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Merck to buy Verona for $10 billion ahead of Keytruda patent expiration
CNBC Television· 2025-07-09 13:23
Mergers and Acquisitions (M&A) - Merck is acquiring Verona Pharma for approximately $10 billion to diversify its portfolio beyond Keytruda [1] - The pharmaceutical industry is seeing a trend of companies buying commercial-stage companies, similar to J&J and Sanofi [4] - Companies are willing to be patient and pay more for acquisitions if they have more certainty about the product and its market performance [8] Patent Expiration and Revenue Replacement - Merck faces a $30 billion revenue gap due to the impending patent expiration of Keytruda [2] - The acquisition of Verona Pharma is aimed at plugging this revenue hole [5] Verona Pharma and its Drug - Verona Pharma's drug, launched last year, is for Chronic Obstructive Pulmonary Disease (COPD) [4] - First-quarter sales of the drug reached $70 million [4] - Peak sales estimates for the drug are currently around $4 billion, but could increase due to potential use for other indications like bronchiectasis [6] Market Dynamics and Investor Perspective - The traditional view that companies not acquired before launch are not viable is shifting [7] - Investors should reconsider how they evaluate pharmaceutical companies, as acquisitions of commercial-stage companies are becoming more common [7]
MRK Pins Hopes on New PAH Drug Winrevair Amid Looming Keytruda LOE
ZACKS· 2025-07-03 13:31
Core Insights - Merck's Keytruda, a PD-L1 inhibitor, is the primary revenue source, contributing approximately 50% of pharmaceutical sales and driving top-line growth [1] - The company is heavily reliant on Keytruda, which is set to lose exclusivity in 2028, prompting strategies for long-term growth [2][3] - Merck is developing a subcutaneous formulation of Keytruda and diversifying its product lineup, particularly in non-oncology areas [3] Winrevair Development - Merck is optimistic about Winrevair, a newly launched pulmonary arterial hypertension (PAH) drug, to enhance revenue post-Keytruda exclusivity [4] - Winrevair received FDA approval in March 2024 based on the STELLAR study, with EU approval following in August 2024 [4] - The drug has shown significant efficacy in late-stage studies, leading to early stoppages due to overwhelming results [6][8] Regulatory Updates - The FDA has accepted Merck's supplemental biologics license application (sBLA) for Winrevair, with a decision expected on October 25, 2025 [7][10] - The ZENITH study demonstrated a meaningful reduction in morbidity or mortality events, supporting the drug's efficacy [6] Financial Performance - Winrevair generated $280 million in sales in Q1 2025, with expectations for increased revenue following a successful label update [11] - Merck's shares have decreased by 17.1% year-to-date, contrasting with a 0.6% decline in the industry [15] - The company's price/earnings ratio is currently 8.84, lower than the industry average of 15.05, indicating attractive valuation [16] Market Competition - Winrevair faces strong competition in the PAH market from United Therapeutics and Johnson & Johnson, which have established products and significant sales [11][12]