Merck (MRK) has two under-the-radar phase III catalysts due before year-end that carry low investor expectations, creating a positively skewed set up if either reads out positive, UBS said in a note emailed Thursday.

The nearer one is phase III BRUNELLO data on MK3000, a Wnt agonist from Merck's 2024 Eyebio deal, in diabetic macular edema. Data is expected around an Oct. 10 placeholder at the American Academy of Ophthalmology meeting, with primary completion for the trial set for Sept. 30, the bank said.

UBS said the drug need to prove non-inferiority to Lucentis on vision gains to meet its primary endpoint, while investors will likely demand superiority on a secondary endpoint.

The bank also flagged phase III TL1A data due from a second ulcerative colitis study, acquired via the 2023 Prometheus deal, as a second overlooked catalyst.

UBS maintained its buy rating on the stock with the price target of $175.

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