Merck stock popped Wednesday after the pharma giant inked a $1.2 billion supply deal with the U.S. government for its experimental Covid pill.
The oral medicine is called molnupiravir and it’s currently in Phase 3 testing. If authorized for emergency use in the U.S., Merck (MRK) and its partner, Ridgeback Biotherapeutics, will supply the U.S. government with 1.7 million doses.
“Merck is pleased to collaborate with the U.S. government on this new agreement that will provide Americans with Covid-19 access to molnupiravir — an investigational oral therapy being studied in outpatient use early in the course of the disease — if it is authorized or approved,” Merck President Rob Davis said in a written statement.
In morning trading on the stock market today, Merck stock rose 2.4% near 74.10.
Merck Stock Pops On Supply Deal
The study is evaluating molnupiravir in non-hospitalized patients with confirmed cases of Covid and at least one risk factor for severe disease.
In addition to the U.S., Merck says it’s planning to seek authorization of molnupiravir abroad. The company is already negotiating advance purchase agreements and has inked licensing agreements with generic drug makers in 104 low- and middle-income countries to accelerate manufacturing.
So far, Merck is manufacturing molnupiravir at risk. That means the company is building its supply with no guarantee molnupiravir will gain authorization anywhere. The company expects to have 10 million doses available by the end of 2021.
Merck is also pricing molnupiravir based on World Bank data which shows countries’ ability to fund their public health responses to the pandemic.
Shares Remain Under Pressure
On a year-to-date basis, Merck stock has fallen more than 5%.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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