Merck Surpasses Expectations on Keytruda Strength, Raises Full-Year Outlook

Merck reported stronger-than-expected second-quarter results on Tuesday, driven by the success of its top-selling cancer treatment Keytruda. The U.S. drugmaker saw quarterly revenue rise 5% to $16.61 billion, beating analysts' average estimate of $16.36 billion. Despite a $5.7 billion charge from its acquisition of Terns Pharmaceuticals, Merck's reported loss in the quarter was 13 cents per share.

Keytruda sales rose 5% to $8.37 billion, including $463 million from its newer subcutaneous formulation, Keytruda QLEX. This exceeded analysts' estimate of $8.07 billion. CEO Rob Davis said the loss-of-exclusivity period for Keytruda would be a 'hill rather than a cliff', with a shallow dip followed by rapid growth.

Merck's CFO Caroline Litchfield attributed stronger-than-expected QLEX uptake to double-digit adoption in the U.S., with the company aiming for 30% to 40% adoption by the end of 2027. Gardasil sales generated $1.17 billion, slightly above analyst consensus.

Merck raised its full-year revenue forecast to $66.3 billion to $67.3 billion and cut its adjusted earnings forecast to reflect large charges for acquisitions. Scotiabank analyst Louise Chen noted that Merck's products have more than $70 billion in potential sales by the mid-2030s.