Merck: Shareholders Will Fail To Be Rewarded Here

Investment Thesis

Merck (MRK) has truly great prospect with its Keytruda program, but its shares are just too expensive at the moment.

Business Prospects: Keytruda

Merck's Keytruda is a humanized antibody used in cancer immunotherapy. As of May 2017, it was approved by the FDA as a treatment of patients with metastatic nonsquamous non-small cell lung cancer ('NSCLC'). Keytruda is an antibody that specifically targets PD-1 receptors in lung cancer. Merck cleverly designed its clinical trial to target cells which had high expression of PD-1 receptors, anything that had above 50% expression levels. This level of expression level in its clinical tests went down well with the FDA which ultimately approved its use in the patients with metastatic nonsquamous NSCLC.

More recently, Merck updated its results with KEYNOTE-024. This study included patients with squamous and non-squamous NSCLC with no EGFR or ALK genomic tumor aberrations. Its results showed a reduction in the risk of death by 37% for Keytruda compared to just chemotherapy. Additionally, Keytruda was associated with significantly longer progression-free and overall survival and with fewer adverse events than was platinum-based chemotherapy alone. KEYNOTE-024 tests results had a significance of p=0.003, meaning its results are very conclusive.

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