Merck & Co., Inc. (MRK), Pfizer Inc. (PFE): These 2 Healthcare Stocks Could Win Big With FDA’s New ‘Breakthrough’ Status

Merck & Co., Inc. (NYSE:MRK)
Merck & Co., Inc. (NYSE:MRK) is another giant in the world of health care and medicine, with a market cap of $143 billion. The company grabbed the attention of the oncology community last fall with some upbeat interim data for lambrolizumab, an experimental antibody drug for advanced melanoma. That turned into breakthrough status for the drug in late April, with the FDA acknowledging that the therapy has shown signs of major benefits over current therapies for life-threatening illnesses. Merck & Co., Inc. (NYSE:MRK) has been strong this year, with shares up 15%. However, the company still looks undervalued, trading with a forward price-to-earnings (P/E) ratio of 13.8, a discount to its peer average of 14.5.

Risks to Consider: Although the FDA’s breakthrough status is a fast path to commercialization, it is noguarantee of approval. These large blue-chip stocks have many segments and products, diluting the impact of the success or failure of these cancer drugs.

Action to Take –> The FDA’s breakthrough designation is providing huge benefits to health care companies by decreasing the amount of time and capital required to commercialize a prospective drug. Less than a year after the program’s launch, the FDA is handing out more breakthrough designations than ever. Pfizer Inc. (NYSE:PFE) and Merck & Co., Inc. (NYSE:MRK) recently received the designation for two of their most promising drugs, giving them a big leg up on the competition.

This article was originally written by Michael Vodicka and posted on StreetAuthority.