Brendan Wood RE: Merck's Announced Agreement to Acquire Prometheus Biosciences
Given Merck's announced agreement to acquire Prometheus Biosciences, here are some of the related Shareholder Conviction trends on Merck.
Typically Investor ratings of their confidence in Merck's Short Term (1yr) EPS Growth Potential fall above both the peer group and sector average. However their ratings of Merck's Long Term (3-5yr) EPS Growth are only in-line with those groups. At April 14th Investors rated the Strength of Merck's Pipeline below average. Those trends are below. Please also find the typical verbatim commentary on Merck's Pipeline, Growth Potential, the KEYTRUDA Patent Expiry and M&A. If you have any questions don't hesitate to reach out at my contacts listed below.
Typical Verbatim Commentary on Merck's Pipeline, Growth Potential, the KEYTRUDA Patent Expiry and M&A:
“Merck & Co. has the Keytruda patent expiry coming up, and they pulled out of the Seagen deal. They have work to do to help them bridge the gap.”
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“Merck & Co. are six years from Keytruda now. We're within a year of people starting to say, the five-year CAGR is negative, so Merck & Co. is going to plummet. There's nothing in the pipeline.”
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“Everyone now is rationalizing why Merck & Co. is okay, but is it really? It was probably too cheap. The arguments for upgrading the stock are flawed.”
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“I like the stuff Merck is trying to do with Keytruda and extending the life of it. It obviously entered into the multiple through 2022. It certainly looks a lot better than it did a year ago.”
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“Merck & Co. had a great growth year in 2022, but they just guided to negative EPS growth.”
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“If Merck & Co. could have done the Seagen deal it would have taken the pressure off to do further deals. They wouldn’t be desperate, and would probably do better with the pipeline.”
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“The fact that Merck & Co. was close to acquiring Seattle Genetics for $40 billion is a complete head scratcher to me. They had a relationship with Seattle Genetics for two years, which delivered nothing. Why did you suddenly need to go and spend $40 billion acquiring this company when the collaboration had delivered nothing?”
“Merck & Co. has nothing in phase three that's material.”
“Everybody I talk to about Merck & Co. mentions the Keytruda patent expiry. Most investors think the company can't fill that hole.”
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“Merck & Co. needs to do more deals like Acceleron to cope with the patent expiry on Keytruda.”
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“Merck & Co. knocked it out of the park with Keytruda, but at some point, they just created a huge hole to fill. I know they did Acceleron and that was great. They have a fantastic drug that's growing, but I don't know if they've ever addressed that issue in terms of the investor mind. However, they do have some time until the Keytruda patent expiry in 2028.”
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“I liked the idea of the Merck & Co. and Seattle Genetics deal, but I don't know if a lot of people did. There was controversy there.”
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“Merck & Co. isn’t doing anything wrong. They have a longer runway than Bristol. They're not facing immediate patent cliffs and their key drug is growing. It's just that people don't think they have anything else in the pipeline. If some of the drugs they're working on are successful, then the stock is going to go up. The ownership commitment will probably come down over time unless they shift things.”
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“Merck & Co. needs to talk more about what they're doing in the pipeline.”
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“For Merck & Co., it's a bet on the management team executing on sensible deals.”
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“Everybody I speak to on Merck & Co. just moans about the Keytruda patent expiry.”
“Merck & Co. have nothing else apart from Keytruda in the pipeline.”
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“Merck & Co. is a mature company with the vaccine business, such as the HPV vaccine. They're continuing to do very well in Keytruda, but that isn't necessarily great news because they're so over dependent on it. It is not the hottest stock in the world.”
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