Merck raises 2024 profit forecast on cancer drug sales

Merck & Co on Thursday raised its annual profit and revenue forecasts on the back of strong sales for its blockbuster cancer drug Keytruda, sending the company’s shares up more than 2% before the bell.

Keytruda, the world’s top selling drug in 2023, has been Merck’s key revenue driver over the past few years and is expected to top $30 billion in sales by 2026 before losing exclusivity toward the end of the decade.

The drug is seeing growth from use for additional types of cancers as well as higher patient demand, Chief Financial Officer Caroline Litchfield said.

Sales of Keytruda stood at $6.95 billion for the first quarter, jumping 20% from the previous year and surpassing analysts’ estimates of $6.66 billion, according to LSEG data.

Gardasil, Merck’s vaccine that prevents cancers caused by human papillomavirus (HPV), brought in quarterly sales of $2.25 billion, up 14% and largely in line with estimates of $2.27 billion.

Merck said Gardasil growth was driven by strong demand in China, where it is seeking approval for use of the vaccine in men.

Sales of Vaxneuvance, a shot that helps protect against infection caused by pneumococcus bacteria, rose 106% to $219 million for the first quarter.

The U.S. Food and Drug Administration last month approved Merck’s potential blockbuster treatment Winrevair for adults with high blood pressure due to constriction of lung arteries, and the company said doctors had started writing prescription for the drug.

Litchfield said the company is making good progress on improving access to Winrevair, with several insurers and other payers already establishing coverage for it.

“Overall, we see today’s results as consistent with the recent solid trends seen from Merck’s business,” J.P.Morgan analyst Chris Schott said.

The primary focus for Merck is Winrevair, Schott said, adding that he expects rapid uptake of the drug from the second half of the year.

New Jersey-based Merck said it expected annual earnings between $8.53 and $8.65 per share, up from its previous forecast of $8.44 to $8.59. Analysts had expected earnings of $8.56 per share.

The company’s new forecast includes a $0.26 per share charge for its $680-million acquisition of cancer drug developer Harpoon Therapeutics, which closed in the first quarter of 2024, Merck said.

The drugmaker forecast 2024 sales between $63.1 billion and $64.3 billion, up from its previous forecast of $62.7 billion to $64.2 billion. Analysts had expected sales of $63.83 billion.

On an adjusted basis, Merck earned $2.07 per share in the first quarter, beating estimates of $1.88.