NorthWest Biotherapeutics Inc (NWBO)

[Basin Street Blues]

BARCLAYS ob Merck & Co., Inc.
3Q22: Post-Call Thoughts; Raising PT to $110
Five reasons we think MRK can still work even up here.
Merck again delivered a clean beat and raise, dialing up the same formula that has worked all year: Keytruda and Gardasil outperformance. While US performance drove the beats for both products (3Q22 Initial Impressions, 10/27/2022), OUS performance was solid in the face of
massive Fx headwinds – which bodes well for ‘23 estimates as Fx headwinds anniversary. With that backdrop, we see five reasons MRK shares will continue to work: (1) robust growth ex-
Lagevrio for ‘23: we model $57.7bn in Revs (implying +7% y/y growth - well towards the high-end of peers) as we expect Keytruda to grow 16% to $24.4bn and Gardasil to reach $7.5bn
(9% y/y), (2) outside chance of growing the top-line even inclusive of Lagevrio; that this is even in the discussion given the $5bn+ in Lagevrio ‘22 numbers shows the strength of the rest of the
business; a bigger step-up for OUS Keytruda/Gardasil and a Lagevrio print closer to the $1bn+ in cons and it could be achievable, (3) de-risking of the CV portfolio over the next 6-8 months (PCSK9, Factor XIA, MK-5475 phase 2 data, and full presentation of sotatercept STELLAR data are
all expected between now and 2Q23e), (4) subcut Keytruda data early next year should drive further conversations around adjuvant uptake (where the company has focused), but also on pushing timelines for biosimilar erosion beyond 2028 (where investors have focused), and (5)
Street continues to mismodel benefit to ‘24 margins from step-down in PD-1 royalty – a dynamic we expect will correct itself as timelines to ‘24 narrow. Maintain Overweight. Raising PT to $110.