Merck posts better-than-expected second-quarter results on Keytruda strength

By Michael Erman and Christy Santhosh

Aug 4 (Reuters) - ‌Merck reported higher-than-expected second-quarter ​sales on ​Tuesday and raised its full-year revenue forecast on the strength of its top-selling cancer treatment Keytruda.

The U.S. drugmaker reported quarterly revenue of $16.61 billion, up 5% from a year earlier and above analysts' average estimate ‌of $16.36 billion, according to LSEG data.

Merck reported a loss for the quarter due to a $5.7 billion ⁠charge from its acquisition of cancer drug developer Terns Pharmaceuticals.

The company's reported loss in the quarter was 13 cents per share, including the $2.31 per ‌share charge from the deal. Analysts had ‌expected a larger adjusted loss per share of 27 cents, and Merck shares rose 0.6% to $128.54 in early trading.

Sales of immunotherapy Keytruda, the world's top-selling prescription medicine, rose 5% to $8.37 billion in the quarter, including $463 million from its ​newer subcutaneous formulation, Keytruda QLEX. That exceeded analysts' estimate of $8.07 billion.

CEO Rob Davis said the loss-of-exclusivity period for Keytruda would be "more of a hill than a cliff," with a shallow dip followed by a rapid return to growth.

Keytruda is ⁠set to lose key patent protections starting in 2028, exposing the company to competition from potentially less expensive biosimilar versions of the drug, although other drugmakers have ​maintained large market shares when faced with biosimilars.

Stronger-than-expected QLEX uptake contributed to the Keytruda beat, Chief Financial Officer Caroline Litchfield said in an interview.

"We're at double-digit of QLEX as a portion ​of the total business in the United States, and we are ‌very much on a path that takes us to the 30% to 40% adoption by the end of 2027," she said.

Gardasil, Merck's cancer-preventing HPV vaccine, generated sales of $1.17 billion, slightly above ⁠the $1.15 billion analyst consensus.

Sales of its measles, mumps, rubella and chickenpox vaccines fell 3% to $592 million in the quarter, below analysts' estimates of $608 million. The company said the decline was due primarily to lower U.S. demand.

"The data that we access suggest that the overall vaccines market ⁠in the United States has declined," Litchfield said, adding that the mix of vaccines the company makes is faring quite well within that ​declining market.

Animal health sales rose 8% to $1.78 billion, slightly ahead of Wall Street projections of $1.75 billion.

Separately, Merck said its experimental drug, tulisokibart, met the main goal in a mid-stage trial for hidradenitis suppurativa, an inflammatory skin condition, but failed in another trial involving patients with a ‌type of lung disease.

Merck raised its 2026 revenue forecast to $66.3 billion to $67.3 billion, from a previous range of $65.8 billion to $67.0 billion. The midpoint is slightly above the LSEG consensus forecast ‌of about $66.8 billion.

The company cut its 2026 adjusted earnings forecast to $2.66 to $2.76 per share from its previous view of $5.04 to $5.16 to reflect large ⁠charges for the acquisitions of Cidara and Terns.

Merck's ‌outlook is becoming clearer ahead of ​Keytruda's biosimilar competition, with more than $70 billion in potential sales from its products by the mid-2030s, said Scotiabank analyst Louise Chen.

(Reporting by Michael Erman in New Jersey and Christy Santhosh in Bengaluru; Editing by ‌Bill Berkrot)

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