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Merck Q2 Revenues Grow 22 Percent

NEW YORK – Merck reported on Wednesday that revenues from its pharmaceutical division increased 22 percent due to robust sales of the checkpoint inhibitor pembrolizumab (Keytruda).

For the three months ended June 30, the Kenilworth, New Jersey-based company reported $11.40 billion in total revenues, a 22 percent increase compared to $9.35 billion in Q2 2020 and beating analysts' consensus estimate of $11.10 billion.

"Our results demonstrate that the impact of the pandemic on our business has lessened," Merck CEO Rob Davis said on a call discussing the company's Q2 financial performance. "I am confident that Keytruda will continue to be a foundational cancer therapy and achieve strong growth for years to come. We are leaders in immune-oncology and are determined to leverage that into sustained success."

The firm's pharmaceutical sales grew to $9.98 billion from $8.18 billion in Q2 2020. Among oncology drugs, pembrolizumab was the growth driver, recording sales of $4.18 billion in the quarter, up 22 percent from $3.39 billion in Q2 2020. Pembrolizumab sales grew 27 percent in ex-US markets and 15 percent in the US, where the therapy is the leader among lung cancer immunotherapeutics. Global sales of the drug reflected increasing uptake among head and neck and renal cell cancer patients.

Sales of the PARP inhibitor olaparib (Lynparza), a joint product of Merck and AstraZeneca, brought in $248 million in alliance revenues, up 39 percent from $178 million in Q2 2020. The firm credits recent approvals and expanded indications for olaparib's growth, and according to Frank Clyburn, Merck's executive VP and head of human health, the firm is anticipating another approval in adjuvant, BRCA1/2-mutated breast cancer based on the recently presented results of the Phase III OlympiA trial

Over the next eight years, between expanding the approved indications for pembrolizumab, olaparib, and other assets in its pipeline, Merck expects to more than triple the number of new indications and therapy launches in its oncology portfolio. The firm is aiming to achieve more than 90 oncology drug approvals by 2028 and more than 50 approvals by 2025. For example, as of July 27, pembrolizumab was under regulatory review in various countries for six different indications.

"We have a wide array of clinical partnerships, providing valuable insights into the biology of disease, and into important potential external innovation," Davis said. "With our expanding oncology portfolio outside of Keytruda, we will expand our leadership in cancer long into the future." Davis also expressed confidence that Merck would "successfully navigate" the eventual loss of exclusivity for pembrolizumab, which it plans to offset by pursuing a breadth of opportunity both within and outside of oncology. Pembrolizumab's key patent expiration is slated for 2028 in the US and Europe.

The company's GAAP net income for the second quarter was $1.21 billion, or $.48 per share, compared to $2.34 billion, or $.92 per share, in the prior-year quarter. The company's non-GAAP EPS was $1.31, which fell short of analysts' consensus estimate of $1.44.

The company's R&D expenditures more than doubled to $4.32 billion in Q2 2021 compared to $2.09 billion in Q2 last year. Selling, general, and administrative costs were $2.28 billion, up 9 percent from $2.09 billion in the prior year's quarter. Notably, Merck spent $1.7 million acquiring the autoimmune disease company Pandion Therapeutics in February, which primarily accounted for the decline in GAAP net income year over year.

Merck narrowed its 2021 full-year revenue guidance to between $46.4 billion and $47.4 billion, and said it is now expecting non-GAAP EPS to be higher compared to 2020 by a single-digit rate in the range of $5.47 to $5.57. The projection takes into account yet another pembrolizumab approval — this one in early-stage, high-risk triple-negative breast cancer — which the US Food and Drug Administration granted just this week based on updated results from the Keynote-522 trial.