Merck (MRK) Earnings Q3 2024

merck On Thursday it reported third-quarter revenue and adjusted earnings that beat expectations, as the company reported strong sales of its best-selling cancer drug Keytruda, recently launched treatments and its animal health business.

But Merck's vaccine that prevents cancer caused by HPV, the most common sexually transmitted infection in the United States, posted another quarter of lower-than-expected sales. Revenue from the Gardasil vaccine fell 11% compared to the same period last year.

The pharmaceutical giant lowered its full-year sales forecast to a range of $63.6 billion to $64.1 billion, from a previous guidance of $63.4 billion to $64.4 billion. of dollars.

Merck also lowered its adjusted earnings guidance to a range of $7.72 to $7.77 per share, from a previous forecast of $7.94 to $8.04 per share. That updated outlook reflects a one-time charge of 24 cents per share related to business development agreements with Curon Biopharmaceutical and Daiichi Sankyo.

Merck shares fell nearly 3% on Thursday.

Here's what Merck reported for the third quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:

• Earnings per share: $1.57 adjusted vs. $1.50 expected
• Revenue: $16.66 billion vs. $16.46 billion expected

Merck posted net income of $3.16 billion, or $1.24 per share, during the third quarter. That compares with net income of $4.75 billion, or $1.86 per share, during the same period a year earlier.

Excluding acquisition and restructuring costs, Merck earned $1.57 per share during the three-month period.

The company posted $16.66 billion in revenue for the third quarter, up 4% from the same period a year earlier.

The results come as Merck shows substantial progress in preparing for Keytruda's patent expiration in 2028. Losing exclusive rights to the drug will likely cause sales to decline, forcing the company to take revenue from other places.

Merck has a handful of new deals under its belt and key drug launches that will help offset those losses. That includes Winrevair, a drug approved in the United States in March to treat a progressive and life-threatening lung condition.

And in June, Capvaxive, a vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illness and lung infections, was approved in the United States.

The company's pipeline of drugs in late-stage development has nearly tripled over the past three years or so to more than 20 unique products, Merck CEO Rob Davis said during an earnings call Thursday.

He said that will drive a significant number of drug and vaccine launches over the next five years, most of which will have “blockbuster potential.” Blockbuster drugs generate at least $1 billion in annual revenue.

Merck's pharmaceutical division, which develops a wide range of medicines, posted revenue of $14.94 billion during the third quarter, up 5% from the same period a year earlier.

The company's immunotherapy drug Keytruda posted revenue of $7.43 billion during the quarter, up 17% from the year-ago period. Analysts were expecting $7.33 billion in Keytruda sales, according to StreetAccount estimates.

That increase was driven by increased use of Keytruda for earlier-stage cancers and strong demand for the drug for metastatic cancers, which spread to other parts of the body.

Gardasil generated sales of $2.31 billion. Merck said the drop was mainly due to lower demand in China compared to the same period a year earlier. It was partially offset by higher sales in the US.

That's below the $2.51 billion analysts were expecting, according to StreetAccount.

Davis said the company is “highly focused” on the China market and is moving forward with its marketing partner, Zhifei, to increase promotional and patient education efforts for Gardasil.

“We hope these efforts will translate into increased patient activation and demand, but as we have said, this will take time,” Davis said.

Davis said Merck is confident in Gardasil's long-term opportunity, with less than 10% of the eligible population worldwide vaccinated. The company expects to reach its goal of $11 billion in global Gardasil sales by 2030.

Winrevair posted $149 million in revenue for the third quarter following its approval in March. Analysts expected the treatment to post $127 million in sales.

About 1,700 people received a prescription for Winrevair during the quarter, bringing the total number of new patient prescriptions to 3,700 since the drug's launch, Merck Chief Financial Officer Caroline Litchfield said during the call. The company estimates that about 80% of those patients will receive the actual drug.

The company's type 2 diabetes treatment, Januvia, posted sales of $482 million, down 42% from the same period a year earlier. Merck said the drop was mainly due to lower prices for the drug in the United States, along with generic competition in several countries.

Analysts expected the drug to gross $610 million in sales, StreetAccount said.

Januvia is one of 10 drugs targeted in ongoing Medicare drug pricing negotiations, a policy that aims to make expensive drugs more affordable for seniors. Those price talks, a key provision of President Joe Biden's Inflation Reduction Act, will end in early August.

Sales of Merck's Covid antiviral pill Lagevrio also fell 40% to $383 million during the quarter.

Still, that beat analysts' expectations of $124.2 million in sales, according to StreetAccount.

Merck's animal health division, which develops vaccines and medications for dogs, cats and livestock, posted sales of $1.49 billion in the third quarter. That's up 6% from a year ago and slightly above what analysts surveyed by StreetAccount expected.