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Merck's (MRK) Stock Up Almost 50% in a Year: Here's Why
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In the past year, Merck & Co., Inc., (MRK - Free Report) has been one of the biggest gainers along with Eli Lilly (LLY - Free Report) . Merck’s stock has risen 45.2% in the past year compared with a 7.4% increase for the industry.
Merck’s performance in 2018 was supported by strong quarterly results and positive pipeline and regulatory updates. It looks well poised to maintain the bullish run in 2019.
Strong Sales & Earnings Performance
Merck’s full-year 2018 sales rose 5% to $42.3 billion while adjusted earnings per share rose 9% to $4.34 per share. Pharmaceutical segment sales rose 6% in 2018 while that of the Animal Health unit rose 9%. Importantly, Merck issued a decent earnings and sales guidance for 2019 on the fourth-quarter conference call.
Strength in Keytruda, Bridion, Gardasil and Animal Health offset headwinds from loss of exclusivity for some products and competitive pressure for Zostavax and Zepatier. Keytruda continued its robust performance on strong demand. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
Keytruda: A Key Growth Catalyst
Merck’s outperformance in the past year can largely be attributed to strong performance and positive regulatory updates related to its PD-1 inhibitor, Keytruda. In a very short span of time, Keytruda has become Merck’s largest product. It is now already approved for use in 15 indications across 10 different tumor types in the United States. The drug generated sales of $7.17 billion in 2018, reflecting a massive 88% surge year over year. Keytruda is continuously growing and expanding into new indications and markets globally.
Keytruda sales are gaining particularly from strong momentum in the indication of first-line lung cancer as it is the only anti-PD-1 approved in the setting in certain patients both as a monotherapy as well as combination therapy.
The Keytruda development program is also progressing well and the drug is being studied for more than 30 types of cancer in more than 900 studies, including more than 500 combination studies. Merck is collaborating with several companies including Amgen, Incyte (INCY - Free Report) , Glaxo and Pfizer separately for the evaluation of Keytruda in combination with other regimens.
We believe that Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide.
Other Pipeline/Regulatory Success
Key new drug approvals for Merck in the past year included that of Steglatro and its fixed-dose combinations for type II diabetes, two new HIV drugs — Pifeltro and Delstrigo — containing doravirine and Prevymis (letermovir) for cytomegalovirus (CVM) infection.
Merck also gained several label expansion approvals for Keytruda and another cancer drug Lynparza, which it markets in partnership with AstraZeneca (AZN - Free Report) . For Keytruda, a key FDA approval in October was the label expansion as a first-line treatment for metastatic squamous non-small cell lung cancer (NSCLC) — a difficult-to-treat lung cancer patient population — based on data from the phaseIII KEYNOTE-407 study.
Lynparza was alsoapproved by the FDA in the first-line maintenance setting in December, becoming the first PARP inhibitor to be approved as a first-line maintenance therapy for BRCA-mutated advanced ovarian cancer. These new products and line extensions should bring in additional sales in 2019 and beyond.
Merck also announced positive data from several late-stage studies, mainly evaluating Keytruda for further line extensions.
Merck also signed a co-development deal with Japan’s Eisai Co., Ltd for the latter’s tyrosine kinase inhibitor, Lenvima. It also agreed to buy Viralytics Limited, an Australian pharmaceutical company that develops oncolytic immunotherapies for a range of cancers, which should strengthen its oncology portfolio.
In December, Merck announced plans to acquire privately held animal health technology provider Antelliq Group from BC Partners. Last month, Merck exercised its option to in-license a once-monthly insulin sensitizer, NGM313, from partner NGM Biopharmaceuticals, Inc., being developed for the treatment of NASH and type II diabetes.
What to Expect in 2019?
For Keytruda, several regulatory decisions for new indications in the United States as well as in Europe are due in 2019, which, if approved, can further boost sales. Key FDA decisions expected in the first half will be on regulatory filings for label expansion of Keytruda as an adjuvant therapy in patients with high-risk stage III melanoma and for patients with non-squamous or squamous lung cancer whose tumors express PD-L1 protein levels of 1 percent or greater (TPS of ≥1 percent).
Meanwhile, Keytruda, Bridion, Lynparza, Gardasil and Animal Health should continue the strong performance, driving sales and profits in 2019. This should make up for headwinds from loss of exclusivity (LOEs), softness in the diabetes franchise, and competitive pressure on Zepatier and Zostavax.
Merck will also continue to focus on cost-cutting initiatives, which should drive its bottom line.
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Merck's (MRK) Stock Up Almost 50% in a Year: Here's Why
In the past year, Merck & Co., Inc., (MRK - Free Report) has been one of the biggest gainers along with Eli Lilly (LLY - Free Report) . Merck’s stock has risen 45.2% in the past year compared with a 7.4% increase for the industry.
Merck’s performance in 2018 was supported by strong quarterly results and positive pipeline and regulatory updates. It looks well poised to maintain the bullish run in 2019.
Strong Sales & Earnings Performance
Merck’s full-year 2018 sales rose 5% to $42.3 billion while adjusted earnings per share rose 9% to $4.34 per share. Pharmaceutical segment sales rose 6% in 2018 while that of the Animal Health unit rose 9%. Importantly, Merck issued a decent earnings and sales guidance for 2019 on the fourth-quarter conference call.
Strength in Keytruda, Bridion, Gardasil and Animal Health offset headwinds from loss of exclusivity for some products and competitive pressure for Zostavax and Zepatier. Keytruda continued its robust performance on strong demand. Animal health and vaccine products are also performing strongly and remain core growth drivers for Merck.
Keytruda: A Key Growth Catalyst
Merck’s outperformance in the past year can largely be attributed to strong performance and positive regulatory updates related to its PD-1 inhibitor, Keytruda. In a very short span of time, Keytruda has become Merck’s largest product. It is now already approved for use in 15 indications across 10 different tumor types in the United States. The drug generated sales of $7.17 billion in 2018, reflecting a massive 88% surge year over year. Keytruda is continuously growing and expanding into new indications and markets globally.
Keytruda sales are gaining particularly from strong momentum in the indication of first-line lung cancer as it is the only anti-PD-1 approved in the setting in certain patients both as a monotherapy as well as combination therapy.
The Keytruda development program is also progressing well and the drug is being studied for more than 30 types of cancer in more than 900 studies, including more than 500 combination studies. Merck is collaborating with several companies including Amgen, Incyte (INCY - Free Report) , Glaxo and Pfizer separately for the evaluation of Keytruda in combination with other regimens.
We believe that Keytruda has strong growth prospects based on increased utilization, recent approvals for new indications and potential additional approvals worldwide.
Other Pipeline/Regulatory Success
Key new drug approvals for Merck in the past year included that of Steglatro and its fixed-dose combinations for type II diabetes, two new HIV drugs — Pifeltro and Delstrigo — containing doravirine and Prevymis (letermovir) for cytomegalovirus (CVM) infection.
Merck also gained several label expansion approvals for Keytruda and another cancer drug Lynparza, which it markets in partnership with AstraZeneca (AZN - Free Report) . For Keytruda, a key FDA approval in October was the label expansion as a first-line treatment for metastatic squamous non-small cell lung cancer (NSCLC) — a difficult-to-treat lung cancer patient population — based on data from the phaseIII KEYNOTE-407 study.
Lynparza was alsoapproved by the FDA in the first-line maintenance setting in December, becoming the first PARP inhibitor to be approved as a first-line maintenance therapy for BRCA-mutated advanced ovarian cancer. These new products and line extensions should bring in additional sales in 2019 and beyond.
Merck also announced positive data from several late-stage studies, mainly evaluating Keytruda for further line extensions.
Merck also signed a co-development deal with Japan’s Eisai Co., Ltd for the latter’s tyrosine kinase inhibitor, Lenvima. It also agreed to buy Viralytics Limited, an Australian pharmaceutical company that develops oncolytic immunotherapies for a range of cancers, which should strengthen its oncology portfolio.
In December, Merck announced plans to acquire privately held animal health technology provider Antelliq Group from BC Partners. Last month, Merck exercised its option to in-license a once-monthly insulin sensitizer, NGM313, from partner NGM Biopharmaceuticals, Inc., being developed for the treatment of NASH and type II diabetes.
What to Expect in 2019?
For Keytruda, several regulatory decisions for new indications in the United States as well as in Europe are due in 2019, which, if approved, can further boost sales. Key FDA decisions expected in the first half will be on regulatory filings for label expansion of Keytruda as an adjuvant therapy in patients with high-risk stage III melanoma and for patients with non-squamous or squamous lung cancer whose tumors express PD-L1 protein levels of 1 percent or greater (TPS of ≥1 percent).
Meanwhile, Keytruda, Bridion, Lynparza, Gardasil and Animal Health should continue the strong performance, driving sales and profits in 2019. This should make up for headwinds from loss of exclusivity (LOEs), softness in the diabetes franchise, and competitive pressure on Zepatier and Zostavax.
Merck will also continue to focus on cost-cutting initiatives, which should drive its bottom line.
Merck currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Is Your Investment Advisor Fumbling Your Financial Future?
See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”
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