Shares in pharmaceuticals giant Merck (MRK) weakened today on fears that a patent battle could jeopardize its plans to sell a new version of its crucial cancer drug Keytruda.
Enzyme Dispute
According to a Wall Street Journal article, Merck is in dispute with biotech Halozyme Therapeutics (HALO) over a “microscopic enzyme” in its new version of the drug. The report stated that Merck has been making some tweaks to Keytruda to make it easier for patients and doctors to use. The enzyme allows the drug to be injected, rather than given intravenously, which gives cancer patients the comfort of being able to take their treatment at home rather than in a hospital.
Halozyme, however, believes the new Keytruda, which treats cancers such as bladder and breast cancer, infringes on its patents, and that Merck must sign a licensing agreement in order to sell its new version. Merck disputes this, declaring that the enzyme it has used was developed independently from Halozyme. Merck said it was confident in its legal position on the matter.
Keytruda is Key to Sales
The dispute really matters to Merck because of the importance of Keytruda to its business. That’s because it generates nearly half of the company’s sales. Indeed, according to its recent full-year results for 2024, Keytruda grew revenues by 18% to hit nearly $30 billion out of a group total of $64.2 billion. In addition, its U.S. patent protection runs out in 2028, which means rivals can then start selling copycats and capturing some of that demand.
Analysts, according to the Wall Street Journal, believe the new version of Keytruda could generate over $6 billion in annual sales.
Is MRK a Good Stock to Buy Now?
On TipRanks, MRK has a Moderate Buy consensus based on 11 Buy and 6 Hold ratings. Its highest price target is $138. MRK stock’s consensus price target is $111.88 implying an 20.87% upside.
