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.

Today's stock market

Index Percentage Change Point Change
Dow 0.11% 28.90
S&P 500 (0.16%) (4.89)

Data source: Yahoo! Finance.

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.

Up and down arrows superimposed on columns of numbers

Image source: Getty Images.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.