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Merck's Keytruda Sales Grow 20 Percent in Q1 While Overall Revenues Dip 9 Percent

NEW YORK – Merck reported on Thursday that sales of its immune checkpoint inhibitor Keytruda increased 20 percent during the first quarter of 2023, reflecting continued global demand in metastatic cancer indications and earlier treatment settings including in triple-negative breast cancer.

For the three months ending March 31, Rahway, New Jersey-based Merck reported total revenues of $14.49 billion, down 9 percent from $15.90 billion in Q1 2022. The top-line figure beat analysts' average estimate of $13.78 billion. Merck's pharmaceutical business unit brought in $12.72 billion during Q1 2023, down 10 percent from $14.11 billion in the prior year's first quarter.

In a call to discuss the company's financial performance on Thursday morning, Merck CFO Caroline Litchfield attributed the bulk of Merck's pharmaceutical revenue declines to plummeting sales of the COVID-19 therapy Lagevrio (molnupiravir) as well as declining sales of its diabetes drugs. Excluding the impact of Lagevrio, Merck's overall revenues increased 11 percent.

Keytruda (pembrolizumab), the top-selling drug in Merck's pharmaceutical segment, contributed $5.80 billion to revenues, up from $4.81 billion during Q1 2022. "Keytruda maintains its leadership in non-small cell lung cancer growth, driven by uptake in metastatic renal cell carcinoma and certain types of head and neck cancer, as well as in early-stage cancers, including certain types of high-risk, early-stage triple-negative breast cancer, which continues to launch in additional markets," Litchfield said.

As Merck looks ahead with Keytruda patents set to expire toward the end of this decade, the drugmaker is continuing to expand its indications into earlier lines of treatment and inking partnerships to advance the checkpoint inhibitor in combination with other drugs.

For example, Merck is studying Keytruda with Moderna's personalized neoantigen cancer vaccine mRNA-4157/V940. In the Phase II Keynote-942 clinical trial, the combination bested Keytruda alone in high-risk melanoma patients. During the recent American Association for Cancer Research's annual meeting, Merck and Moderna presented results showing that the treatment combination reduced patients' risk of disease progression or death by 44 percent and that the benefit was consistent across key biomarker subgroups.

Merck and Moderna are gearing up for a planned Phase III trial this summer, and the drugmakers want to expand the combination into additional tumor types including non-small cell lung cancer. "We're excited to advance that in Phase III for melanoma and to see how far we can push this strategy," Dean Li, the president of Merck Research Laboratories, said during the call.

The PARP inhibitor Lynparza (olaparib), which Merck jointly develops and comarkets with AstraZeneca, brought in $275 million for Merck during Q1 2023, up 3 percent from $266 million in the prior year's first quarter.

"Lynparza remains the leading PARP inhibitor as … revenues grew primarily due to increased demand in key European markets," Litchfield said. The US Food and Drug Administration's Oncologic Drugs Advisory Committee (ODAC) is scheduled to convene on April 28, to discuss a supplemental new drug application that Merck and AstraZeneca have submitted seeking approval for Lynparza plus Janssen's anti-androgen therapy Zytiga (abiraterone acetate) in metastatic castration-resistant prostate cancer combined with hormone therapy. They've submitted data from the Phase III PROpel trial. There has been disagreement in the field, however, whether this drug combination has benefit in the all-comers population that Merck is seeking approval in or if treatment should be limited to patients whose cancers harbor mutations in homologous recombination repair (HRR) genes. 

"We look forward to the discussion regarding the PROpel study," Li said.

Merck posted net income of $2.82 billion, or $1.11 per share, in Q1 2023, versus $4.31 billion, or $1.70 per share in Q1 2022. Non-GAAP EPS was $1.40 for the quarter, which beat the Wall Street average estimate of $1.32.

Merck spent $4.28 billion on R&D during the quarter, which was up 66 percent from $2.58 billion in Q1 2022. The drugmaker spent $2.48 billion on selling, general, and administrative expenses in Q1 2023, up 7 percent from $2.32 billion in Q1 2022.

Previously, Merck had said it is expecting to bring in sales in the range of $57.2 billion to $58.7 billion, and to report EPS in the range of $5.86 to $6.01. Merck updated it projections and said it is now expecting to bring in $57.7 billion to $58.9 billion in revenue during the full year, and report EPS in the range of $5.85 to $5.97. The drugmaker said its financial outlook doesn't factor in the impact from its recently announced $10.8 billion acquisition of immunology-focused precision medicine company Prometheus Biosciences, which is expected to close during Q3 2023.