Merck 2017 forecast eases concerns over royalty payments, dollar Express News
Merck & Co Inc (MRK.N) reported better-than-expected U.S. quarterly sales for its key cancer drug, Keytruda, and forecast largely in-line 2017 results, which some analysts said allayed concerns over the impact of a strong dollar and royalty payments.
Shares of the company, which posted fourth-quarter sales that narrowly missed estimates, were up marginally at $62.25 in premarket trading on Thursday.
U.S. sales of Keytruda picked up substantially, likely benefiting from the U.S. Food and Drug Administration’s approval in October for use as an initial therapy for lung cancer.
Bristol-Myers Squibb & Co (BMY.N), which was the first to market potentially game-changing drugs that spur the immune system to fight cancer, was long perceived as the industry leader in immuno-oncology, with Merck hot on its heels and AstraZeneca Plc (AZN.L) and Roche Holding AG (ROG.S) playing catch-up.
That changed in August, when Bristol’s Opdivo failed as a monotherapy against first-line lung cancer, where Merck’s Keytruda succeeded, resetting the immuno-oncology pecking order.
Merck is now set to cement its lead over Bristol-Myers after the company announced last month that it had filed for a speedy U.S. approval of Keytruda in combination with chemotherapy for first-line lung cancer.
Merck said on Thursday it expected 2017 adjusted earnings in the range of $3.72 to $3.87 per share on revenue of $38.6 billion-$40.1 billion.
Analysts on average were expecting an adjusted profit of $3.85 per share and revenue of $40.04 billion.
Credit Suisse analysts called the guidance reassuring, given concerns related to currency movements, higher operating expenses and new Keytruda royalty payments.
Last month, Merck agreed to pay Bristol and Japan’s Ono Pharmaceutical Co Ltd (4528.T) an initial payment of $625 million, and a 6.5 percent royalty rate on Keytruda sales from January 2017 to December 2023, and a lower rate for the subsequent three years, to resolve all patent-infringement litigation. Merck ‘s fourth-quarter revenue narrowly missed Wall Street expectations, hurt largely by lower-than-expected sales of its diabetes medicines.
The sales miss was also driven by generic competition for its cholesterol treatment, Zetia, and biosimilar competition for its autoimmune treatment, Remicade, in Europe.
Analysts on average had expected sales of $10.22 billion.
Excluding items, Merck earned 89 cents per share, in line with Thomson Reuters I/B/E/S estimates.
(Reporting by Natalie Grover; Editing by Sriraj Kalluvila)