Merck (MRK) Q2 earnings report 2023

Merck on Tuesday reported second-quarter revenue that topped expectations on strong sales of its blockbuster cancer drug Keytruda and HPV vaccine Gardasil.

The pharmaceutical giant posted a quarterly loss, nevertheless, as a result of charges related to the corporate’s acquisition of Prometheus Biosciences earlier this 12 months. 

related investing news

Merck swung to a net lack of $5.98 billion, or $2.35 per share, from a net income of $3.94 billion, or $1.55 per share, throughout the year-earlier period. Excluding acquisition and restructuring costs, Merck’s loss per share was $2.06 for the quarter. 

The loss reflects a $10.2 billion, or $4.02 per share, charge related to the corporate’s acquisition of Prometheus, which makes a speciality of treatments for autoimmune diseases. Merck said it accomplished the deal in mid-June. 

Here’s how Merck results compared with Wall Street expectations, based on a survey of analysts by Refinitiv:

• Loss per share: $2.06 adjusted vs. $2.18 expected
• Revenue: $15.04 billion vs. $14.45 billion expected

Revenue of $15.04 billion for the quarter rose 3% from a 12 months earlier. 

“What you actually see…was long sustained underlying growth, and it was driven by oncology and vaccines, and the Gardasil franchise in vaccines,” Merck CEO Robert Davis said in an interview on CNBC’s “Squawk Box” on Tuesday.

Merck’s stock closed greater than 1% lower Tuesday. Shares of Merck are down roughly 5% this 12 months, with a market value of roughly $267 billion, making it the third largest pharmaceutical company based within the U.S.

The Recent Jersey-based company raised its 2023 sales forecast to a variety of $58.6 billion to $59.6 billion, barely higher than the $57.7 billion to $58.9 billion guidance provided in late April. 

Merck lowered its full-year adjusted earnings outlook to $2.95 to $3.05 per share, from a previous forecast of $6.88 to $7 per share.

The corporate said its business growth throughout the quarter contributed 24 cents per share to the full-year earnings guidance, but was offset by the $4.02 per share charge related to the Prometheus deal.

The outlook also includes previously disclosed one-time charges related to Merck’s acquisition of Imago BioSciences last 12 months and an upfront payment for a drug development agreement with Kelun-Biotech. 

“We see strong growth to the complete 12 months, and the guidance range you might be referencing implies growth of 10% to 11% for those who exclude the one-time impact,” Davis told CNBC. “It’s a powerful beat.”

Merck’s pharmaceutical business, which develops a big selection of medication for various disease areas, booked $13.46 billion in revenue throughout the quarter. That is up 6% from the identical period a 12 months ago. 

Excluding Merck’s Covid antiviral treatment molnupiravir, the pharmaceutical division revenue grew 14%. 

Sales of molnupiravir, sold under the brand name Lagevrio, plunged to $203 million throughout the period, down 83% from the $1.18 billion reported for the second quarter of 2022. Analysts had been expecting the drug to rake in $187.6 million in sales, in accordance with FactSet estimates.

The decline is no surprise. Sales of molnupiravir and other Covid products from firms like Pfizer have plummeted this 12 months because the world emerges from the pandemic and relies less on vaccines and coverings for cover. 

The pharmaceutical division’s growth was largely fueled by the favored antibody treatment Keytruda, which is used to treat several varieties of cancer.

The drug booked $6.27 billion in revenue, up 19% from the year-earlier quarter. Analysts had been expecting $5.97 billion in Keytruda sales, FactSet estimates said.

Davis said “that is the first time now we have been over $6 billion and 1 / 4” for Keytruda sales.

The corporate has been under pressure to cut back its dependence on Keytruda, which is slated to lose patent protection in 2028. But Merck is attempting to defend its patent edge over Keytruda by developing latest formulations of the drug, similar to a version that may be injected under the skin.

Merck’s pharmaceutical business also saw a jump in sales of Gardasil, a vaccine that forestalls cancer from HPV, probably the most common sexually transmitted infection within the U.S.

Gardasil raked in $2.46 billion in sales, up 47% from the second quarter of 2022. Analysts had been expecting sales of $2.10 billion, in accordance with FactSet estimates.

The corporate’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.46 billion in sales, off 1% from the identical period a 12 months ago.

Merck will hold a conference call at 8 a.m. ET on Tuesday. 

Investors are looking forward to updates on upcoming product launches and other drug pipeline updates that would cushion Keytruda’s patent cliff in the event that they gain approval.

That features Merck and Moderna’s experimental personalized cancer vaccine, which is being studied together with Ketyruda. The drugmakers launched a phase three trial of the vaccine last week. 

Other products include Merck’s experimental vaccine that goals to stop invasive pneumococcal disease and pneumococcal pneumonia in adults.