RAHWAY, N.J. - Merck & Co., Inc. (NYSE: MRK) has completed the acquisition of Eyebiotech Limited (EyeBio), now a fully integrated subsidiary, enhancing its late-stage pipeline with new treatments for retinal diseases, the pharmaceutical giant announced today. The transaction includes Restoret™, a novel therapy for diabetic macular edema (DME) and neovascular age-related macular degeneration (NVAMD).
Restoret™, EyeBio’s lead candidate, is a tetravalent, tri-specific antibody targeting the Wnt signaling pathway. Following positive Phase 1b/2a trial results, a pivotal Phase 2b/3 trial is slated for the second half of 2024 to assess Restoret’s efficacy in DME treatment.
Dr. Dean Y. Li, president of Merck Research Laboratories, expressed enthusiasm about the acquisition, stating, "The EyeBio acquisition further diversifies our late-stage pipeline with the addition of a promising candidate based on novel biology and genetics for the treatment of certain retinal diseases. We are excited to welcome the EyeBio team and look forward to working together to advance Restoret for the patients that need it."
Merck's financial outlook will reflect the acquisition's impact, with an anticipated charge of about $1.3 billion, or roughly $0.50 per share, recorded in the third quarter of 2024. This will be included in the company's non-GAAP results. Merck will update its full-year financial outlook on July 30, when it reports its second-quarter 2024 results.
Restoret™ is designed to reduce vascular leakage in retinal diseases by restoring and maintaining the blood-retinal barrier, addressing a significant unmet medical need for patients with DME and NVAMD. The therapy is administered as an intravitreal injection.
In other recent news, Merck has been granted FDA approval for its pneumococcal vaccine Capvaxive, designed to protect adults against pneumococcal disease. This new product is set to compete directly with Pfizer (NYSE:PFE)'s Prevnar 20 in the U.S. market.
In parallel, Wells Fargo has maintained its Equal Weight rating on Merck, influenced by a survey that provided insights into the market reception of Merck's Winrevair. The survey indicated a conservative estimate of market share growth for Winrevair over the next few years.
Additionally, BMO Capital has maintained its Outperform rating on Merck, following significant developments in its oncology pipeline and clinical trials. Merck also plans to acquire EyeBio, a strategic move into the ophthalmology sector, with an upfront payment of $1.3 billion and potential for an additional $1.7 billion tied to milestone achievements.
Moreover, the FDA has accepted for priority review the supplemental Biologics License Application (sBLA) for Merck's KEYTRUDA, a potential treatment for malignant pleural mesothelioma, with a target action date of September 25, 2024.
InvestingPro Insights
As Merck & Co., Inc. (NYSE: MRK) forges ahead with the strategic acquisition of EyeBio and its promising Restoret™ therapy, the company's financial strength and market position are critical for investors monitoring the impact of this move. Merck's robust market capitalization of $326.66 billion underscores its significant presence in the pharmaceutical industry. This stature is further exemplified by the company's impressive gross profit margin of 74.85% over the last twelve months as of Q1 2024, which indicates a strong ability to translate sales into profit.
Investors may also take note of Merck's commitment to shareholders, as evidenced by the company's track record of maintaining dividend payments for 54 consecutive years—an InvestingPro Tip that speaks to its financial resilience and stability. Additionally, the stock's low price volatility is an attractive feature for investors seeking stable returns in a typically turbulent market.
While the company trades at a high earnings multiple with a P/E ratio of 141.18, the adjusted P/E ratio for the last twelve months as of Q1 2024 is more grounded at 25.54, suggesting a more reasonable valuation when considering normalized earnings. Moreover, Merck's shares are trading near their 52-week high, reflecting investor confidence in the company's prospects, including the potential success of Restoret™.
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