Our updated thoughts on the BMY-CELG transaction, MRK numbers ahead of the quarter, and the opportunity in adjuvant IO from our 3/15 Wolfe Healthcare Biweekly Webcast.
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A slide deck describing our updated fundamental outlook for the sector from our February Monthly Controversies report.
This 80p report covers the bull/bear case, current controversies, relative growth prospects and more for our 10 US & EU global pharmaceutical companies.
On Saturday afternoon (2/16/2019), MRK presented detailed results from its KEYNOTE-426 trial at ASCO-GU – earlier in the week partial details had been released. See Exhibit 1 for how results compare to BMY’s Opdivo/Yervoy (CM-214) and PFE/Merck KGaA’s Bacenvio/Inlyta (JAVELIN Renal 101). The bottom line is that despite strong MRK data, BMY’s already-approved Opdivo+Yervoy will still likely retain some share in its labeled indication in 1L renal cell carcinoma (RCC); PFE’s regimen may also capture some share, but to a smaller degree. MRK’s data has been an overhang on BMY shares.
On Thursday (01/31/19) before the open, Merck (MRK):
Reported 4Q18 results that were mostly in-line with consensus.
Gave FY2019 revenues and EPS guidance that were slightly weaker.
Posted solid Keytruda #s showing 66% y/y growth.
Announced it will hold an investor event – its first in a long time – on June 20th.
MRK delivered decent Q4 results about in-line with expectations (importantly, Keytruda came in slightly ahead), and its 2019 guidance – while slightly weaker than consensus – is likely to be viewed as a “clearing event” because investors had anticipated this weakness based on mixed messaging coming out of the company in recent weeks/months about the need to continue investing in the business. MRK continues to claim its pipeline is as good as its ever been, which is a disconnect relative to investor perception – in the eyes of many (including us) its late-stage pipeline is too thin relative to spending roughly $8B/yr on R&D. It begs the question of how much MRK’s heavy spending in IO has crowded out other programs, something that has seemingly happened with BMY too. MRK cites pipeline programs like its Ebola vaccine, its dengue vaccine, and V114 (new and improved version of PFE’s Prevnar-13v), among others – but will these really be commercial hits?! It will be interesting to see what MRK has to say at its newly-announced June 20 investor meeting on this topic. In the meantime, while MRK’s dependence on Keytruda grows ever-higher, the brand is set to deliver continued, very strong growth, with additional sources of long-term optionality to the upside beyond the high estimates that analysts already forecast, and this alone is enough to carry the story, in our view. Yes, it creates single product concentration risk...
Merck (MRK) reported 4Q18 financial results this morning (2/1/19) – both revenue EPS about in-line with our and consensus estimates. Revenues of $11.00B vs. our $11.02B and consensus $10.95B. EPS of $1.04 vs. both our and consensus $1.03.
The Q4 2018 earnings season for our ten covered US/EU pharmaceutical companies is about to begin. It starts Thursday, January 24th with Bristol-Myers and ends Thursday, February 14th with AstraZeneca. This report contains our updated forecasts (out to 2028) and perspectives.
We track Emerging Markets growth rates for our covered companies. It has accelerated consistently since mid-2016; in Q3 2018 it was 11.6% y/y. From Q1 2012 to Q3 2018, y/y growth has been: 6.4% (10.3% (9.1% (9.5% (6.4% (10.3% (9.1% (9.5% (7.4% (6.1% (3.9% (9.5% (6.4% (8.3% (10.9% (8.0% (7.5% (4.7% (3.6% (3.2% (4.4% (1.8% (3.6% (3.3% (5.8% (6.1% (7.4% (7.5% (9.1% (9.5% (11.6% (Exhibit 1).
This report covers the bull/bear case, current controversies, relative growth prospects and more for our 10 US & EU global pharmaceutical companies.
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