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Keytruda Sales Grow 17 Percent in Q3 as Merck Tees Up Combination Therapy Strategy


NEW YORK – Merck aims to develop new targeted therapy combinations, building on a pipeline of antibody drug conjugates acquired in a new alliance with Daiichi Sankyo.

On a conference call Thursday morning to discuss the company's third quarter financial results, Dean Li, president of Merck Research Laboratories, said that the ADC candidates acquired in the partnership with Daiichi Sankyo complement its collaboration with Kelun-Biotech around development of the TROP2-targeted ADC MK-2870. Li noted that combinations will be an important part of the firm's development strategy for ADCs.

For example, based on recent Phase II data presented at the European Society for Medical Oncology Congress, showing a 36.8 percent objective response rate with MK-2870 in previously treated metastatic hormone receptor-positive, HER2-negative breast cancer and other studies in lung cancer, Merck plans to advance the drug in non-small cell lung cancer followed by additional tumor types. Those studies will include clinical trials of MK-2870 with Keytruda (pembrolizumab) in patients with advanced solid tumors and MK-2870 versus chemotherapy in patients with advanced non-small cell lung cancer bearing EGFR or other genomic alterations. "The data we have shown with our partner, Kelun, is that there is room to be able to advance MK-2870 in a variety of tumors and that they are combinable, tolerable, and will be effective," Li said.

The ADC programs acquired from Daiichi Sankyo include HER3-targeted patritumab deruxtecan, which is in Phase III studies for EGFR-mutated non-small cell lung cancer, B7H3-targeted ifinatamab deruxtecan, and CDH6-targeted raludotatug deruxtecan. On the call, Merck CEO Rob Davis said, "We believe each has multibillion-dollar commercial revenue potential for Merck."

For the three months ending Sept. 30, Rahway, New Jersey-based Merck reported total sales of $15.96 billion, up 7 percent from $14.96 billion in Q3 2022. The top-line figure beat analysts' average estimate of $14.44 billion. Merck's pharmaceutical business unit brought in $14.26 billion during Q3 2023, up 10 percent from $12.96 billion in the prior year's third quarter.

Merck CFO Caroline Litchfield attributed Merck's pharmaceutical growth to strong demand across its portfolio. Excluding the impact of declining sales of the COVID-19 therapy Lagevrio (molnupiravir) and foreign exchange, Merck's overall revenues increased 8 percent.

Merck reported on Thursday that sales of Keytruda, the top-selling drug in Merck's pharmaceutical segment, increased 17 percent year over year to $6.34 billion from $5.43 billion during Q3 2022. "In the US, Keytruda growth was driven by increased utilization in both metastatic indications and earlier-stage cancers, such as triple-negative breast cancer," Litchfield said. "Uptake in the earliest stages of non-small cell lung cancer remains strong, and Keytruda has now achieved brand leadership in this setting, reflecting the significant impact it is having as adjuvant treatment for patients with stage Ib to IIIa disease."

Continuing that trend, Keytruda was recently approved in neoadjuvant and adjuvant resectable non-small cell lung cancer based on results from the all-comers KEYNOTE-671 trial. Li called the approval a "watershed moment for the field" and predicted a "push by the American Cancer Society, NCCN, NCI, and NIH to simplify and broaden [lung cancer screening guidelines]," due to the "inexorable march of [immuno-oncology] into earlier-stage lung cancer."

Outside the US, Litchfield said growth in Keytruda sales was driven by uptake in early-stage cancers including high-risk, early-stage triple-negative breast cancer and renal cell carcinoma, as well as increased demand in metastatic renal cell carcinoma and head and neck cancer.

The PARP inhibitor Lynparza (olaparib), which Merck jointly develops and comarkets with AstraZeneca, brought in $299 million for Merck during Q3 2023, up 5 percent from $284 million in the prior year's third quarter.

Merck posted net income of $4.75 billion, or $1.86 per share, in Q3 2023, versus $3.25 billion, or $1.28 per share, in Q3 2022. Non-GAAP EPS was $2.13 for the quarter, which beat the Wall Street average estimate of $1.84.

Merck spent $3.31 billion on R&D during the quarter compared to $4.40 billion in Q3 2022. The drugmaker spent $2.52 billion on selling, general, and administrative expenses in Q3 2023, unchanged from Q3 2023.

Merck also updated it guidance for the year, raising its revenue projections to a range of $59.7 billion to $60.2 billion, up from a previous range of $58.6 billion to $59.6 billion. Its non-GAAP EPS forecast, however, dropped to a range of $1.33 to $1.38 from prior guidance of $2.95 to $3.05. It cited a range of negative impacts that would cut into its non-GAAP profit including a negative impact of 6 percent from foreign currency exchange, as well as an expected $5.5 billion, or $1.70 per share, charge tied to its collaboration agreement with Daiichi Sankyo.