- Merck on Friday reported slightly higher revenues in the second quarter, driven by continued sales growth of its new cancer immunotherapy Keytruda along with incremental gains from its top-selling diabetes and cholesterol drugs.
- Sales of Keytruda, one of Merck's key products for future growth, nearly tripled from a year earlier to $314 million over the three months ending in June. While impressive growth, Keytruda remains well behind Bristol-Myers Squibb's competing immunotherapy Opdivo, which notched $840 million in sales last quarter.
- Net income for the second quarter shot up 76% higher to $1.2 billion, but that surge in profits was almost entirely driven by the removal from the income statement of $715 million in foreign exchange losses related to Merck's assets in Venezuela.
“Our results this quarter reflect our strategic focus on key launches, including Keytruda and Zepatier, as well as our priority inline programs,” said Kenneth C. Frazier, chief executive officer of Merck.
Merck continues to develop Keytruda for several new indications across a range of cancers, hoping to further expand the drug's market share—particuarly as Bristol-Myers Squibbs efforts to do the same with Opdivo continue apace.
Keytruda recently beat out standard of care chemotherapy in patients with previously untreated advanced forms of non-small cell lung cancer. Both Keytruda and Opdivo are currently indicated for second-line use after patient symptoms progress following platinum-based chemotherapy.
Merck hopes the positive Phase 3 study results will position Keytruda for a first-line approval, which would likely boost revenues substantially and even the score with Opdivo. But Bristol-Myers is close behind itself, and is expected to announce results of its own study testing Opdivo in a first-line setting later this year.
In the second quarter, Merck also saw higher sales from its diabetes drug Januvia and from the cholesterol drugs Zetia and Vytorin.
Its hepatitis C drug Zepatier, facing the tall task of competing with Gilead's Harvoni and Sovaldi, pulled in $112 million last quarter, up from $50 million in the first three months of the year. Merck just won approval from the European Commission to market Zepatier in Europe, and plans to launch the drug there beginning in the fourth quarter.
Gains were offset by weaker performance of Merck's Gardasil vaccine franchise and by lower sales of the immunosuppressant Remicade, which faces biosimilar competition in Europe.
Merck predicted it will see a "significant decline" in sales of the IV antibiotic Cubicin after losing patent protection in the U.S. in June. Sales had actually jumped 22% higher in the second quarter on the back of price increases in the U.S., but that bump will likely fade as generic competition kicks in.
Merck also lowered it earnings-per-share forecast, reflecting asset impairment charges and higher restructuring costs in the second quarter.
Some of those costs may be tied to the recently announced layoffs of about 360 employees at three East Cost research sites. Merck plans to open two new labs in Cambridge, MA and San Francisco to better focus its drug discovery and early-stage research around those two biotech hubs.