As previously reported, BMO Capital analyst Alex Arfaei downgraded Merck to Market Perform and also lowered his Q4 earnings view to 98c from $1.12 while keeping his $80 price target on the shares. The analyst cites the company's over-dependence on Keytruda, the Street's high expectations, and his views on upcoming competitor trials combining for a more balanced risk-reward on Merck. Arfaei anticipates that Merck's revenue growth would slow after 2021 given the loss of exclusivity for Januvia, adding that the company's pipeline does not look "good enough to offset meaningful Keytruda disruptions."

Merck announced that the Phase 3 KEYNOTE-811 trial evaluating KEYTRUDA or pembrolizumab, Merck's anti-PD-1 therapy, in combination with trastuzumab and fluoropyrimidine- and platinum-containing chemotherapy met its dual primary endpoint of overall survival OS for the first-line treatment of patients with human epidermal growth factor receptor 2 or HER2 -positive locally advanced unresectable or metastatic gastric or gastroesophageal junction, GEJ, adenocarcinoma. Based on results from KEYNOTE-811, KEYTRUDA is approved in combination with trastuzumab and fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of adults with locally advanced unresectable or metastatic HER2-positive gastric or GEJ adenocarcinoma whose tumors express PD-L1 as determined by an FDA-approved test. This indication is approved by the U.S. Food and Drug Administration FDA under accelerated approval regulations based on the objective response rate ORR and durability of response demonstrated at an earlier analysis. Continued approval of this indication may be contingent upon verification and description of clinical benefit at the final analysis of the KEYNOTE-811 study. In the final analysis of this trial, KEYTRUDA in combination with trastuzumab and chemotherapy demonstrated a statistically significant and clinically meaningful improvement in OS compared to placebo in combination with trastuzumab and chemotherapy in the intention-to-treat ITT study population, with the greatest benefit observed in patients whose tumors expressed PD-L1. The safety profile of KEYTRUDA in this trial was consistent with that observed in previously reported studies; no new safety signals were identified. Results will be presented at an upcoming medical meeting and shared with regulatory authorities worldwide.