Merck’s (MRK) Updated Efficacy Data For Molnupiravir A Tough Pill To Swallow, Sending Shares Lower
1:46 pm Friday, November 26th, 2021
Shares of Merck (NYSE:MRK) have been on a role, up about 15% since mid-September, driven by an impressive beat-and-raise earnings report on October 28 and promising data for its COVID-19 treatment pill, molnupiravir, two weeks earlier. Today, however, the news is less positive after MRK and development partner Ridgeback Biotherapeutics released updated data from the MOVe-OUT clinical trial for molnupiravir, showing that the drug may not be as effective as originally believed.
In October, MRK provided interim analysis from the study, showing that molnupiravir lowered the risk of hospitalization for patients at risk of developing severe COVID-19 by 48%. More specifically, 7.3% of trial participants who were given molnupiravir twice a day for five days were hospitalized and none had died, compared to a hospitalization rate of 14.1% for the placebo patients. The new data released today indicates that the pill may only reduce the risk of hospitalization by 30% as 6.8% of the molnupiravir group was hospitalized, versus 9.7% for the placebo group. Additionally, one person taking the treatment died.
Prior to this development, MRK’s molnupiravir was generating significant momentum and was viewed as a game-changer in the fight against the virus. The U.S. government and the EU were in talks with the company to potentially purchase millions of doses of the drug. While the FDA’s Antimicrobial Drugs Advisory Committee may still render a positive recommendation on molnupiravir when it convenes on November 30, the disappointing data puts MRK at risk of losing business to Pfizer (PFE) and its experimental oral antiviral pill, PAXLOVID.
There’s obviously room on the market for more than one oral antiviral medicine, but the question is whether MRK will still achieve the financial targets it disclosed for molnupiravir, assuming it is granted EUA. During the Q3 earnings conference call, the company stated that it expects molnupiravir to generate revenue of $500 mln to $1.0 bln this year, and approximately $5-$7 bln through 2022. For a reference point, analysts are projecting MRK to report total revenue of $56.6 bln in FY22.
Molnupiravir certainly represents a key catalyst for MRK, but it is far from the company’s only growth driver. For instance, lung cancer treatment Keytruda, which is MRK’s largest product, is experiencing robust growth with sales up 21% last quarter to $4.53 bln. Also, sales for the company’s HPV vaccine, Gardasil, rocketed higher by 63% to nearly $2.0 bln.
The main takeaway is that this updated data is disappointing and raises some concern that MRK’s pill may not receive a favorable recommendation from the FDA panel next week. Even if it is ultimately approved for use, the apparent weaker efficacy relative to Pfizer’s product may hinder sales.
