• The Food and Drug Administration approved Merck's vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and a lung infection called pneumonia.
• An advisory panel to the Centers for Disease Control and Prevention will meet on June 27 to discuss who should be eligible for the shot, called Capvaxive
• Some analysts view the jab as a key growth driver for Merck as it prepares to offset losses from its blockbuster cancer drug Keytruda.

The Food and Drug Administration on Monday approved Merck's new vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and a lung infection called pneumonia, the drugmaker said.

Merck's shot, called Capvaxive, specifically protects against 21 strains of that bacteria to prevent a severe form of pneumococcal disease that can spread to other parts of the body and lead to pneumonia. It's the first pneumococcal conjugate vaccine designed specifically for adults and aims to provide broader protection than the available shots on the market, according to the drugmaker.

Healthy adults can suffer from pneumococcal disease. But older patients and those with chronic or immunocompromising health conditions are at increased risk for the illness, especially the more serious or so-called "invasive" form. 

Invasive pneumococcal disease can lead to meningitis, an infection that causes inflammation in the area surrounding the brain and spinal cord, and an infection in the bloodstream called bacteremia. 

"If you have chronic lung disease, even asthma, you have a higher risk of getting sick with pneumococcal disease, and then being in the hospital, losing out on work," Heather Platt, Merck's product development team lead for the newly cleared vaccine, told CNBC in an interview. "Those are things that have a real impact on adults and children, their quality of life."

Around 150,000 U.S. adults are hospitalized with pneumococcal pneumonia each year, Platt said. Death from the more serious form of the disease is highest among adults 50 and above, Merck said in a release in December.

Even after the FDA approval, the company's single-dose vaccine won't reach patients just yet. An advisory panel to the Centers for Disease Control and Prevention will meet on June 27 to discuss who should be eligible for the shot.

Platt said Merck will support the committee's decision and is ready to supply the vaccine by late summer. 

Merck's competitive edge

Some analysts view Capvaxive as a key growth driver for Merck as it prepares to offset losses from its blockbuster cancer drug Keytruda, which will lose exclusivity in the U.S. in 2028. 

The market for pneumococcal conjugate vaccines is currently around $7 billion and could grow to be worth more than $10 billion over the next several years, according to a November note from Cantor Fitzgerald analysts. 

Merck's newly approved shot could boost its competitive edge in that space, which includes drugmaker Pfizer. Merck currently markets two pneumococcal shots, but neither is specifically designed for adults. For example, the company's existing shot Vaxneuvance is approved in the U.S. for patients 6 weeks of age and older.

Pfizer's single-dose pneumococcal vaccine, Prevnar 20, is the current leader in the market for adults. But Merck expects its new shot to capture the majority of market share among adults, Platt said. 

"We do expect there to be rapid uptake of" Capvaxive, she said, adding that the company is confident that data on the shot will "really resonate" with clinicians and policymakers. 

Merck's pneumococcal vaccine protects against eight strains of the bacteria that are not included in any other approved shot for the disease. Those eight strains account for roughly 30% of invasive pneumococcal disease cases in patients 65 and above, according to a release from Merck, citing CDC data from 2018 to 2021. 

The 21 strains included in Merck's shot account for roughly 85% of invasive pneumococcal disease cases in adults 65 and above, Merck, citing the CDC data. Meanwhile, Pfizer's Prevnar targets strains that only account for roughly 51% of cases in that age group, based on the same CDC data. 

The FDA's approval is partly based on Merck's late-stage trial called STRIDE-3 that pitted the vaccine against Pfizer's Prevnar 20 in adults 18 and up who had not previously received a pneumococcal vaccine.

Correction: This story has been updated to reflect 150,000 U.S. adults are hospitalized with pneumococcal pneumonia each year.