By Michael Erman
(Reuters) – Merck & Co posted narrower-than-expected second-quarter loss and raised its full-year profit forecast on Tuesday on the strength of its two top-selling products, cancer immunotherapy Keytruda and human papillomavirus (HPV) vaccine Gardasil.
Sales in the quarter stood at $15.0 billion, up from $14.6 billion a year ago, despite a sharp drop in demand for Merck’s COVID-19 therapeutic Lagevrio.
Analysts, on average, had expected sales of $14.4 billion, according to Refinitiv data.
Merck reported about $6.3 billion in Keytruda sales for the quarter, up 19%, compared with analysts’ forecasts of $5.9 billion. Sales of Gardasil, which prevents cancers caused by HPV, jumped 47% to $2.5 billion, also well above Wall Street estimates of $2.1 billion.
Merck CEO Rob Davis said Keytruda’s strength is coming from within the United States and internationally, and 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.
Sales of Lagevrio plunged to $200 million in the quarter from $1.2 billion a year earlier as demand for COVID-19 therapeutics dissipated amid low infection rates.
The company posted an adjusted loss of $5.2 billion, or $2.06 a share, primarily due to a $10.2 billion charge related to its acquisition of Prometheus Biosciences. Analysts had expected a loss of $2.18.
Last year, the company reported second-quarter earnings of $4.7 billion, or $1.87 a share.
It paid close to $11 billion 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 toward 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 $58.6 to $59.6 billion, up from its prior view of $57.7 billion to $58.9 billion. Analysts had forecast sales of $58.7 billion.
The U.S. drugmaker now expects to earn $2.95 to $3.05 a share for 2023.
(Reporting by Michael Erman; Editing by Bill Berkrot)
