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Merck (MRK) to Buy OncoImmune, Add Late-Stage COVID-19 Treatment

Zacks Equity Research
·3-min read

Merck & Co., Inc. MRK announced a definitive agreement to acquire private biotech OncoImmune for an upfront payment of $425 million in cash. With the acquisition, Merck will gain right to CD24Fc, a candidate, in phase III studies for the treatment of patients with severe and critical COVID-19

Top-line data from an interim analysis of the phase III study showed that CD24Fc led to 60% higher probability of improvement in clinical status of patients with severe or critical COVID-19 compared to placebo while reducing the risk of death or respiratory failure by more than 50% in such patients.

Per the deal, OncoImmune will divest certain rights and assets unrelated to the CD24Fc program to a new entity in which Merck will have minority stake. The transaction is expected to be closed before the end of the year.

Meanwhile, CD24Fc is also being evaluated in a pivotal phase III study for prophylaxis of graft versus host disease.

Merck’s shares have declined 11.7% this year so far compared with the industry’s 0.2% decline.

 

 

The acquisition boosts Merck’s suite of clinical programs in response to COVID-19. Merck is developing an orally available antiviral candidate, molnupiravir, in collaboration with Ridgeback Bio for treating COVID-19 patients. Two pivotal phase II/III studies are evaluating the candidate in non-hospitalized adult COVID-19 patients or hospitalized adult COVID-19 patients.

Merck is also developing two vaccines — V590 and V591 — in early-stage studies for coronavirus. V590 is being developed in collaboration with International AIDS Vaccine Initiative.

In a separate press release, Merck announced that it has filed applications to the FDA and European Medicines Agency for licensure of V114, its investigational 15-valent pneumococcal conjugate vaccine. Merck’s phase III clinical development program for V114 included 16 late-stage studies that evaluated the vaccine candidate in a variety of populations who are at increased risk for pneumococcal disease.

V114 includes pneumococcal serotypes 22F and 33F, which are not in the currently licensed conjugate vaccines and are commonly associated with invasive pneumococcal disease worldwide.

We remind investors that Pfizer PFE is also developing a 20-valent pneumococcal conjugate vaccine in late-stage studies.

Merck has a strong vaccine portfolio led by its human papillomavirus vaccine, Gardasil. Apart from Gardasil and Pneumovax 23, the company has several marketed vaccines in its portfolio like ProQuad/M-M-R II/Varivax, RotaTeq, and Zostavax. However, Zostavax is facing stiff competition from Glaxo’s GSK shingles vaccine, Shingrix.

Merck currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked biotech stock is Repligen Corporation RGEN with a Zacks Rank of 2 (Buy). Its stock has risen 100.9% this year so far while earnings estimates for 2020 have risen from $1.28 per share to $1.41 per share over the past 30 days. Earnings estimates for 2021 have gone up from $1.42 per share to $1.63 per share in the same timeframe.

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