Offsetting Merck’s growth in the third quarter were disappointing revenues from its HPV vaccine Gardasil and type 2 diabetes pill Januvia, with the company on Thursday narrowing its 2024 sales and adjusted profit outlooks.
Merck on Thursday reported 7% year-over-year growth in third-quarter revenues, which came in ahead of analyst forecasts, driven by its blockbuster cancer therapy Keytruda as well as strong product launches. However, the company narrowed its full-year sales forecast and lowered its adjusted profit guidance.
The pharma brought in more than $16.6 billion in Q3 versus the consensus estimate of $16.46 billion—a 1% beat. Non-GAAP earnings-per-share (EPS) was $1.57, which topped the $1.48 projection by 6%.
Keytruda, a PD-1 inhibitor that has become a cornerstone therapy for many cancers, was a strong driver of Merck’s Q3 beat, growing 21% to bring in nearly $7.5 billion. Analysts had expected the blockbuster immunotherapy to generate sales of around $7.3 billion in the quarter.
According to Merck, the growth in Keytruda sales was driven by greater uptake in earlier-stage settings including triple-negative breast cancer, renal cell carcinoma and non-small cell lung cancer. Keytruda also saw “continued strong demand” in its other metastatic indications.
Merck reported strong product launches in Q3 including the pulmonary arterial hypertension Winrevair, which secured $149 million and surpassed analyst estimates of $129 million. The company also touted its pneumococcal vaccine Capvaxive, which the FDA approved in June 2024 and the CDC recommended for use in adults 50 years and older last week.
However, offsetting Merck’s strong growth in Q3 were disappointing sales of its nine-valent HPV vaccine Gardasil and its type 2 diabetes pill Januvia. Gardasil absorbed a 10% year-over-year revenue hit, bringing in a little more than $2.3 billion in the quarter and missing the consensus estimate of more than $2.57 billion. Meanwhile, Januvia sales nosedived 49% with sales of $278 million, missing the forecast of $421 million.
Looking ahead to the rest of the year, Merck lowered its full-year EPS guidance to $7.72 to $7.77—versus the previously announced range of $7.94 to $8.04—to reflect one-time charges associated with transactions with Harpoon Therapeutics, EyeBio and Curon Biopharmaceutical. The company also narrowed its sales forecast to $63.6 billion to $64.1 billion. The pharma’s previously announced projection ranged from $63.4 billion to $64.4 billion.
Guggenheim Partners analyst Vamil Divan in a note to investors called Merck’s overall performance in Q3 “solid” but said the pharma needs to provide more clarity regarding its expectations for Winrevair and Capvaxive for the coming quarters—as well as its outlook for Keytruda and Gardasil as market pressures mount.
BMO Capital Markets analyst Evan Seigerman noted that “Merck’s commercial story remains strong” as “Keytruda continued its usual dominance,” pointing out that Merck has properly positioned itself for continued growth in the coming years, despite Keytruda’s impending loss of exclusivity (LOE).
“We believe Merck’s developing cardiovascular portfolio, advancements in I&I (immunology and inflammation) through the Prometheus transaction, and partnership with Daiichi are likely to position the company to grow through its Keytruda LOE and add to the company’s topline for several years,” Seigerman wrote.
At the same time, he commented that “another sequential Gardasil miss ($2.31B vs $2.58B) suggests issues from 2Q24 are persisting” and “remains a concern” with the HPV vaccine’s revenues down 10% versus consensus “likely continued to be impacted by problems in China.”
