Merck stock gains on COVID pill hopes – is MRK stock a game changer?

Merck & Co. (NYSE: MRK) shares jumped more than 8% on Friday, after the company released an update regarding its experimental Covid-19 antiviral oral drug molnupiravir. 

The interim analysis from the Phase 3 trial found Molnupiravir may prevent the chances of hospitalization or death from COVID-19 by 50% among people who are at high risk of infection. In addition, the pharmaceutical giant found the drug effective against all the known strains of the virus, including the rapidly spreading Delta strain.

Merck is developing the drug in partnership with Ridgeback Biotherapeutics. The two companies plan to seek emergency use authorization (EUA) for the medicine as soon as possible. However, it is still not clear how long the U.S. Food and Drug Administration (FDA) will take to review the drug. 

Merck & Co could change the game with a COVID pill

If approved, molnupiravir would be the first dedicated oral antiviral drug against the coronavirus. Studies show that the pill is most effective when taken during the initial stage of COVID-19. Moreover, an oral tablet is less invasive in comparison to vaccine shots developed by other drugmakers.

Some industry experts believe that an oral treatment for COVID-19 could change the public perception of the risks associated with the virus. Moreover, molnupiravir can be taken at home which could potentially reduce pressure on hospital systems across the world.

Wallstreet analyst sees upside in MRK stock after positive data

Merck & Co’s interim Phase 3 data caught the attention of sharks on Wallstreet. Citi analyst Andrew Baum, raised the firms valuation with a $105 target on MRK stock. The analyst noted that the potential revenue generated from molnupiravir “deserve a reasonable multiple” given the demonstrated efficacy across known variants. Baum expects orders of successful antivirals to exceed $20 Billion globally. The price target represents a 30% upside from the current trading price.

Furthermore, another analyst Christopher Raymond from Piper Sandler called the Phase 3 interim data a “game changer”. The analyst sees the oral treatment likely impacting “not just the treatment paradigm for COVID-19 but also has potential utility in the prevention setting.”

The Bottom Line – Is Merck stock a game changer?

Merck has already commenced the production of molnupiravir in anticipation of regulatory approval. It expects to produce ten million courses of treatment by the end of this year. Industry experts think the approval would be a game changer for Merck, giving it an edge over competitors in the coronavirus drug market.

Meanwhile, shares of rival drugmakers, including Moderna (MRNA) and BioNTech (BNTX), dropped following the latest development. Moderna shares fell more than 11 percent, while BioNTech shares fell nearly 7 percent in the previous trading session. 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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