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Merck Q3 Revenues Grow 20 Percent With Keytruda as Top Seller

NEW YORK – Merck on Thursday reported a 20 percent increase in third quarter revenues, driven in part by strong sales of its checkpoint inhibitor pembrolizumab (Keytruda) in existing and new cancer indications.

For the three months ended Sept. 30, the Kenilworth, New Jersey-based company reported $13.15 billion in revenues compared to $10.93 billion during Q3 2020, beating analysts' consensus estimate of $12.33 billion.

Merck's pharmaceutical sales were $11.50 billion, up 18 percent over $9.71 billion during the prior year's third quarter. Pembrolizumab sales rose to $4.53 billion, up 22 percent from $3.72 in Q3 2020.

Pembrolizumab "continues to demonstrate durable momentum across all key tumors [and] growth from our recent launches, including KEYNOTE-522 in neoajuvant/adjuvant triple-negative breast cancer," Frank Clyburn, Merck's president of human health, said on a call to discuss the company's Q3 performance. "[It] is continuing to expand its very strong overall iron-clad leadership, improving new and total patient market share."

The US Food and Drug Administration approved pembrolizumab as neoadjuvant and continued adjuvant treatment for high-risk, early-stage TNBC just days before the firm's second quarter ended this past summer. As such, US sales in this indication reflects the therapy's initial uptake in this patient population.

During Q3, pembrolizumab netted $2.6 billion in US sales but its use outside the US also increased by 24 percent, mostly reflecting further penetration in lung cancer, renal cell carcinoma, and head and neck cancer. Over the next four years, Clyburn said that the firm expects pembrolizumab sales will be increasingly driven by approvals in earlier lines of treatment. In the US, Merck anticipates that the drug's earlier indications will represent nearly a third of US-based pembrolizumab sales by 2025.

One pembrolizumab study in an early-stage cancer setting that Merck executives highlighted during the call is KEYNOTE-091, comparing adjuvant pembrolizumab (with or without chemo) versus placebo in stage IB/II to IIIA non-small cell lung cancer patients after surgical resection. This trial, in which patients must have tumor samples available for PD-L1 expression analysis, is slated to read out by the end of this year and Merck will publicize the results in 2022.

Beyond pembrolizumab, Merck also saw a significant uptick in sales of olaparib (Lynparza), the PARP inhibitor comarketed with AstraZeneca and sold for breast, ovarian, and other tumors harboring BRCA1/2 mutations or homologous recombination repair deficiencies. Thanks to continued use around the world, Merck's revenues for olaparib climbed to $246 million, up 25 percent from $196 million during the third quarter of 2020.

Merck's GAAP net income for the quarter was $4.57 billion, or $1.80 per share, compared to $2.32 billion, or $.92 per share, in the prior year's third quarter. Its non-GAAP EPS was $1.75, which exceeded analysts' consensus estimates of $1.55.

Merck's R&D spending was $2.45 billion this past quarter, down significantly from $3.35 billion during Q3 2020. Selling, general, and administrative costs were $2.34 billion, up slightly from $2.06 billion during Q3 2020.

The firm raised and narrowed its 2021 full-year revenue guidance to between $47.4 billion and $47.9 billion, and its non-GAAP EPS guidance to $5.65 to $5.70. After the second quarter, the company had projected full-year revenues of between $46.4 billion and $47.4 billion, and non-GAAP EPS between $5.47 to $5.57.