Merck (MRK) Stock Jumps 4% on Positive Trial Data

  • Shares of Merck (MRK) swung higher amid a rough day for the equities sector.
  • The company announced positive top-line results for a key therapeutic.
  • MRK stock jumped in part because the therapeutic underlined a risky acquisition.
MRK stock - Merck (MRK) Stock Jumps 4% on Positive Trial Data

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Despite a rough day outing on Monday for the major equity indices, shares of pharmaceutical giant Merck (NYSE:MRK) swung higher. Early this morning, the company announced positive top-line results from a Phase 3 study involving sotatercept, an investigational fusion protein evaluated for the treatment of pulmonary arterial hypertension (PAH). Following the disclosure, MRK stock popped up 4% before settling around 3% up in the afternoon session.

Per Merck’s press release, the “trial met its primary efficacy outcome measure, demonstrating a statistically significant and clinically meaningful improvement in 6-minute walk distance (6MWD, which measures how far patients can walk in 6 minutes) from baseline at 24 weeks.” In addition, eight of nine “secondary efficacy outcome measures achieved statistical significance, including the outcome measure of proportion of participants achieving multicomponent improvement.”

Dean Li, president of Merck Research Laboratories, called the results of the Phase 3 study — dubbed Stellar — “profound.”

“The results observed in Stellar suggest that sotatercept has the potential to transform the treatment of patients with PAH,” he said in a written statement, according to Investor’s Business Daily. “We are moving with urgency on our regulatory applications to bring this investigational therapy to these patients.”

Merck’s Big Risk Paid off for MRK Stock

Aside from the clinical significance of sotatercept, the therapeutic featured financial importance for MRK stock. According to Barron’s, Merck “bought sotatercept as part of its 2021 deal to acquire Acceleron Pharma, in the hope that the drug could help fill the revenue gap expected when the patent on the company’s megablockbuster cancer therapeutic Keytruda expires at the end of this decade.”

However, Barron’s noted that the strategy presented tremendous risks. “At the time, Acceleron only had Phase 2 data on sotatercept, and Merck paid a substantial price for the company. The deal was one of the biggest acquisitions of 2021.”

Evercore ISI analyst Umer Raffat weighed in, calling the study a “must-win” for MRK stock. Along with the encouraging Phase 3 data, sotatercept could enjoy a long timeline of exclusivity. Raffat mentioned that the first sotatercept patent will expire in 2026. However, additional patents and protections could prevent generics from hitting the market until the mid-2030s, the analyst stated per

Significantly, MRK stock represents one of the few bright spots in the equities sector so far this year. At the time of writing, shares are up nearly 18% on a year-to-date basis. In sharp contrast, the benchmark S&P 500 index fell over 24% during the same period.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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