Merck’s WELIREG Approval Signals Breakthrough in Rare Cancer Markets

The FDA’s recent approval of Merck’s WELIREG® (belzutifan) for advanced pheochromocytoma and paraganglioma (PPGL) marks a pivotal moment in oncology. This first-of-its-kind oral therapy, backed by 7 years of U.S. orphan drug exclusivity, unlocks a $300+ million annual revenue opportunity in a rare disease market with no approved alternatives. More importantly, it signals Merck’s strategic shift toward high-margin, niche oncology markets—a move that could shield the company from patent cliffs and position WELIREG as a $1 billion blockbuster by 2030.

1. A Rare Disease with No Approved Treatments—Until Now

PPGL, a neuroendocrine tumor affecting 52,800 new patients globally each year, has long been a neglected market. Prior to WELIREG’s approval, systemic therapies for advanced PPGL were limited to off-label use of chemotherapy agents like cabozantinib or sunitinib, which lack robust efficacy data. WELIREG changes this dynamic by becoming the first FDA-approved therapy for advanced PPGL, with a 26% objective response rate (ORR) in clinical trials and a $200,000–$300,000 annual price tag, aligning with premium rare disease therapies like eculizumab (Soliris).

2. Orphan Drug Exclusivity = Monopoly Pricing Power

WELIREG’s 7-year U.S. exclusivity (expiring 2032) and potential 10-year EU exclusivity create a near-impenetrable barrier to competition. With no approved alternatives, Merck can maintain high margins while capturing a global patient pool of 200–300 eligible U.S. patients/year and 1,000–1,500 globally. Even in this niche market, WELIREG’s pricing strategy could generate $150–225 million annually in the U.S. alone, with international markets adding further upside.

Note: Merck’s stock has underperformed broader markets amid Keytruda patent concerns. WELIREG’s approval could reverse this trend.

3. The HIF-2α Platform: A Pipeline Goldmine

WELIREG’s approval for PPGL is just the start. Its mechanism as a HIF-2α inhibitor targets a pathway dysregulated in multiple rare cancers, including:
- Von Hippel-Lindau (VHL) disease-associated tumors (already approved, exclusivity ends 2028).
- Renal cell carcinoma (RCC) (Phase 3 trials ongoing).
- Ovarian cancer and breast cancer (Phase 2 trials).

Each indication could qualify for additional orphan exclusivities, extending WELIREG’s monopoly into the late 2030s. For instance, if approved for metastatic RCC, WELIREG could capture a $1.2 billion market, competing with Opdivo/Keytruda combos but with a unique mechanism.

4. Why This Matters for Merck’s Future

Merck’s reliance on Keytruda, which faces biosimilar competition post-2028, has fueled investor skepticism. WELIREG’s PPGL approval shifts this narrative:
- Diversification: WELIREG reduces reliance on immuno-oncology and positions Merck as a leader in precision oncology.
- High Margins: Rare disease therapies command 80–90% gross margins, far exceeding traditional cancer drugs.
- Strategic Pipeline: HIF-2α’s broader utility could generate $5 billion+ in peak sales across indications.

Risk Factors, but the Upside Outweighs Them

• Safety Concerns: WELIREG’s trials reported Grade 3 anemia (22%) and hypoxia (10%), requiring close monitoring. However, these risks are manageable given the lack of alternatives for advanced PPGL.
• Pricing Pushback: While rare disease therapies are often shielded from price scrutiny, Merck must navigate payer dynamics carefully.

Conclusion: WELIREG is Merck’s Next Growth Engine

The FDA’s approval of WELIREG for PPGL is a strategic masterstroke. It leverages orphan exclusivity to secure a high-margin monopoly in a $300 million niche market while signaling WELIREG’s potential as a platform drug for HIF-2α-driven cancers. With $1 billion+ sales achievable by 2030, this approval positions Merck to thrive in a post-Keytruda world.

Investors should note: Merck’s stock trades at 15x 2024 earnings, a discount to peers. WELIREG’s PPGL approval—and its pipeline’s broader promise—could re-rate the stock to 20x+ earnings, unlocking 30–40% upside. Act now before the market catches on.

Scenario analysis: WELIREG’s approvals in RCC/PPGL could add $2 billion to 2030 revenue.