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Merck-Glaxo Partner for Oncology Treatment

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Merck (MRK), which is working on strengthening its pipeline and bringing new products to market, is partnering GlaxoSmithKline (GSK) for the evaluation of its experimental cancer drug, MK-3475 in combination with Glaxo’s Votrient (pazopanib).

While MK-3475 is an anti-PD-1 immunotherapy, Votrient is an orally administered kinase inhibitor. The phase I/II study will evaluate the safety and efficacy of the combination in treatment naïve patients suffering from advanced renal cell cancer. Additional details regarding the deal were not provided.

While Votrient is already approved for the treatment of patients with advanced renal cell cancer, MK-3475 is being studied across a wide range of cancers like bladder, colorectal, gastric, head and neck, melanoma, non-small cell lung, triple negative breast, pancreatic, hematological malignancies and renal cell cancer. Merck has plans to conduct additional studies on MK-3475 as a monotherapy as well as in combination with other cancer treatments.

Merck currently carries a Zacks Rank #3 (Hold). Merck has entered a challenging period with erstwhile blockbuster drug, Singulair, losing exclusivity in the U.S. in early Aug 2012 and in the EU in Feb 2013. Moreover, we remain concerned about Januvia's performance.

Other headwinds remain in the form of unfavorable currency movement and pipeline setbacks. We believe Merck will look towards cost-cutting initiatives and share buybacks to drive the bottom-line.

Some better-ranked stocks in the health care sector include Vanda Pharmaceuticals Inc. (VNDA) and Actelion Ltd. (ALIOF). Both carry a Zacks Rank #1 (Strong Buy).

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