Merck (MRK) stock popped Tuesday after the drugmaker posted Q3 earnings that topped Wall Street's expectations, a day after U.S. regulators approved two new Biologics License Applications for its Keytruda lung cancer treatment.
But $356 million in worldwide Keytruda sales missed the $386 million expectation of health care tracker Symphony Health Services Consulting, Evercore analyst John Scotti wrote in a research report. U.S. Keytruda sales of $188 million lagged Symphony's model by 10%, he said.
In the stock market today, Merck stock rose 2% to 61.95 after falling intraday to 59.55. Shares are up 17% for the year, though IBD's 44-company Medical-Ethical Drugs group is down 23% in 2016.
For Q3, Merck reported $10.5 billion in sales, up 4.6% vs. the year-earlier quarter, and $1.07 earnings per share ex items, up 11.5% year over year. Both metrics topped the consensus of 22 analysts polled by Thomson Reuters for $10.2 billion and 99 cents.
Merck credited the sales beat to franchises Gardasil and Proquad, vaccines against human papillomavirus (HPV) and measles, mumps, rubella and varicella (chickenpox), respectively. But, Scotti noted, the transition to a two-dose Gardasil regimen will hurt Merck in 2017.
The company "declined to give specific expectations, but did say that they expected revenue declines," he wrote.
Gardasil sales came in at $860 million in Q3, up 38% year over year, while Proquad sales rose 27% to $496 million. Keytruda led growth for Merck in Q3, pulling in $356 million, up 124%. Diabetes med Januvia/Janumet brought in nearly $1.55 billion in sales, comprising 15% of total quarterly revenue.
Merck also updated its fiscal 2016 EPS minus items view to $3.71 to $3.78, which would be up 4.3% on a year-over-year basis. That's in line with analysts' broader views for $3.75.
IBD'S TAKE: While IBD's Ethical Drugs group ranks a lowly No. 163, out of 197 groups, the Biomed/Biotech group is No. 17 and has shown some life, as you could have learned from a recent Industry Snapshot. The feature helps investors identify potentially hot industry groups.
Meanwhile, drugmakers Eli Lilly (LLY) and Novartis (NVS) both posted Q3 sales misses. Lilly stock rose a fraction, but Novartis stock fell 3.7%.
As for Merck, its Q3 results followed a decision Monday from the U.S. Food and Drug Administration allowing two supplemental Biologics License Applications for Keytruda, Merck's lung cancer drug. The drug competes with Bristol-Myers Squibb's (BMY) Opdivo.
Keytruda can now be used as a first-line treatment for patients with metastatic nonsmall cell lung cancer (NSCLC) whose tumors have a high expression of the PD-L1 receptor. Regulators allowed Merck to include data showing Keytruda improved survival vs. chemotherapy in patients with previously-treated NSCLC with a high expression of the PD-L1 receptor.
RELATED:
Merck Topples Bristol-Myers On Lung Cancer Win
Novartis Tumbles On Q3 Sales Miss; Chemo Sales May Boost Incyte
