Merck's Welireg Combo Gets EU CHMP Nod, But Keytruda Overhang Dominates

What happened

Merck announced that the European Medicines Agency's CHMP adopted a positive opinion recommending approval of Welireg (belzutifan) in combination with lenvatinib for adults with advanced clear cell renal cell carcinoma (ccRCC) following prior anti-PD-1/PD-L1 therapy. This regulatory step brings the combination closer to EU approval, expanding Merck's oncology offerings beyond Keytruda. However, the company's investment case remains dominated by Keytruda, which accounted for 49% of 2025 sales, and by near-term headwinds including the ~$2.5B FY2026 revenue erosion and unresolved Gardasil China shipments. The positive CHMP opinion is a positive but incremental development that does not address the core risk of Keytruda's expected biosimilar and IRA price-setting declines beginning in 2028-2029. Overall, this news supports Merck's efforts to diversify, but the market is likely to remain focused on the larger patent cliff narrative.

Implication

The Welireg combination approval in the EU adds another revenue stream in renal cell carcinoma, but its contribution is unlikely to be material enough to offset the Keytruda loss-of-exclusivity risk or the $2.5B near-term headwind. Investors should continue to monitor the key catalysts: Gardasil China shipment resumption, the ~$2.5B headwind bridge, and the April 2026 FDA PDUFA decision for Keytruda-related filing. The stock remains fairly valued around $119, with an attractive entry near $105.

Thesis delta

The core thesis is unchanged: Merck's valuation hinges on managing the Keytruda patent cliff and resolving Gardasil China, while the CHMP opinion for Welireg is a minor positive for oncology diversification. This news does not alter the WAIT rating or the $125 base-case implied value, and we see no reason to adjust position sizing based solely on this development.