MRK Pins Hopes on New PAH Drug Winrevair Amid Looming Keytruda LOE

Merck’s MRK blockbuster PD-L1 inhibitor, Keytruda, approved for several types of cancer indications, is the company's biggest revenue driver. The drug alone accounts for around 50% of the company’s pharmaceutical sales and is a key driver of Merck’s top-line growth.

However, Merck remains heavily dependent on Keytruda for growth. Moreover, the drug is set to lose exclusivity in 2028. Given the heavy reliance and the upcoming loss of exclusivity of Keytruda, Merck is working on different strategies to drive Keytruda's long-term growth. These include innovative immuno-oncology combinations, including Keytruda with LAG3 and CTLA-4 inhibitors.

Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. It is under review in the United States and an FDA decision is expected in September.

Merck is also looking for ways to diversify its product lineup, especially by growing its non-oncology business to navigate the potential challenges once Keytruda loses exclusivity.

MRK's Pins Hope on PAH Drug Winrevair

Merck is pinning hopes on the newly launched pulmonary arterial hypertension (PAH) drug Winrevair to boost its top line once Keytruda loses exclusivity.

Winrevair was approved by the FDA to treat PAH, WHO Group 1, in March 2024 based on data from the STELLAR study. The drug was approved for a similar use in the EU in August 2024.

Merck evaluated Winrevair in two other late-stage studies, ZENITH and HYPERION, for addressing more advanced forms of PAH. The phase III ZENITH study evaluated Winrevair in patients with PAH, WHO Group 1 functional class (FC) III or IV at high risk of mortality.

The phase III HYPERION study evaluated Winrevair in recently diagnosed adult patients with PAH, WHO Group 1 functional class (FC) II or III at intermediate or high risk of disease progression.

Top-line data from the ZENITH study, announced last November, showed that treatment with Winrevair added to background PAH therapy led to a statistically significant and clinically meaningful reduction in the risk of morbidity or mortality events compared to placebo. It was also the first PAH phase III study to be stopped early by an independent data monitoring committee due to overwhelming efficacy.

Earlier this week, the FDA accepted and granted priority review to Merck’s supplemental biologics license application (sBLA) seeking approval to update the label for Winrevair in the United States to include data from the ZENITH study.

A decision from the regulatory body is expected on Oct. 25, 2025.

In January, the HYPERION study was stopped early and moved to final analysis, based on overwhelming efficacy seen in the phase III ZENITH study and review of available data from the Winrevair clinical program, including the STELLAR study.

Conclusion

Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.

Winrevair generated sales worth $280 million in the first quarter of 2025. Though still in the early days, a successful update to the Winrevair label should boost sales in future quarters. Management believes that Winrevair has the potential to generate significant revenues over the long term, especially after Keytruda loses exclusivity.

However, Winrevair faces stiff competition in the PAH market.

Significant players in the PAH market are United Therapeutics UTHR and Johnson & Johnson JNJ.

UTHR markets four drugs to treat PAH in the United States — Remodulin, Orenitram, Tyvaso and Adcirca. United Therapeutics’ Remodulin, Orenitram and Tyvaso recorded sales of $138.2 million, $120.7 million and $466.3 million, respectively, in the first quarter of 2025.

J&J’s key PAH drugs include Opsumit and Uptravi. JNJ recorded revenues of $1.02 billion from its PAH franchise in the first quarter of 2025.

MRK's Price Performance, Valuation and Estimates

Year to date, shares of Merck have lost 17.1% compared with the industry’s decrease of 0.6%.

From a valuation standpoint, Merck appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 8.84 forward earnings, lower than 15.05 for the industry and its 5-year mean of 12.84.

The Zacks Consensus Estimate for 2025 earnings has declined from $8.94 per share to $8.91, while the same for 2026 has decreased from $9.76 to $9.73 over the past 60 days.

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

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This article originally published on Zacks Investment Research (zacks.com).

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