Merck (MRK) is approaching key pipeline catalysts with ISLEND and islatravir plus ulonivirine data that could drive its HIV franchise, RBC Capital Markets said in a note Thursday.

The analysts said that while the April approval of Idvynso expanded Merck's commercial presence, bigger inflection points are expected later this month with the International AIDS conference and Merck's Aug. 3 investor update.

At the conference, Merck will present detailed phase 3 ISLEND-1 and ISLEND-2 data along with phase 2b ISL/ULO results. Initial ISLEND results announced in June showed ISL/LEN met non-inferiority goals versus Biktarvy and standard-of-care antiretroviral therapy at week 48 in virologically suppressed patients, the analysts said.

Importantly, no new safety concerns were reported, "an important signal on the CD4/lymphocyte front that had been the single most-watched variable for the islatravir program given its class history," the analysts said, adding that the upcoming data will help determine the drug's commercial potential and timing of a potential new drug application filing.

RBC has an outperform rating and a $142 price target on Merck.

Price: 127.85, Change: +4.24, Percent Change: +3.43