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Merck Keytruda sales soar, but European application pulled
October 27, 2017 / 11:03 AM / 24 days ago

Merck Keytruda sales soar, but European application pulled

(Reuters) - Merck & Co (MRK.N) on Friday said quarterly sales of its Keytruda cancer immunotherapy exceeded $1 billion for the first time, but it withdrew an application for European use of the drug in lung cancer, raising questions about future sales.

The logo of Merck is pictured in this illustration photograph in Cardiff, California April 26, 2016. REUTERS/Mike Blake/Illustration/File Photo

Merck’s shares, which fell 6 percent to close at $58.24, were down another 3 percent at $56.68 after hours.

Despite a near tripling in Keytruda sales to $1.05 billion, Merck said that the cost of a June cyber attack that temporarily crippled manufacturing coupled with lower sales of off-patent products caused its third-quarter revenue to fall 2 percent to $10.33 billion.

The drugmaker said nearly one in three new lung cancer patients in the United States were starting with Keytruda and that the launch in bladder cancer was going well. Lung cancer is by far the most lucrative oncology market.

Despite approvals for numerous cancer types, “Keytruda is almost completely reliant on the performance in first-line lung cancer,” said Leerink Partners analyst Seamus Fernandez.

Late Friday Merck said it had withdrawn a European application for use of Keytruda in combination with chemotherapy as an initial treatment for nonsquamous non-small cell lung cancer (NSCLC), the most common form of the disease.

European approval had been expected next year, according to Sanford Bernstein analyst Tim Anderson.

The U.S. Food and Drug Administration granted accelerated approval to that combination May, making Keytruda the first, and so far only, immunotherapy approved for first-line lung cancer.

Merck earlier on Friday said a decision to make overall survival a main goal for a large, pivotal lung cancer trial of Keytruda plus chemotherapy would delay those results until February 2019.

Merck spokeswoman Pam Eisele said no decisions have been made about when the European application would be resubmitted, but there would be opportunities for the company to conduct interim analyses of trial data.

Merck said quarterly sales were cut by about $240 million as it had to borrow from the U.S. Centers for Disease Control and Prevention’s stockpile doses of its Gardasil vaccine to prevent cancer caused by the human papillomavirus.

Revenue fell by about $135 million from lost sales and there was another $175 million in costs related to the NotPetya cyber attack. The company expects a similar impact in the fourth quarter.

Merck’s Zostavax shingles prevention vaccine is also about to face potentially withering competition from GlaxoSmithKline’s (GSK.L) just-approved Shingrix, which appears to maintain efficacy far longer. Zostavax sales rose 23 percent to $234 million.

Merck cautioned that its Januvia diabetes drug would face continued pricing pressure. It along with the related Janumet saw sales fall 2 percent to $1.52 billion.

The company’s recently off-patent cholesterol medicines Zetia and Vytorin saw sales cut in half at $462 million.

“They need to identify other growth drivers for the business,” said Fernandez, noting other areas under pressure, such at intense competition for the hepatitis C franchise.

Chief Executive Ken Frazier said business development was an important priority, but that he would prefer bolt-on deals to enhance innovation rather than a major acquisition.

Merck’s animal health business reached $1 billion in quarterly sales for the first time.

“We see animal health as a pillar of growth for the company,” Frazier said.

Merck now expects full-year adjusted earnings of $3.91 to $3.97 per share, above Wall Street estimates of $3.87, according to Thomson Reuters data. It previously forecast earnings of $3.76 to $3.88.

Due to a $2.35 billion charge related to its collaboration with AstraZeneca Plc (AZN.L), Merck posted a third-quarter net loss of $56 million.

Excluding items, the company earned $1.11 per share, beating analysts’ average estimates by 8 cents, with help from cost controls.

Reporting by Bill Berkrot in New York and Manas Mishra in Bengaluru; additional reporting by Deena Beasley; Editing by Phil Berlowitz and Diane Craft

Our Standards:The Thomson Reuters Trust Principles.
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