Merck Q3 results: 5% revenue growth primarily driven by oncology

Global pharmaceutical company Merck has announced its revenue has increased by 5% to $10.8bn in the third quarter (Q3) of 2018, compared to $10.3bn in Q3 2017. The growth is primarily driven by oncology.

Sales in Q3 2018 were $2bn, compared to a loss of $56m in Q3 2017 on a generally accepted accounting principles (GAAP) basis. The 2017 results were due to a loss of approximately $240m, a decline that has been attributed to Merck borrowing from the US Centre of Disease control and prevention vaccine stockpile, in addition $135m from lost revenue linked to cyber-attacks in some markets.

GAAP earnings per share rose from -$0.02 in Q3 2017 to $0.73 in Q3 2018.

The positive results were dominated by the pharmaceutical portion of the business, which saw a 5% rise in revenue from $9.16bn in Q3 2017 to $9.7bn in Q3 2018.

This was primarily driven by oncology and a significant increase in the sales of Merck’s Keytruda, which is linked to approvals for new indications and its position as the only first-line anti-programmed cell death-ligand 1 (anti-PD-1) therapy for non-small cell lung cancer (NSCLC).

Keytruda’s sales in the quarter reached $1.9bn, which represents an 80% increase from $1bn in Q3 2017.

During the quarter, Merck announced results of its Keynote-189 trial for Keytruda, which led to European Commission and US Food and Drug Administration (FDA) approval of the drug in combination with platinum chemotherapy for first line treatment of patients with metastatic nonsquamous NSCLC.

In addition, during Q3, Keytruda received a priority FDA review for a new supplementary biologics license application for NSCLC patients with tumours expressing PD-L1, the results for a Keynote-426 trial where the drug was combined with Pfizer’s axitinib to treat patients with renal cell carcinoma and positive opinion by the European Medicines Agency’s Committee for Medicinal Products for Human Use for the drug’s use in melanoma.

Merck chairman and CEO Kenneth C Frazier said: "Our focused execution is driving our operational results, with KEYTRUDA making a difference to cancer patients around the world. We are also continuing to advance our broad pipeline, including in oncology, vaccines, hospital and specialty as well as animal health."

Other parts of Merck’s oncology portfolio saw growth in the quarter. Lynparza, a PARP inhibitor, which Merck has co-developed with AstraZeneca, and tyrosine kinase inhibitor Lenvima, which is being co-developed with Eisai, both saw sales growth in the quarter with Merck’s share of Lynparza sales totalling $49m and of Lenvima being $43m.

As a result of the positive financial results for Q3 2018, Merck has increased its fourth quarter dividend from $0.48 per share to $0.55 per share. The payment will be made to shareholders in January 2019.

Frazier said: "Increasing the dividend and authorizing additional opportunistic share repurchases are driven by our commitment to a balanced capital allocation strategy and supported by our strong balance sheet and cash flow generation that provide us the flexibility to return cash to shareholders while also investing in our pipeline, innovation and growth."

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