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Merck & Co posted better-than-expected second-quarter sales on Tuesday on strong demand for its two top-selling products, cancer immunotherapy Keytruda and human papillomavirus (HPV) vaccine Gardasil.
Shares of Merck rose about 2% at $108.45 in premarket trading after the company also raised its full-year revenue forecast.
Merck said Keytruda sales for the quarter jumped 19% to $6.3bn, surpassing analysts’ average estimate of $5.9bn. Sales of Gardasil, which prevents cancers caused by HPV, surged 47% to $2.5bn, also well above Wall Street estimates of $2.1bn.
Merck CEO Rob Davis said Keytruda’s strength is coming from within the US and internationally, and the drug is increasingly being used ahead of other treatments.
“It’s really driven by very strong uptake as we’re continuing to move into earlier lines of cancer,” Davis said in an interview. He added that Keytruda was being used more often against a particularly aggressive form of cancer known as triple negative breast cancer, contributing to its sales strength.
Use of Gardasil in China was the biggest driver of growth for the vaccine, Davis said. There is room for further Gardasil growth as its use expands into treating males and moves into smaller cities, he added.
The strength of Merck’s underlying business, as well as multiple potential products in its pipeline, should support strong earnings beyond the end of the decade, by when Keytruda is seen losing exclusivity, Cantor Fitzgerald analyst Louise Chen said in a note.
Sales in the quarter stood at $15bn, up from $14.6bn a year ago, despite a sharp drop in demand for Merck’s Covid-19 therapeutic Lagevrio.
Analysts, on average, had expected sales of $14.4bn, according to Refinitiv data.
The company posted an adjusted loss of $5.2bn, or $2.06 a share, primarily due to a $10.2bn charge related to its acquisition of Prometheus Biosciences. Analysts had expected a loss of $2.18.
Its sales of Lagevrio also plunged to $200m in the quarter from $1.2bn a year earlier as demand for Covid-19 therapeutics dissipated amid low infection rates.
Last year, the company reported second-quarter earnings of $4.7bn, or $1.87 a share.
It paid close to $11bn in cash for Prometheus, adding a promising experimental treatment for ulcerative colitis and Crohn’s disease to its pipeline.
Merck has been looking for deals to protect itself from eventual revenue loss as patents on Keytruda begin to expire towards the end of the decade.
Davis said the Prometheus deal will not constrain the company’s ability to do more deals, and that Merck continues to “look for science-driven, science-led opportunities”.
“While I feel pretty good about what we have in the internal pipeline and the progress we’re making, we know there’s more to do,” he said.
Merck said it now expects full-year sales of $58.6bn to $59.6bn, up from its prior view of $57.7bn to $58.9bn.
The US drugmaker now expects to earn $2.95 to $3.05 a share for 2023.
Reuters
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