By Michael Erman
NEW YORK, Oct 29 (Reuters) – Merck posted higher-than-expected third-quarter earnings on Thursday, driven by strong demand for its blockbuster cancer drug Keytruda and its HPV vaccine Gardasil.
Shares of the company rose nearly 2% in premarket trading.
The US drugmaker reported third-quarter revenue of $18.1 billion, topping analysts’ average estimate of $17.3 billion, according to LSEG data. Adjusted earnings were $2.49 per share, ahead of expectations for $2.08 per share.
About $550 million of the company’s growth in the quarter was due to purchases of drugs being made earlier than expected, the company said.
Sales of immunotherapy Keytruda — one of the world’s best-selling drugs — rose 6% from the year-ago quarter to $8.6 billion, beating analysts’ estimates of $8.0 billion. Those sales included $830 million from the new subcutaneously administered version of the drug, Keytruda QLEX, which was approved late last year.
Gardasil sales, which have been hurt by weak demand in China in recent quarters, also rose significantly, helped by early purchases by the US Centers for Disease Control and Prevention. Sales of the vaccine, which prevents cancers caused by the human papillomavirus, rose 14% to just under $2 billion, compared with Wall Street estimates of $1.8 billion.
Pulmonary arterial hypertension drug Winrevair, one of Merck’s newer growth products, generated $694 million in sales, up 94% from last year and above Wall Street expectations of $645 million.
Merck raised the low end of its full-year revenue forecast to $66.8 billion from $66.3 billion previously, while maintaining the prior high-end projection of $67.3 billion.
The company also increased its adjusted earnings forecast and now expects a profit of $2.77 to $2.82 per share, compared with its prior outlook of $2.66 to $2.76 per share.
Merck expects Keytruda’s growth to moderate as it approaches peak revenue in certain indications and faces challenges in the German market.
The company has been working to diversify its portfolio beyond Keytruda, which is set to lose key patent protections starting in 2028. It has spent billions on acquisitions and licensing deals in hopes of replacing revenue it expects to eventually lose to biosimilar competition.
Last week, Merck and partner Moderna published data showing their mRNA cancer vaccine significantly cut the risk of death or recurrence of melanoma when combined with Keytruda. It marked the first positive late-stage trial result for an mRNA cancer vaccine.
Citi analysts said the data strengthens Merck’s post-Keytruda story.
Merck shares rose 12% in August when the companies announced the trial’s success without the actual data. They dipped last week when the detailed results were announced.
Merck’s stock closed at $140.93 on Wednesday and is up around 34% this year, outperforming the wider market.
Cantor analyst Carter Gould said investors remain focused on Merck’s “incremental pipeline updates,” particularly trial timelines for sac-TMT, its promising experimental cancer therapy, and the next data set for its mRNA cancer vaccine.
(Reporting by Michael Erman and Kamal ChoudhuryEditing by Bill Berkrot and Leroy Leo)
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