Updated version 1 - Merck's third-quarter performance exceeded expectations, with Keytruda and Gardasil showing strong results.

Added stock price trend in the second paragraph, with chart attached

Michael Erman

Reuters New York, October 29 - Merck & Co (MRK.N) reported third-quarter earnings on Thursday that exceeded market expectations, mainly driven by strong demand for its blockbuster cancer drug Keytruda and HPV vaccine Gardasil.

The company's share price rose nearly 3% in pre-market trading.

According to data from London Stock Exchange Group (LSEG), the U.S. pharmaceutical company posted Q3 revenue of $18.1 billion, beating analysts’ average estimate of $17.3 billion. Adjusted earnings per share were $2.49, higher than the market expectation of $2.08.

The company stated that approximately $550 million of this quarter’s growth was due to earlier-than-expected timing of drug purchases.

Sales of immunotherapy drug Keytruda (one of the world’s best-selling medicines) grew 6% year-over-year to $8.6 billion, surpassing analysts’ expectations of $8.0 billion. This included $830 million in sales from the new subcutaneous Keytruda QLEX formulation approved late last year.

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After several quarters of struggles from weak demand in China, Gardasil sales also rose significantly this quarter, thanks to early procurement by the U.S. Centers for Disease Control and Prevention. The vaccine, which prevents cancers caused by human papillomavirus (HPV), saw sales grow 14% to nearly $2.0 billion, compared with Wall Street's forecast of $1.8 billion.

Merck raised the lower end of its full-year revenue forecast from $66.3 billion to $66.8 billion, while maintaining the upper end forecast at $67.3 billion.

The company also raised its adjusted earnings per share outlook, now expecting EPS in the range of $2.77 to $2.82, up from the previous forecast of $2.66 to $2.76.

Merck has been striving to diversify its product portfolio beyond Keytruda, as the drug will lose critical patent protection starting in 2028. The company has spent billions of dollars on acquisitions and licensing deals in hopes of offsetting future revenue expected to be lost due to biosimilar competition.

Pulmonary arterial hypertension drug Winrevair is among Merck’s newer growth drivers, with sales reaching $694 million, up 94% year-over-year and exceeding Wall Street’s forecast of $645 million.

Last week, Merck and its partner Moderna MRNA.O released data showing that combining their mRNA cancer vaccine with Keytruda significantly reduced the risk of death or recurrence in melanoma patients. This marks the first time an mRNA cancer vaccine has achieved positive results in a late-stage clinical trial.

In August (link), when the two companies announced successful trial results but hadn’t yet released actual data, Merck’s share price rose 12%. After detailed results were disclosed last week, the stock price pulled back.

Merck shares closed Wednesday at $140.93, up about 34% year-to-date, outperforming the broader market.

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