Merck Faces Keytruda Patent Cliff as Retail Traders Eye SLS and MLTX Stocks

Sellas Life Sciences and MoonLake Immunotherapeutics emerged as leading retail trader candidates for potential acquisition by Merck & Co. following the drugmaker's Friday FDA approval for its flagship cancer drug Keytruda. The speculation centers on Merck's need to diversify revenue ahead of Keytruda's U.S. patent expiration beginning in 2028. Keytruda generated $31.7 billion in 2025, accounting for approximately 55% of Merck's $58.1 billion pharmaceutical revenue, creating significant concentration risk as exclusivity loss approaches.

SLS and MLTX each gained more than 2% at the start of overnight trading late Sunday, while MRK edged marginally higher.

Keytruda Revenue Concentration Reaches 55% of Merck Pharmaceutical Business

Merck announced on Friday that the U.S. Food and Drug Administration approved Keytruda and Keytruda Qlex, a newer version given as an injection under the skin, each in combination with Pfizer and Astellas' Padcev, for use before and after surgery in adults with muscle-invasive bladder cancer. The approval expands Keytruda's already dominant cancer franchise.

Keytruda and Keytruda Qlex generated $31.7 billion in 2025, equal to about 55% of Merck's $58.1 billion in pharmaceutical revenue. Since 2020, Keytruda sales have more than doubled, while the total pharmaceutical business has grown at a much slower pace.

The concentration has become more important as Keytruda nears the loss of its U.S. exclusivity, beginning in 2028. Merck reorganized its human-health operation in February, creating a dedicated oncology division. The company has also spent heavily on acquisitions, including Verona Pharma, Cidara Therapeutics, and Terns Pharmaceuticals.

CEO Robert Davis told investors earlier this year: "And we're not done."

SLS Phase 3 Trial Records 78 of 80 Required Events

The Sellas thesis centers on galinpepimut-S (GPS), the company's WT1-targeting immunotherapy. Sellas is evaluating GPS in the Phase 3 Regal trial as a maintenance therapy for acute myeloid leukemia (AML) patients who entered remission following second-line treatment. The study has recorded 78 of the 80 patient-death events required to trigger its final analysis.

Sellas stated the trial would be successful if GPS achieves a median overall survival of at least 12.6 months, compared with 8 months in the control arm. The trial remains blinded.

Stocktwits sentiment eased to 'bullish' from 'extremely bullish' a week earlier, while 24-hour message volume surged 53% and the stock's watcher count climbed 5% over the past month.

Retail traders have highlighted CEO Angelos Stergiou's Fourth of July reference to "strategic partners" and amended executive agreements containing change-of-control provisions.

MLTX Received Prior Merck Offer Exceeding $3 Billion

Merck reportedly submitted a nonbinding offer valuing MoonLake at more than $3 billion last year, according to the Financial Times. The initial approach was rejected, although talks could potentially be revived.

Stocktwits sentiment for MLTX improved to 'bullish' from 'neutral' a day earlier, while weekly message volume surged 760% and the stock's watcher count rose 5% over the past month.

MoonLake's lead drug, Sonelokimab, has completed Phase 3 development in hidradenitis suppurativa. At one year, 67% of patients achieved a strong improvement in disease severity, 33% reached complete skin clearance under a key measure and 26% achieved inflammatory remission. The company plans to submit a Biologics License Application (BLA) to the FDA by Sept. 30 and request Priority Review.

SLS Shares Rise 155% Since Merck's Terns Acquisition

Since Merck announced its acquisition of Terns in March, SLS shares have risen 155%, compared with 22% for MLTX and 6% for Merck.

Sellas carries a market cap of about $2.4 billion and an enterprise value of $2.3 billion. MoonLake is valued at $1.5 billion, with an enterprise value of about $1.2 billion. MoonLake held $298.5 million in cash at the end of the first quarter, compared with $107.2 million for Sellas.

David Giroux, chief investment officer at T. Rowe Price Investment Management, told Barron's on Friday that large pharma companies face a $400 billion to $500 billion patent-expiration hole over the next decade. He specifically named MoonLake among seven potential targets, stating: "I would be shocked if all weren't acquired in the next few years for big premiums over their current value."

FAQ

What revenue does Keytruda generate for Merck? Keytruda and Keytruda Qlex generated $31.7 billion in 2025, equal to approximately 55% of Merck's $58.1 billion in pharmaceutical revenue.

When does Keytruda's U.S. patent exclusivity expire? Keytruda's U.S. patent exclusivity begins expiring in 2028.

What prior acquisition offer did MoonLake receive from Merck? Merck reportedly submitted a nonbinding offer valuing MoonLake at more than $3 billion last year, according to the Financial Times. The initial approach was rejected.