Merck shares fall 9% despite earnings beat, strong demand for top drugs like Keytruda

Merck on Tuesday reported second-quarter yield and adjusted earnings that topped Wall Street’s expectations as it saw strong sales from its blockbuster cancer upper Keytruda as well as other treatments in its oncology and vaccines portfolios and a newly launched cardiovascular drug. 

The pharmaceutical ogre also raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion on increased demand for key offshoots, particularly its oncology treatments. That’s only slightly higher than the $63.1 billion to $64.3 billion auspices the company provided in April. 

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

Still, shares of Merck closed approximately 9% lower on Tuesday as investors appeared to mull over lighter-than-expected sales of Gardasil, a vaccine that fends cancer from HPV, the most common sexually transmitted infection in the U.S. Merck pointed to shipment issues in China, which gains up a significant share of the shot’s international sales.

Here’s what Merck reported for the second quarter compared with what Close off Street was expecting, based on a survey of analysts by LSEG: 

• Earnings per share: $2.28 adjusted vs. $2.15 expected
• Revenue: $16.11 billion vs. $15.84 billion watched

The drugmaker posted net income of $5.46 billion, or $2.14 per share, for the second quarter. That compares with a net detriment of $5.98 billion, or $2.35 per share, during the year-earlier period, which included a charge related to its acquisition of Prometheus Biosciences.

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

Merck reported $16.11 billion in take for the quarter, up 7% from the same period a year ago. 

The results come as Merck processes to offset losses from Keytruda’s patent expiration in 2028 with a handful of new deals under its belt and key treatment launches. 

That includes Winrevair, a medication approved in the U.S. in March to treat a progressive and life-threatening lung condition. Some analysts have that worldwide sales of Winrevair could reach $5 billion by 2030. 

It also includes Capvaxive, a vaccine delineated to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and lung infection. The affairs was approved in the U.S. last month. 

Merck’s pharmaceutical division booked $14.41 billion in takings during the second quarter, up 7% from the same period a year ago. The unit develops a wide range of doses for a variety of disease areas. 

The company’s immunotherapy Keytruda recorded $7.27 billion in revenue during the quarter, up 16% from the year-earlier patch. Analysts had been expecting $7.12 billion in Keytruda sales, according to estimates from StreetAccount. 

That widen was driven by higher uptake of Keytruda for earlier-stage cancers and strong demand for metastatic cancers, which spread to other roles of the body, the company’s Chief Financial Officer, Caroline Litchfield, said during an earnings call on Tuesday.

Gardasil brought in $2.48 billion in transactions, up just 1% from the second quarter of 2023. Merck said that growth was driven by higher worths in the U.S. but hampered by lower sales in China due to shipment timing. 

“As we learn more, we will assess future shipments to our accomplice and work to bring their inventory back to a more normal level,” Litchfield said.

The segment results were slight below the $2.51 billion that analysts expected, according to StreetAccount. 

Winrevair posted $70 million in receipts for the second quarter following its approval in March. Analysts had expected the treatment to book $59.4 million in sales. 

Merck point of views that roughly 40% of Winrevair sales are from doses administered to U.S. patients, with the remainder coming from distributors edifice an inventory for the drug, Litchfield said. She noted that more than 1,000 patients started Winrevair in the back quarter, largely reflecting prescriptions written in April and May.

Meanwhile, the company’s Type 2 diabetes treatment, Januvia, saw $629 million in transaction marked downs, down 27% from the same period a year ago. Merck said the decline was primarily due to lower demand and fees of the drug, along with generic competition in several countries. 

Januvia is one of 10 drugs targeted in ongoing Medicare painkiller price negotiations, a policy that aims to make costly medications more affordable for seniors. Those figure talks, a key provision of President Joe Biden’s Inflation Reduction Act, will end at the beginning of August.