Big Pharma Giant Merck Explodes on Earnings Beat

Shares of pharmaceutical firm Merck were heading higher after the company reported second-quarter sales of $10.9 billion this past Friday, beating Wall Street estimates. Adjusted earnings per share of $1.37 was also better than the $1.04 expected.

Sales of Merck’s blockbuster cancer drug Keytruda helped offset an 8% decline in revenue to $10.87 billion during the quarter.

The company revealed to investors that the “majority of the negative impact” hit its earnings during the quarter. Merck now expects a gradual recovery through the third quarter “with a return to normal operating levels in the fourth quarter.”

Looking ahead Merck says it expects full-year adjusted profit of $5.63 to $5.78 per share, compared with its prior forecast of $5.17 to $5.37 per share. Net income attributable to shareholders rose to $3 billion, or $1.18 per share, in the quarter, from $2.67 billion, or $1.03 per share, a year earlier.

CEO Ken Frazier said on the earnings call, “While the pandemic has brought challenges that few of us could have imagined even six months ago, it has also demonstrated the critical importance of organizations that are focused on breakthrough science. Our scientists are highly focused on this effort, and we are incredibly energized by this mission. Simply put, this is why Merck exists.

Throughout the quarter, Merck executed well both operationally in support of our existing portfolio and by advancing our innovative research program.”

“We continue to perform at a very high level without significant disruption to the production, supply and distribution of our medicines, vaccines, and animal health products or our clinical trials. As expected, social distancing measures in many regions negatively impacted second-quarter volume for many of our products. However, customer access to care is steadily improving, including in our portfolio of vaccines, which was hit particularly hard this quarter. We remain confident that our innovative portfolio will drive strong long-term growth.”

He added, “COVID-19 represents a tremendous challenge to the biopharmaceutical research community, and Merck is moving with urgency to apply our deep expertise in vaccines and infectious diseases toward potential solutions. During the quarter, we announced two vaccine development efforts, one through a collaboration with IAVI and the other through our now completed acquisition of Themis. We selected these candidates because they are based on proven platforms that we anticipate will lead to safe, effective, and broadly deployable vaccine with the promise of single dosage.”

“Both vaccine candidates will soon enter the clinic, and we have begun investing to facilitate our ability to manufacture hundreds of millions of doses. We also announced a program to develop a novel orally available antiviral candidate through a collaboration with Ridgeback Bio. This compound has advanced into Phase 2 clinical trials. We are optimistic about the prospects for these three programs, and if successful, Merck is committed to working with others to create broad, affordable, and equitable global access.”

“These programs illustrate our continued commitment to supplementing internal capabilities with innovative external science. Roger will provide more details on the significant progress being made in our research activities elsewhere. More broadly, the biopharmaceutical industry’s response to COVID-19 had been extraordinary. Our industry is uniquely positioned to address this public health challenge on a global scale,” said Frazier.

Disclaimer: We have no position in Merck & Co., Inc. (NYSE: MRK) and have not been compensated for this article.