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Will Keytruda Remain Merck's (MRK) Key Top-Line Driver?
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Merck’s (MRK - Free Report) PD-L1 inhibitor, Keytruda, approved for several types of cancers, alone accounts for around 46% of the company’s pharmaceutical sales. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Keytruda is continuously growing and expanding into new indications and markets globally.
Sales of Keytruda rose 23%, excluding Fx impact, in the first half of 2022. Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across recent earlier-stage launches
Keytruda is presently approved to treat seven indications in earlier-stage cancers in the United States. Numerous recent approvals and the expected launch of many additional indications, including in earlier lines of therapy, can further boost sales. In the United States, Merck expects over half of Keytruda’s growth to come from indications in early-stage (neoadjuvant/adjuvant) treatment settings through 2025 and to represent roughly 25% of total global Keytruda sales by that time.
Merck’s stock has declined 3.4% so far this year against an increase of 8% for the industry.
Image Source: Zacks Investment Research
The Keytruda development program is also progressing well and the drug is being studied for more than 30 types of cancer, including both monotherapy and combination studies. Meanwhile, Keytruda is being studied in phase III studies for biliary tract, gastric, hepatocellular, cutaneous squamous cell, mesothelioma, and ovarian and prostate cancers, among others.
Merck is also working on different strategies to drive Keytruda’s long-term growth. These include innovative immuno-oncology combinations including Keytruda with TIGIT, LAG3 and CTLA-4 inhibitors. Merck is also leveraging Keytruda benefit across several cancer types to identify and develop promising new oncology candidates.
In partnership with Moderna (MRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for the treatment of adjuvant melanoma. Merck/Moderna initiated a pivotal phase III study in adjuvant melanoma in July 2023.
Conclusion
Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug and should look for ways to diversify its product lineup. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity post-2028. Nonetheless, with continued label expansion into new indications, particularly earlier-line launches, Keytruda is expected to remain a key top-line driver and see strong growth for the next 2-3 years, courtesy of the current approved indications as well as upcoming launches.
Two drug/biotech stocks worth considering are J&J (JNJ - Free Report) and Corcept Therapeutics (CORT - Free Report) , both with a Zacks Rank of 2 (Buy).
Estimates for J&J’s 2023 earnings per share have increased from $10.66 to $10.75 over the past 60 days. Estimates for 2024 have jumped from $11.01 per share to $11.30 in the same timeframe. J&J’s stock has declined 6.2% year to date.
J&J beat earnings expectations in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.58%, on average.
In the past 60 days, the Zacks Consensus Estimate for Corcept’s 2023 earnings per share has gone up from 62 cents to 78 cents. The consensus estimate Corcept’s 2024 earnings per share has also improved from 61 cents to 83 cents. Shares of CORT have climbed 56.1% so far this year.
CORT’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 6.99%.
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Will Keytruda Remain Merck's (MRK) Key Top-Line Driver?
Merck’s (MRK - Free Report) PD-L1 inhibitor, Keytruda, approved for several types of cancers, alone accounts for around 46% of the company’s pharmaceutical sales. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Keytruda is continuously growing and expanding into new indications and markets globally.
Sales of Keytruda rose 23%, excluding Fx impact, in the first half of 2022. Keytruda sales are gaining from continued strong momentum in metastatic indications and rapid uptake across recent earlier-stage launches
Keytruda is presently approved to treat seven indications in earlier-stage cancers in the United States. Numerous recent approvals and the expected launch of many additional indications, including in earlier lines of therapy, can further boost sales. In the United States, Merck expects over half of Keytruda’s growth to come from indications in early-stage (neoadjuvant/adjuvant) treatment settings through 2025 and to represent roughly 25% of total global Keytruda sales by that time.
Merck’s stock has declined 3.4% so far this year against an increase of 8% for the industry.
Image Source: Zacks Investment Research
The Keytruda development program is also progressing well and the drug is being studied for more than 30 types of cancer, including both monotherapy and combination studies. Meanwhile, Keytruda is being studied in phase III studies for biliary tract, gastric, hepatocellular, cutaneous squamous cell, mesothelioma, and ovarian and prostate cancers, among others.
Merck is also working on different strategies to drive Keytruda’s long-term growth. These include innovative immuno-oncology combinations including Keytruda with TIGIT, LAG3 and CTLA-4 inhibitors. Merck is also leveraging Keytruda benefit across several cancer types to identify and develop promising new oncology candidates.
In partnership with Moderna (MRNA - Free Report) , Merck is developing a personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for the treatment of adjuvant melanoma. Merck/Moderna initiated a pivotal phase III study in adjuvant melanoma in July 2023.
Conclusion
Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug and should look for ways to diversify its product lineup. There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity post-2028. Nonetheless, with continued label expansion into new indications, particularly earlier-line launches, Keytruda is expected to remain a key top-line driver and see strong growth for the next 2-3 years, courtesy of the current approved indications as well as upcoming launches.
Zacks Rank and Stocks to Consider
Merck has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
Merck & Co., Inc. Price and Consensus
Merck & Co., Inc. price-consensus-chart | Merck & Co., Inc. Quote
Two drug/biotech stocks worth considering are J&J (JNJ - Free Report) and Corcept Therapeutics (CORT - Free Report) , both with a Zacks Rank of 2 (Buy).
Estimates for J&J’s 2023 earnings per share have increased from $10.66 to $10.75 over the past 60 days. Estimates for 2024 have jumped from $11.01 per share to $11.30 in the same timeframe. J&J’s stock has declined 6.2% year to date.
J&J beat earnings expectations in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.58%, on average.
In the past 60 days, the Zacks Consensus Estimate for Corcept’s 2023 earnings per share has gone up from 62 cents to 78 cents. The consensus estimate Corcept’s 2024 earnings per share has also improved from 61 cents to 83 cents. Shares of CORT have climbed 56.1% so far this year.
CORT’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 6.99%.