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Merck Asks FDA To Authorize Covid Pill — And Inches Deeper Into Buy Zone

Merck stock hovered near the break-even point Monday after the company asked the Food and Drug Administration to authorize its Covid pill.




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The pill, dubbed molnupiravir, is an antiviral treatment for Covid that Merck is developing with Ridgeback Biotherapeutics. If authorized, doctors would prescribe it to patients with mild-to-moderate Covid who are at risk of worsening to severe disease. In one study, molnupiravir cut down on hospitalizations and deaths by roughly half.

The results were so promising, an independent committee told Merck (MRK) and Ridgeback they could stop recruiting patients for the study. Now, the duo is seeking emergency use authorization for the pill, which would be a first-of-its-kind treatment for Covid.

“The extraordinary impact of this pandemic demands that we move with unprecedented urgency, and that is what our teams have done by submitting this application for molnupiravir to the FDA within 10 days of receiving the data,” Merck Chief Executive Robert Davis said in a written statement.

In midday trading on today’s stock market, Merck stock seesawed between positive and negative ground. Shares inched down near 80.40 in recent action.

Merck Stock Rises On Covid Filing

Merck already has a deal with the U.S. government for 1.7 million courses of molnupiravir. The firm says it also has supply and advance purchase agreements with other governments. It expects to make 10 million courses by the end of 2021, with more expected in 2022.

Molnupiravir works by creating mutations in the RNA of the virus. Eventually, the virus is so riddled with errors that it can no longer replicate properly. This phenomenon is called viral error catastrophe. Merck stock rocketed more than 8% the day it came out with its recent molnupiravir data.

Some experts note this could heighten the risk of cancer or birth defects in people taking the pill. In theory, this would happen if the drug also integrates into the host’s genes.

Evercore ISI analysts Umer Raffat and Jonathan Miller argue Merck has run tests in animals to rule out this possibility. So far, those tests haven’t produced that concerning result. Merck also has dosed more than 1,000 human patients so far, and nothing has come up yet.

“So, on the whole, we tend to think this risk is overblown,” they said in a report to clients. “And we think the drug has a good shot at approval on this data.”

They also note antivirals drugs from Pfizer and Atea Pharmaceuticals — the latter in partnership with Roche — don’t have this so-called mutagenic possibility. Raffat and Miller have an outperform rating on Merck stock.

AstraZeneca Reports Covid Data

In addition to the small move for Merck stock, AstraZeneca (AZN) stock rose Monday after the company said its injected treatment showed the potential to prevent and treat Covid.

AstraZeneca is giving people a combination of two antibodies. The company says its single shot could protect people from contracting Covid for a year. Unlike a vaccine, which prods the body into making its own antibodies, AstraZeneca’s drug simply gives recipients antibodies. This method could be key for people who don’t produce sufficient antibodies in response to vaccination.

In the study, the antibody combination reduced the risk of developing severe Covid or dying by 50% compared to a placebo in non-hospitalized Covid patients. All patients received the shot within seven days of symptoms beginning.

“An early intervention with our antibody can give a significant reduction in progression to severe disease, with continued protection for more than six months,” Mene Pangalos, AstraZeneca’s executive vice president of biopharmaceuticals research and development, said in a written statement.

The move Monday put AstraZeneca stock into a buy zone above a buy point at 61.03 out of a cup-with-handle base, according to MarketSmith.com. Shares broke out last month, but later fell more than 6% from their entry. Investors are encouraged to sell when a stock falls 7%-8% below its buy point.

Meanwhile, Merck stock remained in a buy zone above its entry at 79.33 out of a flat base.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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