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

By Michael Erman

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 an adjusted loss per share of 27 cents.

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.

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

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 another separate ‌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 now expects 2026 adjusted earnings of $2.66 ⁠to $2.76 per share compared to its previous ‌expectation between $5.04 and $5.16. The cut ​includes charges of $3.62 per share for the acquisition of Cidara and $2.31 per share for the acquisition of Terns.

(Reporting by Michael Erman in New Jersey; Editing by Bill Berkrot and ‌Pooja Desai)

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