regular-img-figure paywall-full-content invisible\" contenteditable=\"false\"><span><img decoding=\"async\" src=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/10\/49482691-16961155713749433.png\" alt=\"One month chart of Merck's price with various technical indicators overlaid\" width=\"640\" height=\"268\" contenteditable=\"false\" data-width=\"640\" data-height=\"268\" loading=\"lazy\"><\/span><figcaption>\n<p class=\"item-caption\"><span>Yahoo! Finance<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">All told, $115\/sh feels like a fair assessment. That\u2019s about 10% upside from current prices, which isn\u2019t really enough to make us recommend buying, especially given the concentrated nature of their revenue streams and the choppy waters ahead.<\/p>\n<h2 class=\"paywall-full-content invisible no-summary-bullets\">\u200bConclusion<\/h2>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Merck has managed their pipeline well to this point and been rewarded for it. Looking ahead, however, their management skills (in both pharmaceutical and business senses) are going to be tested as stiffening macro headwinds and looming losses of exclusivity threaten to prematurely derail the gravy train. The heavy dependence on a few breakout products and inorganic expansions of their pipeline and discovery footprint may not hold up for much longer. There is a small discount to be had for this risk right now, but it\u2019s not really enough for us to insist it\u2019s worth picking up over another big pharma name, all else held equal.<\/p>\n<p class=\"paywall-full-content invisible no-summary-bullets\">Editor&#8217;s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/seekingalpha.com\/article\/4639814-merck-right-on-time?source=feed_all_articles\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In reviewing the pharmaceutical space, names often keep popping up as we write about other companies\u2019 biggest competition, and Merck (NYSE:MRK) just so happened to be the one that piqued our interest enough to put together a dedicated analysis. Between the two titans of the oncology and vaccine spaces with Keytruda and Gardasil, respectively, we [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":70731,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-70730","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Merck: Right On Time (NYSE:MRK) | iFintechWorld<\/title>\n<meta name=\"description\" content=\"In reviewing the pharmaceutical space, names often keep popping up as we write about other companies\u2019 biggest competition, and Merck (NYSE:MRK) just so\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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