Stocks drifted sideways in a narrow range on Monday, with major benchmarks ending the session with mixed results as investors await a possible rate cut by the Federal Reserve. The Dow Jones Industrial Average (DJINDICES:^DJI) had a small gain, while the S&P 500 (SNPINDEX:^GSPC) posted a modest loss.
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As for individual stocks, Pfizer (NYSE:PFE) and Mylan (NASDAQ:MYL) announced plans to create a company specializing in low-priced drugs, while Merck (NYSE:MRK) had positive news about its lead cancer treatment.
Mylan plans a merger with Pfizer's Upjohn unit
Drug giants Pfizer and Mylan announced an agreement to merge Upjohn, Pfizer's off-patent drug business, with Mylan in an all-stock deal. Shares of Mylan jumped 12.6% and those of Pfizer fell 3.8%.
The yet-to-be-named company is expected to have pro forma 2020 revenue of $19 billion to $20 billion, with Pfizer shareholders owning 57% of the combined company and Mylan shareholders owning 43%. Mylan, the maker of the EpiPen allergy shot, would get Upjohn brands such as Viagra, Lipitor, and Celebrex, along with a strong sales infrastructure in China. Pfizer plans to shed a slow-growing business unit in order to focus on higher-growth opportunities.
The companies also reported second-quarter earnings. Mylan posted a 2% increase in revenue and a 4% decrease in adjusted earnings per share, which were both above expectations. Pfizer had mixed results, with a 2% decline in revenue, below the analyst consensus, and 4% growth in adjusted EPS. Analysts were expecting a 7% drop in EPS.
Merck's Keytruda continues to score wins
Merck had good news on two fronts about its cancer-fighting blockbuster drug Keytruda today, and shares moved up 1.3%. The immunotherapy drug was successful in a clinical trial in breast cancer and received a positive opinion from European regulators for use in fighting renal cancer.
Keytruda met one of two primary endpoints in the Keynote-522 trial, which is testing the ability of Keytruda in combination with chemotherapy to prevent recurrence of triple-negative breast cancer after surgery. The combination was administered before surgery, and the trial of 1,174 patients showed a significant increase in pathological complete response, or lack of all signs of cancer several months after surgery, compared to chemotherapy alone. Triple-negative breast cancer is an aggressive and difficult-to-treat form of the disease. The trial will continue in order to evaluate the other endpoint, event-free survival.
Merck also announced that the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion about the use of Keytruda in combination with Pfizer's Inlyta as a first-line treatment for advanced renal cell carcinoma (RCC). RCC is the most common form of kidney cancer, with a five-year survival rate of less than 10%. The decision is an important step in the approval for the treatment in Europe.