Merck (MRK) Q2 2024 Earnings

Merck U.S. drugmaker ABC on Tuesday reported second-quarter revenue and adjusted earnings that beat Wall Street expectations, driven by strong sales of its leading cancer drug Keytruda, as well as other treatments in its oncology and vaccine portfolios and a newly launched cardiovascular drug.

The drug giant also raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion, driven by increased demand for key products, particularly oncology treatments. That’s only slightly higher than the guidance the company gave in April of $63.1 billion to $64.3 billion.

Merck lowered its adjusted earnings forecast to a range of $7.94 to $8.04 per share, from a previous forecast of $8.53 to $8.65 per share. Merck said the updated outlook reflects one-time charges of 26 cents and 51 cents per share for the company’s acquisitions of Harpoon Therapeutics and iBio, respectively.

However, the company's shares fell more than 6% on Tuesday.

Here's what Merck reported for the second quarter compared to what Wall Street was expecting, based on a survey of analysts by the London Stock Exchange Group:

Earnings per share: $2.28 adjusted vs. $2.15 expectedRevenue: $16.11 billion vs. $15.84 billion expected

The drugmaker reported net income of $5.46 billion, or $2.14 a share, in the second quarter. That compares with a net loss of $5.98 billion, or $2.35 a share, in the year-ago period, which included charges related to its acquisition of Prometheus Biosciences.

Excluding acquisition and restructuring costs, the company earned $2.28 per share for the three-month period.

Merck reported revenue of $16.11 billion in the quarter, up 7% from the same period last year.

The results come as Merck prepares to offset losses from the expiration of Keytruda's patent in 2028 through a series of new deals and major drug launches.

These include Winrivir, which was approved in the United States in March to treat advanced, life-threatening lung disease. Some analysts expect Winrivir’s global sales to reach $5 billion by 2030.

The vaccines also include Capvaxive, a vaccine designed to protect adults against a bacteria called pneumococcal that can cause serious illness and lung infections. The vaccine was approved in the United States last month.

Merck's pharmaceuticals unit posted revenue of $14.41 billion in the second quarter, up 7% from the same period a year earlier. The unit develops a broad portfolio of drugs for a variety of disease areas.

Immunotherapy company Keytruda reported revenue of $7.27 billion during the quarter, up 16% from the year-ago period. Analysts were expecting sales of $7.12 billion, according to StreetAccount estimates.

The increase was driven by increased use of Keytruda to treat early-stage cancers and strong demand for metastatic cancers, which spread to other parts of the body, Carolyn Litchfield, the company's chief financial officer, said during an earnings call Tuesday.

Sales of Gardasil, a vaccine that prevents cancer caused by human papillomavirus, the most common sexually transmitted infection in the United States, have remained roughly flat.

Gardasil generated sales of $2.48 billion, up just 1% from the second quarter of 2023. Merck said growth was driven by higher prices in the United States but hampered by lower sales in China due to shipping timing.

“As we gain more knowledge, we will evaluate our partner’s future shipments and work to bring their inventory back to a more normal level,” Litchfield said.

The sector's results came in slightly below the $2.51 billion analysts had expected, according to StreetAccount.

Winrivir reported revenue of $70 million in the second quarter after its approval in March. Analysts had expected the treatment to generate sales of $59.4 million.

Merck estimates that about 40% of its Winrivir sales come from doses given to patients in the United States, with the rest coming from distributors building up inventory of the drug, Litchfield said. More than 1,000 patients started using Winrivir in the second quarter, largely reflecting prescriptions written in April and May, she said.

Meanwhile, sales of its Type 2 diabetes drug Januvia were $629 million, down 27% from the same period last year. Merck said the decline was primarily due to lower demand and lower prices for the drug, as well as competition from generic drugmakers in several countries.

Januvia is one of 10 drugs targeted in ongoing Medicare drug price negotiations, a policy aimed at making expensive medications more affordable for seniors. Those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, are set to end in early August.

Sales of Merck’s antiviral drug Lagivrio also fell 46% to $110 million during the quarter, but those sales still beat analysts’ expectations of $81.5 million, according to StreetAccount.

Merck’s Animal Health division, which develops vaccines and medicines for dogs, cats and livestock, reported sales of $1.48 billion in the second quarter, up 2% from a year earlier and slightly below what analysts polled by StreetAccount had expected.