Merck (MRK) and Ridgeback Biotherapeutics revealed that the U.S. Food and Drug Administration’s (FDA) Antimicrobial Drugs Advisory Committee has voted in favor of the company’s COVID-19 pill by a narrow margin of three votes.
The voting is in regard to the Emergency Use Authorization (EUA) application for molnupiravir, designed to treat mild to moderate COVID-19 in adults who are at high risk of progressing to severe conditions or hospitalization. (See Merck stock chart on TipRanks)
The committee is of the opinion that the known and potential benefits of molnupiravir outweigh its known and potential risks. Notably, the FDA is not bound by the committee’s decision but may take its advice into consideration.
The Executive Vice-President and President of Merck Research Laboratories, Dr. Dean Y. Li, said, “With the continued spread of the virus and the emergence of variants, additional treatments for COVID-19 are urgently needed. That is why we are moving with speed and rigor to pursue authorizations and to accelerate broad global access to this investigational medicine.”
Supporting Data
Merck recently disclosed additional analyses from all 1,433 participants, which reflect that molnupiravir reduced the risk of hospitalization or death from 9.7% in the placebo group to 6.8% in the molnupiravir group. Also, nine deaths were reported in the placebo group, and one in the molnupiravir group.
The incidence of any adverse event (AE) or drug-related AE was comparable in the molnupiravir and placebo groups. However, a lesser number of participants discontinued study therapy due to an AE in the molnupiravir group than the placebo group.
Price Target
Following the news, Mizuho Securities analyst Mara Goldstein assigned a Buy rating to the stock with a price target of $100 (upside potential of 33.5%).
Goldstein noted, “Given the favorable vote and the FDA’s internal review, we see EUA likely in the next few weeks. As MRK has secured/in-process government contracts we anticipate that roughly $1 billion of revenue could be recognized in 2021.”
Overall, the stock has a Moderate Buy consensus rating based on 5 Buys and 6 Holds. The average Merck price target of $93.73 implies 25.1% upside potential.
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Negative Sentiment
TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on Merck, with 8.8% of investors on TipRanks decreasing their exposure to MRK stock over the past 30 days.
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