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Merck Q1 Revenues Increase 50 Percent Driven by Keytruda

NEW YORK – Merck on Thursday reported a 50 percent revenue increase during the first quarter of 2022, driven in large part by Keytruda (pembrolizumab).

"Our oncology business is benefiting from the continued rollout of new and important indications, including in earlier lines of therapy," Merck CEO Rob Davis said on a conference call to discuss the firm's Q1 financial results.

For the three months ending March 31, the Kenilworth, New Jersey-based company reported $15.90 billion in revenues compared to $10.63 billion in the prior year's first quarter, beating analysts' consensus estimate of $14.68 billion.

Merck's pharmaceuticals unit brought in $14.11 billion, up 53 percent from $9.24 billion in Q1 2021. Revenues for Merck's blockbuster checkpoint inhibitor Keytruda were $4.81 billion, up 23 percent from $3.90 billion in the year-ago quarter.

The anti-PD-1 agent was approved by the US Food and Drug Administration last month for advanced, previously treated endometrial cancer patients whose tumors express high microsatellite instability (MSI) or harbor DNA mismatch repair deficiencies (dMMR).

Sales of the PARP inhibitor Lynparza (olaparib), which Merck co-owns with AstraZeneca, also increased. Merck recorded revenues of $266 million for Lynparza in Q1 2022, up 17 percent from $228 million in Q1 2021.

According to Dean Li, president of Merck's Research Laboratories, a big part of Merck's growth strategy with Keytruda involves expanding the agent's approvals into earlier disease stages. As of now, the agent has five early-stage FDA approvals.

The firm is also pushing Lynparza into earlier-line treatment settings, and in March, the FDA approved the PARP inhibitor as an adjuvant treatment for early-stage breast cancer patients harboring germline BRCA1/2 mutations.

Merck CFO Caroline Litchfield expressed optimism during the call that Lynparza will be able to "reach a broad prostate cancer population based on the PROpel study." Merck presented results from that study in February suggesting a benefit in frontline, metastatic castration-resistant prostate cancer, though questions linger regarding whether biomarker-defined patient populations drove most of the benefit.

Outside of the US, "we continue to deliver on our regulatory strategy," Li said. Indeed, this past quarter, the firm received several positive opinions from the European Medicines Agency's Committee for Medical Products for Human Use (CHMP), including for Keytruda in certain MSI-high cancers and early-stage breast cancers.

Merck's GAAP net income for the quarter was $4.31 billion, or $1.70 per share, compared to $2.75 billion, or $1.08 per share (not including income from discontinued operations), in Q1 2021. The firm's non-GAAP EPS was $2.14, which exceeded analysts' consensus estimate of $1.83.

The firm's R&D spending was $2.58 billion in the first quarter of 2022, up 7 percent from $2.41 billion during the same period last year. Selling, general, and administrative costs were $2.32 billion, up 6 percent from $2.19 billion in Q1 2021.

Merck raised and narrowed its 2022 full-year revenue guidance to between $56.9 billion and $58.1 billion, reflecting full-year growth between 17 percent and 19 percent. Previously the company had guided to between $56.1 billion and $57.6 billion. The firm is now expecting non-GAAP EPS in the range of $7.24 and $7.36 for full-year 2022 compared to previous guidance of non-GAAP EPS in the range of $7.12 and $7.27.