Merck MRK announced that it has signed a procurement agreement with the United States government for its COVID-19 therapeutic candidate, molnupiravir (MK-4482). Per the agreement, the government will purchase 1.7 million courses of the candidate for approximately $1.2 billion, if the drug is granted Emergency Use Authorization or approval from the FDA.
Merck is developing molnupiravir in partnership with Ridgeback Biotherapeutics in a phase III study for the treatment of non-hospitalized patients with confirmed COVID-19. Merck is currently developing molnupiravir as an oral treatment for outpatients with COVID-19 in a phase III study — MOVe-OUT.
Following the agreement news, shares of Merck gained 2.3% on Wednesday. However, the company’s shares have declined 9.6% so far this year against the industry’s 5.8% increase.
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The company stated that it expects to manufacture more than 10 million courses of molnupiravir by the end of 2021. The company has invested heavily in development of the candidate including manufacturing expenses, along with research cost for ongoing and previous development of the candidate. Moreover, the company has stopped development of two COVID-19 vaccines and one COVID-19 therapy candidate. It has also stopped development of molnupiravir as a treatment for hospitalized COVID-19 patients. These setbacks have resulted in significant write-offs for the company.
Based on feedback from an external Data Monitoring Committee, the company made amendments, earlier this year, to the MOVe-OUT study design to include patients with symptom duration of less than or equal to five days and with at least one risk factor for progression to severe disease.
Meanwhile, data from the MOVe-OUT study showed that treatment with molnupiravir resulted in lower hospitalizations or deaths compared to placebo. Although the data was not enough to provide a meaningful measure of clinical effect, treatment with the candidate indicated inhibition of replication of the virus. Data from the study is expected by September or October. Merck plans to file for EUA in the second half of 2021. Any development or regulatory setback to molnupiravir in outpatient setting will lead to complete failure of Merck in the field of COVID-19. Moreover, Pfizer PFE and Roche RHHBY are also developing similar COVID-19 treatments and will likely increase competition for Merck.
However, we note that Merck is supporting manufacture of another company’s COVID-19 product. The company has an agreement with the Biomedical Advanced Research and Development Authority that will provide it with funding up to $268.8 million to support manufacturing of COVID-19 vaccines. The company also signed an agreement with J&J JNJ in March to support the production of the latter’s vaccine.
Merck & Co., Inc. Price
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Merck currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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