Earnings Preview: Merck report to detail new drugs
TRENTON, N.J. (AP) — Merck & Co., the world's third-biggest drugmaker by revenue, will focus on key sales trends and plans to seek approval of numerous experimental drugs when it reports fourth-quarter results before the stock market opens Friday.
WHAT TO WATCH FOR: CEO Kenneth Frazier will discuss how sales are doing in high-growth markets, particularly Japan and China, and for Merck's top medicines, such as the Januvia franchise of Type 2 diabetes pills. Those sales are crucial as Merck tries to make up for revenue lost since its top-selling drug, Singulair for asthma and allergies, got U.S. generic competition.
Frazier will discuss performance of Merck's animal health and consumer healthcare businesses, likely noting the latter just got approval to sell a nonprescription version of the overactive bladder patch Oxytrol. And he'll likely discuss continuing efforts to manage costs, as Merck, based in Whitehouse Station, N.J., provides its first financial forecast for 2013.
Much of Merck's report, however, will focus on medicines on the horizon or still in patient testing.
This year, Merck plans to apply for approval to sell six new medicines, including odanacatib, which could be the first drug in a new class of osteoporosis medicines, and vorapaxar, an anticlotting drug for preventing heart attacks and strokes. The others are a fertility treatment called Elonva, a drug for grass allergies, one for pollen allergies and an improved version of Gardasil, Merck's blockbuster vaccine against sexually transmitted cancers caused by human papilloma virus, that protects against more virus strains.
That's quite a surge right after Merck applied for approval of several other drugs. Those include applications filed last year in the U.S. for suvorexant, a new type of insomnia drug meant to limit morning grogginess, and in the EU for vintafolide, for treating non-small cell lung cancer.
Earlier this month, Merck said the Food and Drug Administration has begun reviewing two other medicines the agency previously rejected. Merck has submitted additional information FDA required about them and reapplied for approval.
One drug is a combination cholesterol-lowering pill containing Merck's Zetia and a generic version of Pfizer Inc.'s now-generic Lipitor, the top-selling drug of all time. They fight high cholesterol in two ways to cut heart attack and stroke risk. The other is sugammadex, for reversing anesthesia effects after surgery. It's already on sale in some other countries as the brand Bridion.
Merck executives should briefly mention a bigger setback. Earlier this month, the company said it would stop selling cholesterol drug Tredaptive in dozens of foreign countries — just a couple weeks after deciding not to seek U.S. approval for it. Both moves came because a huge, four-year study found that adding the niacin-based drug to standard cholesterol treatment — widely used statins such as Lipitor — did not lower the risk of heart attack or stroke. Worse yet, study participants getting Tredaptive were more likely to suffer nonfatal but serious side effects such as infections and respiratory problems.
The company also withdrew its application for European Union approval of a sarcoma drug already rejected by the FDA, ridaforolimus. It's still in testing for breast and lung cancer.
Meanwhile, Merck's promising drug to slow progression of Alzheimer's disease, a drug known as MK-8931 in a new class called BACE inhibitors, has begun a mid-stage patient test. If it goes well, it will quickly shift into a much bigger late-stage study.
Two other experimental drugs are now in mid-stage patient testing, one for advanced melanoma and one a once-a-week version of Januvia. And a biologic drug for psoriasis is in late-stage patient testing.
WHY IT MATTERS: Merck's Singulair had been the world's 11th-best-selling drug, generating annual sales of $5.5 billion, or more than 10 percent of company revenue. Sales nosedived after it got U.S. generic competition in early August.
Merck needs to replace that lost revenue by getting new drugs approved and by wringing additional sales out of its key medicines. Besides Januvia and related combination pills, those products include Gardasil, shingles vaccine Zostavax, HIV drug Isentress and new hepatitis C drug Victrelis.
WHAT'S EXPECTED: Analysts polled by FactSet, on average, expect earnings per share of 81 cents on revenue of $11.47 billion.
LAST YEAR'S QUARTER: Merck reported profit of $1.51 billion, or 49 cents per share, on revenue of $12.29 billion.
Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma