Merck Sheds $10 Billion as Bristol-Myers Study Dents Euphoria

(Bloomberg) -- Positive results from a late-stage study of Bristol-Myers Squibb Co.’s combination therapy for lung cancer dented some of investors’ euphoria about Merck & Co.’s Keytruda heading into a closely watched earnings season.

Merck shares fell as much as 5.1%, the most in six weeks, wiping out more than $10 billion in market value. Merck’s product concentration has been a concern for some skeptics as Keytruda is expected to account for close to 40% of revenue by 2024. Competition from Bristol-Myers and Roche Holding Ag’s Tecentriq has been largely discounted until now.

Merck executives will likely face questions about Keytruda’s grip on the lung cancer market when the company reports earnings in a week. Bristol-Myers will release its results on Oct. 31.

So far, analysts aren’t too worried about an immediate impact. Bloomberg Intelligence’s Sam Fazeli said that “it’s far too early” to worry about Bristol-Myers competition given the high bar that Keytruda has set. Analysts from Cantor Fitzgerald and SVB Leerink also said the lack of details from Bristol-Myers about its study findings makes it hard to gauge the direct impact.

Bristol-Myers shares jumped as much as 7.8%, the most in nearly three years, to trade at the highest since October 2018. The much-needed win comes less than a month after tepid results for a different study of its drug cocktail. Celgene Corp., which Bristol-Myers announced plans to buy in a $74 billion cash-and-stock deal earlier this year, rose as much as 3.9%.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editor responsible for this story: Catherine Larkin at clarkin4@bloomberg.net

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