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Merck Rises on Outlook for Billions in Covid Antiviral Sales

(Bloomberg) — Merck & Co.’s closely watched Covid-19 antiviral molnupiravir could bring in as much as $7 billion in global sales through 2022, according to the drugmaker.

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The figure includes up to $1 billion in revenue this year if the experimental drug is authorized in December, Chief Financial Officer Caroline Litchfield said early Thursday on a conference call. She projected at least $5 billion in sales by the end of next year, provided it’s cleared.

Merck rose as much as 5.4% to $85.96 as of 11:12 a.m. in New York, its highest intraday price since January 2020.

Molnupiravir has become one of the most highly anticipated coronavirus medications, as the pill is relatively cheap to make and easy to transport. Merck has taken steps to make sure that it will be distributed widely, including in low-income countries.

The drug could prove a boost to Merck results at a time that pandemic-related slowdowns in medical care have taken a bite out of sales.

“There are now signs of recovery here, and Merck has the added bonus, in the near-term at least, from its oral Covid-19 therapy, molnupiravir,” Bloomberg Intelligence analyst Sam Fazeli said in a note.

In the longer term, Merck will continue to grapple with financial reliance on the blockbuster cancer drug Keytruda, which could face competition in the coming years, Fazeli said. Merck is also diversifying with the $11.5 billion purchase of rare-disease drugmaker Acceleron Pharma Inc., announced earlier this fall.

The drugmaker raised its annual forecast as it reported quarterly profit and revenue that beat Wall Street’s expectations. Adjusted earnings for the year will be $5.65 to $5.70 a share, up from the earlier guidance of $5.47 to $5.57, the drugmaker said in a statement. Revenue will be $47.4 billion to $47.9 billion, compared with the earlier guidance that topped out at $47.4 billion. The projections don’t include potential molnupiravir sales.

Quarterly adjusted earnings were $1.75 a share, beating analysts’ average estimate by 20 cents, and revenue was $13.2 billion, compared with Wall Street expectations of $12.3 billion.

Merck and partner Ridgeback Biotherapeutics LP are seeking U.S. authorization of molnupiravir, their Covid antiviral. Merck said it plans to make at least 20 million treatment courses of the drug next year, on top of 10 million it expects to make by the end of 2021.

Potential Upside

The 20 million courses for next year reflects only Merck’s production and doesn’t include manufacturing by partners, so “global production will be significantly more next year,” said Chief Executive Officer Rob Davis.

Molnupiravir is also being studied as a prophylactic treatment following exposure. If that’s successful, Merck could see upside to its estimates, Frank Clyburn, president of human health, said on the call.

The drug could also be used down the road more broadly for prophylaxis, or prevention before an exposure occurs, though “that has yet to be proven,” said Dean Li, president of Merck Research Laboratories, in an interview.

The antiviral may become one of Merck’s leading products. Blockbuster cancer drug Keytruda brought in more than $14 billion in sales last year, followed by the diabetes drug Januvia with around $5 billion and nearly $4 billion for HPV vaccine Gardasil.

Vaccine Revenue

Merck said vaccine revenue contributed to the third-quarter results. However, sales of its pneumococcal vaccine, Pneumovax 23, declined nearly 30%, “primarily driven by lower demand in the United States reflecting prioritization of the Covid-19 vaccine.”

Sales of the papillomavirus vaccine Gardasil were $1.99 billion, topping estimates. Sales of blockbuster cancer drug Keytruda and the diabetes medications Januvia and Janumet also beat Wall Street projections. Animal health sales were $1.42 billion, in line with expectations.

While wellness visits and surgical procedures have recovered in the U.S., pandemic-related interruptions to medical care continue to affect cancer screenings and diagnoses, hampering new patients starting on treatment, Clyburn said.

Gardasil sales were boosted by about 68% year-over-year thanks to U.S. Centers for Disease Control and Prevention purchases, and despite “a below normal back-to-school season,” he said.

(Updates with research executive’s comments in second section.)

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