Two of Merck's cardiovascular products could generate north of $10 billion in peak sales, an analyst said Tuesday as he boosted his price target on Merck stock.
Over the weekend, Merck presented data from studies of drugs called sotatercept and MK-0616. The former is in testing for high blood pressure in the lungs, a condition known as pulmonary arterial hypertension. The latter is an oral treatment for high cholesterol.
Credit Suisse's Trung Huynh called both drugs "potentially practice changing" and key to easing the pain of Keytruda's patent expirations in 2028. The cancer blockbuster generated $20.9 billion revenue last year, more than a third of Merck's total sales.
"In conversations with key opinion leaders, following the presentation of the data at the (American College of Cardiology meeting), both products were thought to be differentiated and would see significant uptake in their indications," he said in a report.
On Monday, following the presentations, Merck stock jumped 4%. On the stock market today, shares rose a fraction to close at 111.27. Merck stock is consolidating with a buy point at 115.59, according to MarketSmith.com.
Merck Stock: $5.1 Billion In Potential Sales
Huynh now sees a 95% chance sotatercept gains Food and Drug Administration approval. He also expects the drug to generate a peak of $5.1 billion in sales, up from prior estimates for $3.2 billion. Merck acquired sotatercept alongside Acceleron Pharma in a big $11.5 billion bet.
Sotatercept is meant to be added onto other treatments for pulmonary arterial hypertension, also known as PAH. In a recent study, patients who received sotatercept for 24 weeks had a 40.8-meter improvement in how far they could walk for six minutes. Sotatercept also cut the risk of worsening health or death by 84% compared to the placebo.
Based on the strength of the data, Mizuho Securities analyst Mara Goldstein raised her forecast to $1.4 billion in sotatercept sales in 2029, up from her earlier call for $900 million. She reiterated her price target of 130 on Merck stock.
SVB Securities analyst Daina Graybosch sees "FDA approval, payer coverage and rapid uptake in sotatercept's labeled indication." Merck is also trying to expand sotatercept to higher-risk patients. Graybosch kept her outperform rating on Merck stock.
60% Chance Of Success
The second drug catching analysts' interest is MK-0616, an oral treatment that blocks the PCSK9 protein. PCSK9 is tied to high LDL cholesterol. There are injectable drugs, but prescriptions have been limited.
Merck tested MK-0616 in patients who didn't achieve lower LDL cholesterol on a prior treatment After eight weeks, every dose tested led to lower cholesterol. The reductions ranged from 41%-61% compared to a placebo.
The data suggest MK-0616 could have "a competitive profile and leaves room for upside," Mizuho analyst Goldstein said. She has a buy rating on Merck stock.
Credit Suisse's Huynh sees a peak of $5 billion in sales for MK-0616. He now sees a 60% chance the company will succeed with MK-0616, up from his prior estimate for 50%. Huynh calls Merck stock "a top pick" among U.S. pharmaceutical companies.
This comes "as new management successfully diversifies away from the patent expiration of its most important asset, Keytruda, by 2028," he said. "We think Merck's high, consistent earnings growth, which is considerably above peers, should be the key to outperformance over the next few years."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
