I'm not convinced REVEAL will show a clinically meaningful effect for anacetrapib, but I think there's a reasonable chance. If it does, Merck would have a novel drug with mega-blockbuster potential. Most importantly, investors might not even need to wait for the data. Merck shares will likely gain ground in anticipation of the results, which should be available in 2015.

Merck is also conducting Phase III trials of Tredaptive, a niacin-based HDL booster, for the treatment of atherosclerosis. Results from this study, named HPS2-THRIVE, should be available within the next six months. Although I doubt HPS2-THRIVE will succeed due to the failure of other niacin-based HDL studies, positive data would be a meaningful near-term upside surprise. If nothing else, Tredaptive is another low-expectation, high-impact arrow in Merck's HDL quiver.

Other Drugs to Watch

Large-cap pharma companies usually have massive R&D pipelines and multiple marketed products, so it's impossible to discuss everything in such a condensed format. Nonetheless, there are a few other products worth watching.

Merck recently announced that a Phase III trial of odanacatib, a novel drug candidate for the treatment of osteoporosis, had demonstrated sufficiently robust efficacy to warrant early stoppage. Odanacatib works by blocking cathepsin K (cat-K), an enzyme responsible for bone resorption, which is a fancy medical term for the process by which the body breaks down bone. In osteoporosis, unbalanced resorption leads to a steady decline in bone density. Merck expects to submit for global regulatory approval in the first half of next year. If approved, odanacatib could easily generate sales of $1 billion to $2 billion.

The company's diabetes franchise remains anchored by Januvia, the dominant DPP-4 inhibitor class drug. I expect sales of Januvia and related drugs -- Merck has a combination product with metformin on the market and several other variants in the pipeline -- will continue to grow rapidly. Notably, despite the recent acquisition of Amylin Pharmaceuticals by Bristol-Myers Squibb and AstraZeneca, I doubt Bydureon will be a major impediment to Januvia's growth.

A few other notable mentions: Merck plans to resubmit Bridon, an agent for anesthesia reversal, for FDA approval this year. Despite some safety concerns, Bridon could do better than expected should it reach the market. Finally, I'm skeptical of the company's novel insomnia drug suvorexant, which will also be submitted for regulatory approval this year, due to my dislike of orexin modulation as a mechanism-of-action -- orexin is a neurotransmitter that regulates sleep-wake cycles and appetite -- and the abundance of adequate generic alternatives. However, management seems very excited about the product, so it's probably worth keeping an eye on going forward.

Merck currently trades at less than 12 times consensus earnings for 2013, the company's "trough" EPS year. I think this multiple could expand as the company returns to earnings growth, especially if excitement about the pipeline builds. In exchange for a little patience, investors also collect nearly 4% in annual dividends. It's not the most exciting recommendation, but Merck seems like a solid long position in turbulent times.
Nathan Sadeghi-Nejad has 15 years experience as a professional health-care investor, most recently as a sector head for Highside Capital. He has worked on the sell side (with independent research boutiques Sturza�s Medical Research and Avalon Research) and the buyside (at Kilkenny Capital prior to Highside). Sadeghi-Nejad is a graduate of Columbia University and lives in New York. You can follow him on Twitter @natesadeghi.

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