By Michael Erman and Kamal Choudhury
NEW YORK, Oct 29 (Reuters) - Merck said on Thursday it plans to raise its revenue forecast from new products over the next decade, buoyed by recent clinical trial successes and acquisitions, as the company prepares for the loss of patent protection on blockbuster cancer drug Keytruda.
Merck CEO Robert Davis said its January forecast of $70 billion by the mid-2030s for its emerging portfolio of new medicines had not factored in the potential impact of positive clinical
trial readouts and some other new assets, such as its Terns Pharma deal and an experimental PD-1/VEGF bispecific antibody drug.
"What we've seen so far gives me great confidence and increased confidence in that $70 billion. And as such, as we've indicated, we expect now to be raising that number," Davis said on a call to discuss the company's results and outlook.
Merck shares were up more than 4% in midday trading.
Davis pointed to the potential for wide use of experimental cancer treatment sacituzumab tirumotecan, or sac-TMT, as well as stronger prospects for personalized mRNA cancer vaccine intismeran, developed with Moderna, after late-stage data showed it cut the risk of melanoma death or recurrence by 42% in combination with Keytruda.
Merck shares rose 12% in August when the companies announced the trial's success without the actual data.
"As we look across the portfolio, I feel very good about where we are and our ability to navigate the Keytruda LOE," Davis said, referring to the loss of exclusivity for Merck's biggest-selling medicine.
The bullish long-term view accompanied third-quarter results that beat Wall Street estimates on strong demand for Keytruda, pulmonary arterial hypertension drug Winrevair, and HPV vaccine Gardasil.
Merck posted third-quarter revenue of $18.1 billion and adjusted earnings of $2.49 per share, both topping Wall Street estimates, according to LSEG data.
About $550 million of quarterly sales were driven by favorable purchase and inventory timing in the US for Keytruda, Gardasil and Winrevair, which Merck expects will largely unwind over the fourth quarter and 2027.
Sales of immunotherapy Keytruda — until recently the world's best-selling drug — rose 6% from the year-ago quarter to $8.6 billion, beating estimates of $8.0 billion. That included $830 million from Keytruda QLEX, the newly approved subcutaneous formulation.
Sales of Gardasil, which prevents cancers linked to the human papillomavirus, rose 14% to just under $2 billion, assisted by early purchases from the US Centers for Disease Control and Prevention. Winrevair sales surged 94% to $694 million, exceeding expectations of $645 million.
Merck raised the low end of its full-year revenue forecast, and now expects between $66.8 billion and $67.3 billion. It lifted its adjusted profit forecast to $2.77 to $2.82 per share.
Looking to 2027, the company said it expects "moderate top-line growth," as gains from newer drugs and animal health are partially offset by a more than $2 billion hit from generic competition and patent expirations on older products.
The drugmaker also said it expects Keytruda's growth to moderate as it approaches peak revenue for certain of its many approved uses.
Merck has spent billions on acquisitions in an effort to become less dependent on Keytruda before it begins losing US patent protections in 2028.
Cantor analyst Carter Gould said investors remain focused on Merck's "incremental pipeline updates," particularly trial timelines for sac-TMT and the next data set for the mRNA cancer vaccine.
(Reporting by Michael Erman and Kamal Choudhury; Editing by Bill Berkrot)
