Updated Version 2 - Merck's Q3 Results Exceed Expectations, Keytruda and Gardasil Perform Strongly

Updated stock price performance, added analyst comments in paragraphs 13 and 17, provided detailed information in paragraph 11 along with a chart

Michael Erman

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

The company's share price rose by nearly 2% in pre-market trading.

According to data from London Stock Exchange Group (LSEG), the U.S. pharmaceutical company recorded third-quarter revenue of $18.1 billion, surpassing analysts' average expectation of $17.3 billion. Adjusted earnings per share were $2.49, higher than the expected $2.08.

The company stated that approximately $550 million of this quarter’s growth came from earlier-than-expected pharmaceutical purchases.

Sales of the immunotherapy drug Keytruda (one of the world's top-selling drugs) rose 6% year-over-year to $8.6 billion, beating analyst expectations of $8 billion. Among this, the newly approved subcutaneous formulation Keytruda QLEX, approved at the end of last year, contributed $830 million in sales.

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After being hit in previous quarters by weak demand in China, Gardasil sales benefited significantly this quarter from early procurement by the U.S. Centers for Disease Control and Prevention. The vaccine, which prevents HPV-related cancers, saw sales increase 14% year-over-year to nearly $2 billion, compared to Wall Street’s estimate of $1.8 billion.

Winrevair, a medication for pulmonary arterial hypertension and one of Merck’s newer growth products, achieved sales of $694 million, up 94% year-over-year, beating Wall Street’s forecast of $645 million.

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

The company also raised its adjusted earnings per share guidance, now expecting EPS of $2.77 to $2.82, up from the prior $2.66 to $2.76.

Merck anticipates that growth momentum for Keytruda will stabilize, as the drug is nearing peak revenue in certain indications, and faces challenges in the German market.

As Keytruda is set to lose key patent protection from 2028, the company has been working to expand its portfolio beyond Keytruda. To offset potential revenue losses from biosimilar competition, the company has spent billions on acquisitions and licensing deals.

Last week, Merck and its partner Moderna MRNA.O released data showing that their mRNA cancer vaccine, when combined 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 late-stage clinical trials.

Citigroup analysts said the data reinforced Merck’s outlook post-Keytruda patent expiration.

In August (link), when both companies announced the trial’s success but had yet to release actual data, Merck’s stock rose 12%. Following the release of detailed results last week, share prices pulled back.

Merck closed at $140.93 on Wednesday, up about 34% so far this year, outperforming the broader market.

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Cantor Fitzgerald analyst Carter Gould noted that investors remain focused on Merck’s “progressive R&D pipeline updates,” especially the clinical trial timeline for its promising experimental oncology therapy sac-TMT, as well as the next batch of data for its mRNA cancer vaccine.

(To facilitate non-native English speakers, Reuters provides its reports through automated translation into several other languages. Since automated translation may be inaccurate or fail to include necessary context, Reuters does not guarantee the accuracy of automated translation text, which is provided for reader convenience only. Reuters bears no responsibility for any damage or loss resulting from the use of the automated translation function.)