Merck's stock rallies toward a record after FDA OKs arterial-hypertension drug

By Tomi Kilgore

J.P. Morgan sees Winrevair sales reaching $5 billion by 2030

Shares of Merck & Co. Inc. rallied into record territory Wednesday, after the drug giant's treatment for pulmonary arterial hypertension, Winrevair, was approved by the U.S. Food and Drug Administration.

The stock (MRK) climbed 4.6% in premarket trading, enough to pace the S&P 500 index's SPX gainers ahead of the open. The stock was also on track to open above the record closing price of $129.45 reached on Feb. 23.

The FDA's approval is based data from a Phase 3 trial that showed adding Winrevair (sotatercept) to background therapy increased six-minute walk distance by 41 meters at week 24 of therapy. Using Winrevair also significantly improved many other secondary measures, including reducing the risk of death by 84%.

Winrevair had previously been granted Breakthrough Therapy Designation by the FDA.

"Based on the Phase 3 Stellar trial, adding Winrevair to background PAH therapy demonstrated significant clinical benefits compared to background PAH therapy alone," said Dr. Marc Humbert, an investigator on the Stellar trial. "This approval is an important milestone, as it offers healthcare providers a novel therapeutic option that targets a new PAH treatment pathway."

Merck said it expects Winrevair, which is given once every three weeks by injection, to be available in select specialty pharmacies in the U.S. by the end of April.

J.P. Morgan analyst Christopher Schott the fact that Winrevair received a "clean label with no black box" was a relief to some investors, as there was some concern that the FDA may have required a warning on the packaging about potential adverse side effects.

He believes Winrevair will have a strong initial launch, and quickly become part of the standard of care for eligible PAH patients. He believes the treatment could generate sales of about $5 billion by 2030.

"Longer-term, we see further opportunities for growth with the launch of an autoinjector over time (Winrevair's label allows for self administration) as well as with potential label expansions into additional patient populations," Schott wrote in a note to clients.

Merck's stock has rallied 15.1% year to date through Tuesday, while the S&P 500 has advanced 9.1%.

-Tomi Kilgore

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