© Reuters. FILE PHOTO: The Merck logo is seen at the entrance to the Merck & Co campus in Rahway, New Jersey, U.S., July 12, 2018. REUTERS/Brendan McDermid
By Michael Erman and Leroy Leo
(Reuters) -Merck & Co on Thursday reported better-than-expected third-quarter revenue and profit as demand spiked for blockbuster cancer immunotherapy Keytruda and its cancer-causing virus vaccine. papillae in the Gardasils.
Merck shares rose about 2% in midday trading as the US drugmaker also raised its full-year revenue and profit forecasts despite the impact of a weakening euro and pound. The company’s shares are up more than 30% year-to-date, outperforming the broader market.
Merck has been looking to pursue deals to protect itself from lost revenue as Keytruda patents begin to expire at the end of the decade. The company was said to be in talks to buy the cancer-focused biotech Seagen Inc over the summer, but a deal didn’t materialize.
“Our urgency about growing the business hasn’t changed. We see a growing list of potential places to have fun,” Merck CEO Robert Davis said in a conference call with fellow executives. analyst. “Obviously, we have to bring them to life, which we’re working on.”
Merck announced Wednesday that Davis will take on an additional role of president effective December 1, succeeding former chief executive Ken Frazier.
Keytruda’s revenue grew 20% to $5.4 billion in the quarter, in line with analyst estimates. Gardasil’s revenue grew 15% to $2.3 billion, topping expectations of more than $200 million.
Gardasil’s performance “reflects growing international demand and likely normalization from COVID trends in the US,” Wells Fargo (NYSE:) analyst Mohit Bansal said in a note.
The company also announced sales of its slightly better COVID-19 antiviral drug Lagevrio (molnupiravir), developed and shared with Ridgeback Biotherapeutics.
Merck benefited from its forex hedging program, which added about $300 million in quarterly revenue, offsetting some of the pressure on overseas sales, Chief Financial Officer Caroline Litchfield said in an interview.
“Forex will continue to be a headwind,” Litchfield said. She added that the impact of Merck’s hedging program is likely to be more subtle going forward as the pace of dollar strengthening slows.
Sales of Merck’s animal health business fell short of analysts’ estimates. BMO Capital Markets analyst Evan Seigerman called that “the only point of concern,” but noted that the unit had seen significant growth earlier during the pandemic.
Some investors have suggested Merck follow rivals Eli Lilly (NYSE:) and Co and Pfizer Inc (NYSE:) by discontinuing its animal health business. Davis said the company has no plans to do so.
“We are benefiting from what it offers us and we continue to see it as a strategic asset,” the CEO said.
Merck now expects earnings of $7.32 to $7.37 per share in 2022, up from the previous view of $7.25 to $7.35. It beat analysts’ estimates for adjusted profit for the quarter by 14 cents.
