Strong drug sales, vaccine hopes propel earnings for Merck
Drugmaker Merck, bouncing back from a US$1.6-billion hit from the coronavirus pandemic in the second quarter, boosted its third-quarter profit by 55 per cent and blew past Wall Street expectations. The strong result was due to sales slightly higher than a year ago, plus restrained spending and a one-time gain.
The Kenilworth, New Jersey company on Tuesday said it’s making progress on three efforts to combat the coronavirus pandemic: two different vaccines and an antiviral drug.
Merck entered the race to fight COVID-19 later than other top drugmakers, but is focusing on creating medicines that are easier to administer and based on proven technologies. For instance, the company and partner Ridgeback Bio have begun two large, late-stage trials of an experimental treatment called molnupiravir that’s in capsule form, rather than injected, which would allow COVID patients who aren’t hospitalised to take the drug at home.
Meanwhile, Merck is developing two experimental vaccines that only require one dose, unlike the many two-dose vaccines further along in human testing. The company said it’s begun an early-stage study in volunteers of a vaccine known as V591 based on measles vaccine technology. It’s also about to start early-stage human testing of V590, which uses the same technology as Merck’s approved Ebola vaccine.
Research head Roger Perlmutter, who is retiring at year end, told analysts on a conference call that the treatment, given to several hundred COVID patients so far, “seems to be extremely well tolerated”.
The maker of cancer blockbuster Keytruda reported net income of US$2.94 billion, or US$1.16 per share, up from US$1.9 billion, or 74 cents per share, a year earlier. Adjusted earnings came to US$1.74 per share, a whopping 30 cents more than analysts expected.
Merck reported revenue of US$12.55 billion, also easily beating analyst projections for US$12.26 billion.
“This was a good quarter for Merck, and we think the company is executing well,” Edward Jones analyst Ashtyn Evans wrote to investors, adding she’s “encouraged by the improving trends and volumes, although an increase in COVID cases across the US could impact future results”.
In early trading, Merck shares rose US$1.11, or 1.4 per cent, to US$79.55.
Sales of prescription drugs totalled US$11.32 billion, up two per cent. Keytruda brought in nearly one-third of that at US$3.72 billion, up 21 per cent from a year ago. Januvia and Janumet diabetes pills brought in US$1.33 billion, up one per cent.
Sales of its pneumonia vaccine, Pneumovax 23, jumped 58 per cent to US$375 million, because people concerned about catching COVID-19 and suffering complications have been getting flu and pneumonia shots to help protect themselves.
Sales of veterinary medicines jumped nine per cent, to US$1.22 billion.
Merck narrowed and raised its full-year profit forecast. It now expects full-year earnings in the range of US$5.91 to US$6.01 per share, with revenue in the range of US$47.6 billion to US$48.6 billion.