Latest news with #VeronaPharma
Yahoo
11 hours ago
- Business
- Yahoo
Merck Just Announced a $10 Billion Deal That Will Help Diversify Its Business
Key Points Merck aims to boost its business by buying Verona Pharma for $10 billion. Through the deal, it will add Ohtuvayre -- a treatment for COPD -- to its portfolio. With the stock valued at only 12 times earnings and yielding over 4%, it's a steal of a deal. 10 stocks we like better than Merck › One of the biggest concerns with healthcare giant Merck (NYSE: MRK) is its dependence on top-selling cancer drug Keytruda. While it has been a beast for the business over the years, generating billions in revenue, investors are always concerned about what else is ahead for the business in the long run and how strong the company's growth prospects will be, especially as patents run out. Recently, Merck announced an important acquisition, which may alleviate some of those concerns around its future growth. For the price of $10 billion, it's acquiring Verona Pharma (NASDAQ: VRNA). Here's what that might mean for Merck's operations, and whether it makes the stock a no-brainer buy right now. What Merck gets with the Verona Pharma deal For $10 billion, Merck is acquiring a promising healthcare company which is in the early stages of its growth. Key to its potential is Ohtuvayre, a blockbuster drug that regulators approved last year as a treatment for chronic obstructive pulmonary disease (COPD). Analysts estimate that it could generate $1 billion in annual revenue by 2029. Verona has already been generating strong results of late. Sales through the first three months of the year for Ohtuvayre totaled $71.3 million, which was nearly double what it generated in the previous period. The product's growth has been exciting, and that's ultimately the big hope for Merck -- that Ohtuvayre becomes a key pillar for its overall growth. Verona's CEO, David Zaccardelli, believes that with the help of Merck, Ohtuvayre could take off. He said: "We believe Merck's commercial footprint and industry-leading clinical capabilities will help accelerate the potential of Ohtuvayre to reach more patients living with COPD." There is hope that Ohtuvayre may be a possible treatment option for other indications as well, with Verona involved in multiple other trials for the drug, including as a treatment for cystic fibrosis and asthma. Merck expects the deal to close before the end of the year. Merck could use another growth catalyst A key problem for Merck is that its business simply hasn't been generating strong growth in recent years. In its most recent quarter (ended in March), sales were down by nearly 2% year over year. The good news is that with Winrevair, which is approved for pulmonary arterial hypertension, still in its early stages and now with potentially Ohtuvayre in the mix, Merck's top line may receive a boost on multiple fronts in the near future. A new injectable version of Keytruda may soon become available as well (Keytruda is currently administered intravenously). While Merck may not have been an exciting growth stock to own of late, its future does appear to be getting brighter, especially as it diversifies its operations. Has Merck become a no-brainer buy? Merck's business is stronger with the acquisition of Verona, and with the stock trading at only 12 times its trailing earnings, it's one of the best healthcare stocks you can buy right now. Not only is it cheap, but with underrated growth prospects and a dividend that yields more than 4%, it may be a steal of a deal. The stock was arguably a good buy even before the Verona acquisition news, and it's an even better-looking buy right now. Although shares of Merck are down 16% this year and there are headwinds facing drugmakers today due to tariffs and trade wars, if you're in it for the long haul, buying and holding Merck stock could pay off significantly in the years ahead. Should you buy stock in Merck right now? Before you buy stock in Merck, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Merck wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $679,653!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,046,308!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool has a disclosure policy. Merck Just Announced a $10 Billion Deal That Will Help Diversify Its Business was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Verona Pharma plc (VRNA) Is Unlikely To Face Antitrust Action For Merck Deal, Says Jim Cramer
We recently published . Verona Pharma plc (NASDAQ:VRNA) is one of the stocks Jim Cramer recently discussed. Verona Pharma plc (NASDAQ:VRNA)'s shares experienced a boost in July when pharmaceutical giant Merck announced that it would acquire the firm for a $10 billion price tag. The stock experienced a healthy 20.6% gain after the announcement, which added to its 80% year-to-date gains at that point. Cramer discussed the Verona Pharma plc (NASDAQ:VRNA) acquisition after it was announced. He called the firm's COPD drug a 'first in class' compound that would help Merck with its drug portfolio, particularly as investors worry about KEYTRUDA's patent expiration. This time, he discussed antitrust approval of the acquisition: 'Did you see the Merck deal the other day? Verona? Two gentlemen? Getting together, Merck and Verona. You know they're not gonna block that. That doesn't even hit the radar, whoever's in antitrust.' A patient in a clinic, taking a medication dose from a nebulizer to treat a respiratory disease. After the Verona Pharma plc (NASDAQ:VRNA) acquisition was announced, here is what Cramer said: 'Yeah, I talked to Rob this morning, really liked this. He thinks he's got about 50 billion dollars worth of new drugs, which would therefore make it so you should stop worrying about the Keytruda patent expiration in 2028. I am with Rob. I think this COPD is a really important, another important franchise for them the alternative use steroids. And we've all be discovering that if you have trouble using steroids, one it becomes less effective over time, and two, the side effects are much worse than people realize. So I think this is a first in class, novel, compound that will make it so. . .I like this acquisition very much.' While we acknowledge the potential of VRNA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Verona Pharma plc (VRNA): A Bull Case Theory
We came across a bullish thesis on Verona Pharma plc (VRNA) on Capital Employed's Substack by Patients Capital Management. In this article, we will summarize the bulls' thesis on VRNA. Verona Pharma plc (VRNA)'s share was trading at $91.53 as of 3rd July. A patient in a clinic, taking a medication dose from a nebulizer to treat a respiratory disease. Verona Pharma, a UK-based biopharmaceutical company, is advancing a standout therapeutic with its lead asset, Ohtuvayre, poised to redefine treatment for COPD and related respiratory diseases. The most compelling data point is patient feedback: individuals using Ohtuvayre report feeling noticeably better, which is critical in COPD where managing daily wellbeing matters most. Ohtuvayre's non-steroidal mechanism means it can be safely combined with all existing COPD medications, creating effectively zero competition and addressing a major unmet need by avoiding the downsides of chronic steroid therapies. Beyond COPD, Verona Pharma retains significant upside from potential indications in non-CF bronchiectasis and asthma, which remain largely unpriced in current valuations and could offer meaningful long-term growth—serving as optionality embedded in the investment thesis. Strategically, the company is positioning for partnerships by developing dry powder inhaler (DPI) and metered dose inhaler (MDI) formulations, creating a clear window for larger pharmaceutical companies to engage in due diligence or acquisition discussions. Importantly, Verona Pharma carries no near-term financing overhang, eliminating a common investor concern and making potential deal outcomes even more impactful. Despite a strong rally in the stock, the market still appears to underappreciate Verona Pharma's potential: analysts are currently modeling peak sales of around $2.5 billion, even though the nebulized version alone could realistically reach $4–5 billion. As sell-side estimates adjust quarterly to reflect this upside, the stock is likely to re‐rate. Looking ahead, growing investor conviction and evolving shareholder base could provide deeper support for higher valuation levels. With differentiated clinical efficacy, broad strategic optionality, strong balance sheet, and significant valuation mispricing, Verona Pharma offers a compelling multi-catalyst investment opportunity in respiratory therapeutics. Previously, we covered a on Teva Pharmaceutical Industries Limited (TEVA) by Kontra in May 2025, which highlighted the company's transformation under CEO Richard Francis, strong free cash flow growth, and rising contributions from innovative drugs like Austedo and Uzedy. The company's stock price has been stable with an approximate 0.7% gain since our coverage. This is because the thesis has yet to fully play out but remains valid given Teva's ongoing operational momentum and valuation support. Patients Capital Management shares a similar view on Verona Pharma but emphasizes a more targeted bet on a single asset, Ohtuvayre, with blockbuster potential and strategic optionality in respiratory therapeutics. VRNA isn't on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of VRNA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
3 days ago
- Business
- Business Insider
Merck Stock (MRK) Bulls Cheer $10Bn Verona Pharma Gamble
Merck & Co. (MRK) is betting on acquisitions to offset the looming revenue loss from the upcoming patent expiration of Keytruda (pembrolizumab). Its latest move— the $10 billion acquisition of Verona Pharma (VRNA) —adds a promising blockbuster candidate for Chronic Obstructive Pulmonary Disease (COPD), a market worth an estimated $23 billion. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. By broadening its pipeline beyond oncology, Merck aims to regain investor confidence, especially as its stock has lagged behind the broader market in recent years. In my view, Merck's latest bet is likely to pay off, making me cautiously Neutral about its stock ahead of Keytruda's 2028 primary U.S. patent expiration date. The 'Keytruda Cliff' Represents Merck's Greatest Challenge Merck's biggest challenge is no secret—the looming patent expiration of Keytruda is the clearest example of the broader 'patent cliff' many pharmaceutical giants face. We're talking about blockbuster drugs generating over $10 billion annually, like Eliquis, Stelara, and Humira. In Merck's case, Keytruda brought in $29.5 billion last year —nearly half of the company's total revenue of $64.17 billion. That level of dependence makes the eventual decline in Keytruda sales a major concern. Given that Keytruda is a biologic, the impact of biosimilar competition tends to be less abrupt than with traditional generics. Analysts expect sales to decline more gradually, potentially falling to around $15 billion within four to five years of the patent's expiration. Still, declining revenue is never a good look for a company, and Merck now faces the critical task of replacing that lost income. One part of Merck's strategy is to introduce a subcutaneous version of pembrolizumab, which offers the convenience of shorter treatment times for both patients and healthcare providers. If it proves to be as effective as the intravenous version, it could gain traction for its ease of use. However, while this could help extend Keytruda's commercial life, it's unlikely to fully bridge the revenue gap. Payers may not be willing to pay a premium for convenience alone, especially once lower-cost biosimilars hit the market. Merck Bets Big on Ohtuvayre as It Looks Beyond Keytruda As part of its broader strategy, Merck is also leaning heavily on acquisitions and promising pipeline assets. Its recent interest in Verona Pharma's Ohtuvayre came as little surprise. Approved by the FDA in June 2024, Ohtuvayre has quickly gained traction. It's considered a 'first-in-class' treatment for COPD, uniquely combining non-steroidal anti-inflammatory effects with bronchodilation in a single molecule—an important innovation, given that many COPD patients continue to struggle with symptoms despite multiple existing therapies. In the first quarter of 2025, Ohtuvayre generated $71.3 million in sales, beating analyst expectations. Forecasts now suggest the drug could achieve peak annual sales of over $4 billion. In addition, it's being explored for other respiratory conditions, including non-cystic fibrosis bronchiectasis and asthma, potentially broadening its commercial impact even further. Further Strategic Acquisitions Bolster Merck's Pipeline Before Verona, Merck had been active in expanding its pulmonary and oncology portfolio. Think back to the $11.5 billion purchase of Acceleron Pharma in 2021 for its pulmonary arterial hypertension therapy, Winrevair. This asset generated $419 million in sales last year. In another example, Merck's more recent $680 million acquisition of Harpoon Therapeutics bolstered its immunotherapy pipeline. That's the nature of big pharmaceutical companies like Merck—blockbuster drugs eventually run their course. The real challenge is building a sustainable 'flywheel effect,' where profits from a hit like Keytruda are reinvested into developing the next wave of blockbuster therapies. When internal R&D falls short, companies often turn to acquisitions—but that's typically a more expensive route. For instance, developing a drug like Ohtuvayre in-house would likely have cost Merck a fraction—perhaps less than 10%—of the $10 billion it paid to acquire Verona Pharma. That said, Merck has the financial flexibility to make such moves. With a debt-to-assets ratio near historical lows, the company is well-positioned to pursue strategic investments without overextending itself. Judging by its Price-to-Earnings (P/E) ratio of just 12.2, which trades 55% lower than its sector median (26.98), the market isn't confident in Merck's ability to replace Keytruda. This is, at least in part, owed to Merck's underwhelming near-term revenue growth prospects. Its forward year-over-year revenue growth of 4.4% is 45% lower than the sector median of 8%. Certainly, Merck's ability to resolve these 'growing pains' will determine the future direction of its stock. Is Merck a Buy, Sell, or Hold? On Wall Street, Merck sports a Moderate Buy consensus rating based on 10 Buy, seven Hold, and zero Sell ratings in the past three months. MRK's average stock price target of $103.60 implies an upside potential of almost 24% over the next twelve months. Last week, analyst Terence Flynn from Morgan Stanley issued a Hold rating on MRK with a price target of $98. Regarding Ohtuvayre's immediate and long-term impact on Merck's financials, the analyst noted that 'The company expects the acquisition to become accretive to earnings by 2027, and fully accretive by 2028.' The strategic fit of Ohtuvayre within Merck's existing cardio-pulmonary portfolio and the potential for synergies further support the Hold rating, as the long-term benefits are balanced by the short-term financial adjustments required.' Bold $10Bn Bet on Verona Isn't Enough to Dislodge Neutral Outlook Merck's acquisition of Verona Pharma is part of its broader strategy to offset the looming revenue hit from Keytruda's patent expiration. While Ohtuvayre offers a promising blockbuster opportunity with relatively low development risk, it came at a steep price, making the deal something of a double-edged sword, especially since the drug's long-term success is not guaranteed. That said, Merck's current valuation suggests the market may be underestimating its potential. For investors who believe in the upside of recent initiatives—like the launch of subcutaneous pembrolizumab and the addition of Ohtuvayre—this skepticism could represent an opportunity. In the meantime, Merck's solid 3.86% dividend yield offers a cushion if the stock continues to lag. Neutral.
Yahoo
3 days ago
- Business
- Yahoo
Merck to Acquire Verona for $10 Billion, Targeting Life Beyond Keytruda
Merck (MRK, Financials) is spending $10 billion to acquire U.K.-based Verona Pharma, the company announced Wednesday; the move is part of Merck's push to diversify its drug portfolio as its blockbuster cancer drug Keytruda approaches major patent cliffs starting in 2028. Warning! GuruFocus has detected 3 Warning Sign with MRK. Verona brings with it Ohtuvayre, an inhaled treatment for chronic obstructive pulmonary disease, often known as smoker's lung. The drug was approved earlier this year and has generated $42.3 million in sales so far in 2024; analysts see long-term potential, estimating peak annual revenue could top $3 billion. Merck will pay $107 per American depository sharerepresenting a 23% premium to Verona's last Nasdaq close. Shares of Verona surged 20% in premarket trading following the announcement; Merck edged slightly higher. This is Merck's largest deal since its $10.8 billion acquisition of Prometheus Biosciences in 2023 and adds to its growing pipeline of late-stage assets. The company has made a string of acquisitions since 2021, including the $11.5 billion Acceleron deal, which brought in Winrevaira treatment for pulmonary arterial hypertension. While analysts generally welcomed the Verona deal, some flagged that Merck still has work to do to assure investors it can offset looming Keytruda losses. This looks like a potential complementary therapy, said Kevin Gade of Bahl & Gaynor. But others, like BMO Capital's Evan Seigerman, noted that one acquisition won't be enough to fully bridge the gap. This article first appeared on GuruFocus. Sign in to access your portfolio
