Keytruda carries Merck & Co. to Q1 profit beat, rosier 2024 forecast

2024-04-25

疫苗财报临床结果

Merck & Co. reported better-than-expected first-quarter results on Thursday, fueled by strong sales of its blockbuster cancer drug Keytruda that prompted the pharma to raise its profit and revenue forecasts for 2024.

The cancer immunotherapy saw sales surge 20% year-over-year to $6.9 billion in the first quarter, topping analyst estimates of $6.7 billion. Edward Jones analyst John Boylan called Keytruda the "star" of Merck's report, adding, "we expect that to continue due to growing acceptance of the drug and good clinical data."

Merck's total sales for the three-month period were $15.8 billion, which is up 9% from 2023. Net income came in at $4.8 billion, an increase of 69% compared to the same time last year.

However, with more than 40% of Merck's sales now reliant on Keytruda, the company is facing a revenue crunch once the drug's main US patent expires in 2028.

Preparing for post-Keytruda

Still, analysts are becoming more confident that the company will be able to offset Keytruda’s loss of exclusivity with sales from newer products, such as its pulmonary arterial hypertension (PAH) drug Winrevair, which scored a highly-anticipated US approval last month, as well as a 21-valent pneumococcal vaccine, dubbed V116, that may be cleared by the FDA in June for use in adults.

"Merck has a solid pipeline of other new products and has an impressive management team," Boylan said.

During an earnings call Thursday, CEO Rob Davis wouldn't provide specific sales guidance for Winrevair, but said Merck is seeing "an increasing number of prescriptions being written [as well as] repeat prescriptions…and from a payer perspective we're seeing good access," with several having already established coverage policies.

"Our confidence in a successful launch has not changed. We continue to see this consistent with our expectations," he said. Analysts estimate Winrevair will generate $572 million this year, growing to $1.3 billion the next, and up to $2.1 billion in 2026.

Sales, profit outlook lifted

Beyond Keytruda, Merck's HPV vaccine Gardasil also delivered solid growth, with sales rising 14% to $2.3 billion, largely in line with consensus. The company noted particularly strong demand for the vaccine in China, where it is seeking approval for use in men. Sales of pneumococcal vaccine Vaxneuvance more than doubled to $219 million in the first quarter.

However, Merck's diabetes franchise continued its downward slide, with sales of Januvia falling 24% to $670 million, missing expectations of $687 million. It is one of the 10 drugs targeted in ongoing Medicare drug price negotiations, a policy under the Biden administration's Inflation Reduction Act that aims to make some of the more expensive treatments more affordable for seniors.

Overall, Merck said pharmaceutical division sales totaled $14 billion during the quarter, a gain of 10% from the same period a year ago.

The company also raised and narrowed its financial outlook for the year. It now expects sales in 2024 to be between $63.1 billion and $64.3 billion, up from previous guidance of $62.7 billion to $64.2 billion. Adjusted earnings are now seen ranging from $8.53 to $8.65 per share, versus a prior forecast of $8.44 to $8.59 per share.

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