Merck's Tulisoki Shows Promise in Phase 2b Trial Amid Dividend Concerns
Merck & Co Inc (NYSE: MRK) has announced positive results from its Phase 2b clinical trial evaluating tulisokibart, a novel monoclonal antibody targeting tumor necrosis factor-like cytokine 1A. The trial met its primary endpoint with significant clinical responses at both high and medium doses, achieving Hidradenitis Suppurativa Clinical Response 50 (HiSCR50) rates of 72% and 64% respectively at week 16.
The company's pharmaceutical segment is anchored by blockbuster drugs such as Keytruda, which generated $31.7 billion in sales in 2025. However, the trial results come amid ongoing concerns about Merck's dividend sustainability, with a payout ratio of 1.11 and a dividend yield of 2.35%. The company currently offers a modestly attractive yield but investors should weigh the risk that the payout ratio may not be sustainable if earnings do not improve or if cash flow tightens.
The trial also showed meaningful quality-of-life improvements and a favorable safety profile, with no serious infections reported. Merck's strong profitability and pipeline potential are tempered by weaker momentum and moderate valuation metrics, as evident from its GF Score™ of 81 out of 100. The company's stock is currently modestly overvalued at $149.28 compared to its GF Value™ of $120.87.