AstraZeneca (AZN) and Merck (NYSE: MRK) announced that the U.S. Food and Drug Administration (FDA) has approved LYNPARZA for the adjuvant treatment of adult patients with germline BRCA-mutated (gBRCAm), human epidermal growth factor receptor 2 (HER2)-negative high-risk early breast cancer. These patients include individuals who have undergone neoadjuvant or adjuvant chemotherapy.
Specifically, both pharmaceutical companies are together known as MSD outside the U.S. and Canada.
According to Merck’s release, LYNPARZA is the first-of-its-kind “PARP inhibitor and the first targeted treatment to potentially exploit DNA damage response (DDR) pathway deficiencies, such as BRCA mutations, to preferentially kill cancer cells.”
Supporting Data
The regulator’s approval followed the results from the Phase 3 OlympiA trial, which was designed to evaluate the efficacy and safety of LYNPARZA versus placebo. It demonstrated the safety and tolerability profile in line with the prior clinical trials.
Breast cancer, the most common cancer diagnosed globally, is estimated to have 2.3 million patients in 2020. Significantly, breast cancer patients in the U.S. are diagnosed at an early stage 91% of the time, with germline BRCA mutations detected in about 5%-10% of all cases.
Comments and Status
Reaching the milestone, the CMO at Merck Research Laboratories, Roy Baynes, said, “Compared to placebo, LYNPARZA as adjuvant treatment offers these patients the potential to live longer without their cancer recurring.”
LYNPARZA is approved in the U.S., European Union, Japan, and several other countries. Remarkably, in the EU and Japan, the approval also includes patients with locally advanced breast cancer.
Wall Street’s Take
Recently, Credit Suisse analyst Lorenzo Biasio maintained a Buy rating on Merck and a price target of $87. This indicates an 12.16% upside potential from Friday’s closing price of $77.57 per share.
The rest of the Street is cautiously optimistic about the stock, which has a Moderate Buy consensus rating based on eight Buys and four Holds. The average Merck price target stands at $90.42 and implies upside potential of 16.57% to current levels. Shares have gained 9.62% over the past year.
Risk Analysis
According to the new TipRanks Risk Factors tool, the Merck stock is at risk mainly from two factors: Legal & Regulatory and Ability to Sell, which contribute 8 and 6 risks, respectively. In total 31 risks were identified for the stock.
Though Merck is at a higher risk from a sell standpoint than other companies in its industry, it remains less risky from a legal perspective. Given its risk profile, positive clinical development, and current stock movements, investors might consider investing in this stock.
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