Merck (MRK) Stock Jumps 5% After Q1 Earnings Top Estimates

TLDR

• Merck posted an adjusted Q1 loss of $1.28/share, beating estimates of a $1.47 loss
• Worldwide sales rose 5% to $16.3 billion, ahead of the $15.8 billion Wall Street forecast
• Keytruda sales hit $8 billion, up 12%, but Gardasil dropped 22% on weak China demand
• Winrevair surged 88% to $525 million; Januvia sales fell 29% ahead of May patent expiry
• Full-year guidance raised slightly to $65.8B–$67B in sales and $5.04–$5.16 adjusted EPS

Merck reported first-quarter results Thursday that came in ahead of Wall Street expectations, sending the stock up 4.8% in premarket trading.

Merck & Co., Inc., MRK

The drugmaker posted an adjusted loss of $1.28 per share for Q1, narrower than the $1.47 loss analysts had forecast. On a reported basis, the net loss was $4.24 billion, or $1.72 per share, driven by a $3.62 per share charge tied to its $9.2 billion acquisition of Cidara Therapeutics in January.

That compares to a profit of $5.08 billion, or $2.01 per share, in the same quarter a year ago.

Worldwide sales rose 5% to $16.29 billion, beating the $15.85 billion consensus estimate from FactSet.

Keytruda, Merck’s blockbuster cancer treatment, remained the clear engine of growth. Sales reached $8 billion in the quarter, up 12%, accounting for nearly half of total revenue. That includes both traditional intravenous Keytruda and the newer subcutaneous version, Keytruda SC.

The drug has been under a microscope ahead of its U.S. patent expiry in 2028, after which lower-cost biosimilars are expected to enter the market.

CEO Robert Davis has previously described efforts to build a “patent wall” around Keytruda through new indications and combinations, with some patents running to 2029.

Gardasil Weakness Continues

Not everything is trending upward. Gardasil, Merck’s HPV vaccine, saw sales fall 22% on a foreign exchange-adjusted basis in Q1.

The drop reflects continued weakness in China, along with lower sales in Japan following the end of a national catch-up immunization program. Lower U.S. sales due to unfavorable public-sector purchasing patterns also weighed on the number.

Januvia, the diabetes drug, is losing ground even before its May patent expiry. Sales fell 29% in Q1 as generics eat into market share ahead of the formal exclusivity loss.

Winrevair Picks Up the Slack

On the brighter side, Winrevair — Merck’s treatment for pulmonary arterial hypertension — posted another strong quarter. Sales surged 88% year-over-year to $525 million.

Bridion also contributed, with sales rising 7% to $472 million, though that was partly offset by generic competition in international markets.

Merck raised its full-year guidance modestly. The company now expects worldwide sales of $65.8 billion to $67 billion, up from its prior range of $65.5 billion to $67 billion.

Adjusted earnings guidance was lifted to $5.04 to $5.16 per share, compared to the previous range of $5.00 to $5.15.

Earlier this year, Merck had flagged that full-year results would come under pressure from patent losses on Januvia and other drugs. That warning had weighed on the stock following Q4 results.

The company received FDA approval last week for a once-daily two-drug HIV-1 treatment regimen, adding another asset to its pipeline as it looks to diversify revenue ahead of the Keytruda patent cliff.

MRK was up 4.8% in premarket trading Thursday.

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