Is This Merck’s Next Big Billions-Of-Dollars Act After Keytruda?

Is This Merck’s Next Big Billions-Of-Dollars Act After Keytruda?

Merck (MRK) kicked off its cardiovascular “renaissance” on Tuesday after the Food and Drug Administration signed off on its newest drug, Winrevair. Merck stock popped in after-hours trading.


The treatment for pulmonary arterial hypertension, or PAH, came to Merck through its big bet takeover of Acceleron Pharma for $11.5 billion. Pulmonary arterial hypertension is a form of high blood pressure in the lungs. It causes shortness of breath, dizziness and chest pressure. Eventually, the right side of the heart fails, says Merck’s Chief Medical Officer Eliav Barr.

In a 2022 interview with Investor’s Business Daily, Barr said Merck was on the precipice of a “renaissance” in treating heart disease. The approval of Winrevair, formerly called sotatercept, is just the first of what could be a $10 billion yearly franchise in cardiovascular drugs. With Merck’s biggest moneymaker, cancer drug Keytruda, set to lose patent protection in 2028, Merck stock analysts are closely watching for the drugmaker’s next big act.

The results for PAH in clinical testing were “groundbreaking,” Barr told IBD in a March interview. Adding Winrevair to standard treatments for PAH helped significantly improve how far patients could walk over six minutes — a measure of disease severity.

Eight out of nine secondary metrics of the study also showed statistically significant improvements. The patients who received sotatercept had an 84% lower risk of clinical worsening events or death over 24 weeks compared to the placebo recipients.

“About 40% of people die within five years of diagnosis (of PAH), so they have a pretty high rate of hospitalization for needing lung transplants or other sorts of deterioration events that happen,” he said. “This is a pretty transformational drug and our hope for this drug is that it will be adopted by the right patient at the right time.”

Is This Merck Stock’s Next Big Act?

In a January report, Mizuho Securities analyst Mara Goldstein said the market for pulmonary arterial hypertension drugs is growing at a 6% compounded annual rate. She expects it to be worth $9 billion a year by 2028. Physicians say they would use sotatercept upon approval.

“We see (Winrevair) as a blockbuster opportunity within PAH and reaching $2.4 billion in sales by 2029 with upside stemming from its use in other diseases and indications involving vascular remodeling,” she said. She has a buy rating on Merck stock and raised her price target to 138 from 130.

Winrevair is the first treatment for PAH that addresses the underlying cause of the disease, Barr said. Standard drugs help relax the blood vessels which thicken as the disease progresses. Winrevair, instead, rebalances the signals in the body telling the blood vessels to narrow.

“It allows for a very significant change in the way in which the blood moves through the lungs,” he said. This allows the blood to become properly oxygenated and travel throughout the body.

Overall, Goldstein says Merck’s late-stage pipeline could add a potential $13.6 billion in 2029 sales. She listed sotatercept as a low-risk, likely-to-gain approval drug. Analysts following Merck stock are also keeping tabs on MK-0616, an oral cholesterol treatment in the PCSK9 drug class.

The PCSK9 gene provides instructions for making a protein that regulates the amount of cholesterol in the bloodstream. Blocking that protein helps lower bad LDL cholesterol. The FDA has approved a series of injections that do the same, but they’ve struggled to gain steam.

Goldstein says Merck is facing a $2 billion-plus opportunity for its oral PCSK9 inhibitor “given the ramp for cardiovascular drugs.” She expects sales to be $317 million in 2029.

‘Really Severe Consequences’

There are about 40,000 people with PAH in the U.S. and a roughly equal number in the major European markets. That puts the total market at about 80,000 to 90,000, Merck’s Barr said.

PAH patients tend to get their diagnoses in their 30s or 40s. Five years from diagnosis, 43% of them will be dead, Barr said.

“It’s a smaller group of patients,” he said. “But it’s a group of patients facing really severe consequences.”

Merck is also testing Winrevair in patients with pulmonary arterial hypertension due to left heart disease. This is a common complication of left heart disease, which occurs when the left ventricle of the heart gradually weakness. Over time, the heart has to work much harder to pump blood.

Importantly, Winrevair is an injectable drug, so patients can receive it at home.

Today, Merck stock has a middling Relative Strength Rating of 75 out of a best-possible 99. This means shares rank in the top one-quarter of all stocks when it comes to 12-month performance, according to IBD Digital.

But shares are currently trading in a buy zone after breaking out of a cup base with a buy point at 119.65 in early January, shows.

Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.


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