Merck’s (NYSE:MRK) shares gained about 5% in the extended trading session yesterday. The spike comes after the U.S. Food and Drug Administration (FDA) approved Winrevair, MRK’s new drug to treat adults with pulmonary arterial hypertension (PAH), a life-threatening lung disease. It is worth mentioning that MRK secured the rights to Winrevair through its $11.5 billion acquisition of Acceleron Pharma in 2021.
Importantly, Winrevair targets the root cause of PAH, which provides it an edge over other treatments, which only help manage symptoms. The FDA approval is based on its Phase III results, which demonstrated the treatment’s consistent and sustained efficacy in improving the patient’s exercise capacity. Further, Merck anticipates that Winrevair will be available at some specialty pharmacies in the U.S. by the end of April.
J.P. Morgan analyst Chris Schott sees strong potential in Winrevair and expects its annual sales to grow from an estimated $400 million in 2024 to around $5 billion in 2030. Buoyed by upcoming pipeline updates and Winrevair’s promising growth expectations, Schott reiterated a Buy rating on MRK stock.
Strategic Victory for MRK
The FDA’s approval of Winrevair is a strategic victory for Merck. This development aligns with the company’s ongoing efforts to diversify its revenue portfolio ahead of the market exclusivity expiration of Keytruda, its highly successful cancer treatment, in 2028.
The upcoming expiration of market exclusivity presents a potential challenge for Merck. It could lead to the introduction of more affordable substitutes, consequently impacting MRK’s future sales. Interestingly, MRK generated revenues of $25 billion from the cancer drug last year, which represented more than 40% of total sales.
Is MRK a Good Stock to Buy Now?
Wall Street analysts are optimistic about the stock. With 16 Buy, two Hold, and one Sell recommendations, MRK has a Strong Buy consensus rating. The analysts’ average price target on Merck stock of $134.56 implies an upside potential of about 7% from current levels. Shares of the company have gained more than 22% over the past six months.
