Blackstone Funding Deal Might Change the Case For Investing In Merck (MRK)

• Merck recently announced an agreement to receive US$700 million in funding from Blackstone Life Sciences to advance the development of sacituzumab tirumotecan, an investigational cancer therapy, in exchange for future royalties contingent on regulatory approval and successful clinical trial outcomes. This partnership allows Merck to accelerate innovation while retaining full control over development and commercialization of the candidate.
• The collaboration with Blackstone underscores investor confidence in Merck’s oncology pipeline and provides non-dilutive capital to further support clinical progress.
• We'll now examine how this new collaboration and funding arrangement strengthens Merck’s investment narrative, particularly through externally supported pipeline development.

Find companies with promising cash flow potential yet trading below their fair value.

Merck Investment Narrative Recap

As a potential Merck shareholder, you have to weigh belief in the company’s long-term innovation pipeline, especially within oncology, against significant short-term challenges, such as softness in Gardasil sales and ongoing risks tied to Keytruda’s eventual loss of exclusivity. The US$700 million Blackstone funding for sacituzumab tirumotecan meaningfully supplements Merck’s efforts to develop next-generation oncology assets; however, it does not materially change near-term catalysts or mitigate the largest current risks facing the business.

Of the recent announcements, the most relevant to the new Blackstone collaboration is the expanded late-phase pipeline, which Merck aims to triple by the mid-2030s. Combined with this external capital support, pipeline advancement remains crucial as the company prepares for potentially significant Keytruda revenue pressure in future years.

In contrast, investors should be aware that Gardasil’s recent demand issues and inventory build-up in China still present...

Read the full narrative on Merck (it's free!)

Merck's narrative projects $72.0 billion in revenue and $24.3 billion in earnings by 2028. This requires 4.2% yearly revenue growth and a $7.9 billion earnings increase from the current earnings of $16.4 billion.

Uncover how Merck's forecasts yield a $102.33 fair value, a 22% upside to its current price.

Exploring Other Perspectives

The Simply Wall St Community’s 32 fair value estimates for Merck span from US$74.77 to US$203.87 per share, showing wide-ranging assessments. Given these varied perspectives, pipeline execution versus the looming Keytruda patent cliff shapes how you might view Merck’s future performance and risk profile.

Explore 32 other fair value estimates on Merck - why the stock might be worth over 2x more than the current price!

Build Your Own Merck Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Merck research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Merck research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Merck's overall financial health at a glance.

No Opportunity In Merck?

Our top stock finds are flying under the radar-for now. Get in early:

• The latest GPUs need a type of rare earth metal called Terbium and there are only 38 companies in the world exploring or producing it. Find the list for free.
• AI is about to change healthcare. These 33 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early.
• Trump's oil boom is here - pipelines are primed to profit. Discover the 22 US stocks riding the wave.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com