Merck's Tulisokibart Hits Goal in UC, Bolstering Pipeline Beyond Keytruda

What happened

Merck announced positive late-stage results for tulisokibart, an anti-TL1A antibody, in ulcerative colitis, meeting its primary endpoint. This strengthens a key pipeline asset as the company seeks to diversify beyond Keytruda, which accounted for 49% of 2025 sales. The data provides tangible evidence of progress in building post-Keytruda revenue pillars, addressing a core concern in the DeepValue master report. However, the drug's commercial potential remains unproven until regulatory filings and broader launch data emerge. The near-term financial headwinds from Gardasil China weakness and Keytruda's looming exclusivity loss still constrain valuation.

Implication

The tulisokibart success supports Merck's narrative of building a diversified pipeline, which the DeepValue report identified as critical for post-2028 growth. However, the drug's peak sales contribution is years away and unlikely to offset the $2.5B FY2026 headwind or the Keytruda cliff. Investors should view this as a positive data point that keeps the WAIT rating intact, as the stock still requires evidence of Gardasil China recovery and stable erosion guidance. The news may provide a short-term sentiment boost, but fundamental re-rating hinges on these macro drivers, not isolated pipeline wins.

Thesis delta

The positive tulisokibart data modestly improves confidence in Merck's ability to replace Keytruda revenue, but the core thesis remains unchanged: the 2026 headwind, Gardasil China pause, and Keytruda's 2028-2029 exclusivity loss dominate the risk-reward. The WAIT rating persists until these factors show tangible improvement.