Merck’s Covid Pill Changes Drugmaker’s Fate After Failed Shots

Written by
Cynthia Koons
Written by

Cynthia Koons

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(Bloomberg) -- Merck & Co. hasn't been a major name in Covid. It failed twice in its quest to devise a vaccine and scrapped a drug it acquired through a $425 million deal months prior. Its Covid pill, which also disappointed in hospitalized patients in April, may end up being the key to turning this story around.

Merck's drug molnupiravir, which it's developing with privately held Ridgeback Biotherapeutics LP, reduced the risk of hospitalization or death by 50% in a late-stage clinical trial. If it succeeds, molnupiravir would be the first antiviral pill developed specifically to target Covid-19 to hit the market. The other leading drugs available must be administered in a hospital or infusion center, putting them largely out of reach of all but the sickest patients.

The excitement about the results was palpable; Merck's stock surged 8.4% to $81.40, the biggest gain in five years. Evercore analyst Umer Raffat posed the question of whether it could be a “game changer in Covid” saying “I don't like using hyperbole... but the data really is that good.” Prior to the trial data, Mizuho Securities Co. analyst Mara Goldstein said molnupiravir could be anywhere from a $1 billion to $10 billion drug, depending on how well it works and what side effects it causes.

Molnupiravir's history long predates Merck's involvement. The chemical compound on which it is based has been known for decades. It works by interfering with virus replication, thereby preventing severe infection. Molnupiravir doesn't stop the virus from making copies of itself, rather it introduces errors into the virus' RNA that are replicated until it's defunct.

A scientist at Emory was studying the drug for flu when Ridgeback became involved, initially hoping the treatment could work against Ebola. Ridgeback announced its deal for molnupiravir in March of 2020 as Covid-19 lockdowns were just beginning in the U.S. Two months later, Merck announced its deal with Ridgeback.