Merck (MRK) Q4 earnings report 2023

Merck on Thursday reported fourth-quarter revenue and adjusted earnings that topped estimates because it saw strong demand for its blockbuster cancer drug Keytruda and HPV vaccine Gardasil. 

The pharmaceutical giant posted a net quarterly loss, nonetheless, on account of previously announced charges related to a deal the corporate struck in October with the Japanese drugmaker Daiichi Sankyo to co-develop three highly sought-after cancer treatments.

Here’s what Merck reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly generally known as Refinitiv:

• Earnings per share: 3 cents adjusted vs. a lack of 11 cents per share expected
• Revenue: $14.63 billion vs. $14.50 billion expected

Shares of Merck closed almost 5% higher on Thursday.

The corporate posted a net lack of $1.23 billion, or 48 cents per share, for the quarter. That compares with net income of $3.02 billion, or $1.18 per share, throughout the year-earlier period. 

Excluding acquisition and restructuring costs, Merck earned 3 cents per share for the fourth quarter. The corporate’s results include a charge of $1.69 per share related to the Daiichi Sankyo deal. 

Merck raked in $14.63 billion in revenue for the quarter, up 6% from the identical period a 12 months ago. 

Those results come as Merck shows significant progress in preparing for Keytruda’s patent expiration in 2028, with a handful of recent deals under its belt and key drug launches ahead. The lack of exclusive rights to the drug will likely mean its sales will fall, forcing the corporate to attract revenue from elsewhere.

Merck CEO Robert Davis said on an earnings call Thursday that the corporate “feels superb” in regards to the progress it has made to grow its drug portfolio. But he said “we want more” products, adding that the corporate stays all in favour of signing acquisitions or collaboration deals.

Merck also issued its full-year 2024 guidance, which was generally in step with expectations. The corporate expects revenue to are available in between $62.7 billion and $64.2 billion and adjusted earnings to be $8.44 to $8.59 per share this 12 months. 

Analysts surveyed by LSEG expected Merck to forecast full-year sales of $63.52 billion and adjusted earnings of $8.42 per share. 

That adjusted earnings outlook features a one-time charge of roughly 26 cents per share related to Merck’s acquisition of Harpoon Therapeutics, which develops immune-based cancer drugs, earlier this month.

Merck also announced a latest restructuring program for 2024, which goals to enhance the manufacturing network of each its pharmaceutical division and animal health business. Merck recorded charges of $190 million related to this system within the fourth quarter, which is excluded from its adjusted results.

That brings Merck’s total restructuring charges for the period to $401 million. That number also includes charges from a restructuring program the corporate launched in 2019.

Merck’s pharmaceutical business, which develops a big selection of medicine for several disease areas, booked $13.14 billion in revenue throughout the quarter. That is up 8% from the identical period a 12 months ago. 

Merck’s immunotherapy Keytruda, which is used to treat several varieties of cancer, largely fueled the expansion.

The drug booked $6.61 billion in revenue, up 21% from the year-earlier quarter. Analysts had been expecting $6.41 billion in Keytruda sales, in accordance with estimates from FactSet. 

The treatment saw growth from increased use in earlier stage cancers and powerful demand amongst patients with metastatic disease, or cancer that spreads to different a part of the body, Merck CFO Caroline Litchfield said during an earnings call Thursday. Merck also saw a jump in sales of Gardasil, a vaccine that stops cancer from HPV, probably the most common sexually transmitted infection within the U.S.

Gardasil raked in $1.87 billion in sales, up 27% from the fourth quarter of 2022. That is barely below the $1.92 billion that analysts were expecting, in accordance with FactSet estimates. 

Meanwhile, sales of its Covid antiviral pill Lagevrio fell to $193 million throughout the period, down 77% from the $825 million reported for the fourth quarter of 2022. Still, the drug blew past analysts’ expectations of $69 million in sales, in accordance with FactSet. 

That is no surprise: Demand has plummeted for Lagevrio and other Covid products from corporations resembling Pfizer and Moderna over the past 12 months, as cases and concern in regards to the virus dwindled from their pandemic peaks.

Merck’s Type 2 diabetes treatment, Januvia, also saw sales fall to $787 million throughout the quarter, down 14% from the identical period a 12 months ago. The corporate said competition from cheaper generic drugs outside of the U.S., particularly in Europe, and lower demand within the U.S. cut into the sales.

That total still got here in higher than analysts’ estimate of $732.3 million for the period, in accordance with FactSet. 

Januvia is one among 10 drugs that will probably be subject to Medicare drug price negotiations, a policy under the Inflation Reduction Act that goals to make costly medications cheaper for seniors. Also on Thursday, Medicare is making initial price offers for every of those drugs.