Merck posted yet another strong quarter on the back of its cancer therapy Keytruda, in what’s becoming almost a routine event for the New Jersey drugmaker.
“New quarter, same Merck outperformance,” BMO Capital Markets analyst Evan David Seigerman wrote in a note to clients after Merck released first-quarter results Thursday.
Among US drugmakers, Merck has been one of the better performers in the last half-decade, even as it prepares for Keytruda’s key patent expiry in 2028. It has invested in areas beyond oncology through its $10.8 billion purchase of immunology drug developer Prometheus last year. But a key part of the post-Keytruda strategy is more Keytruda, through a subcutaneous version of the drug that’s expected to extend the franchise.
On a call with investors Thursday, CEO Rob Davis said the patent expiries many drugmakers face later this decade will be “more of a hill than a cliff,” and he promised the company would “come back with fast growth after that.”
Dean LiMerck has suggested that it might do more deals. But there was limited focus on dealmaking Thursday, with Merck’s executives leaning into its internal pipeline. That included some flirtation with the obesity space — a conversation that’s come up on almost every pharma earnings call.
Merck’s head of research, Dean Li, suggested that the company is more likely interested in a next wave of obesity-related treatments that target specific subpopulations, or address underlying causes of obesity-related diseases, rather than jumping into the crowded GLP-1 field.
“It may not be that the same molecule is the best molecule that wins out in each of those subpopulations,” he said. “We wonder if there’s opportunity there.”
According to one of the slides shared by the executive team, investment in internal R&D remains the top priority. And it plans to “aggressively” advance the TL1A drug it obtained in the Prometheus deal.
Separately, Merck said it would end a Phase 2 pulmonary arterial hypertension (PAH) program for its experimental drug MK-5475, focusing the compound instead on chronic obstructive pulmonary disease (COPD).
Much of the lab work will be funded by Keytruda’s success. Sales of the cancer drug were up a staggering 20% compared to a year prior, to $6.95 billion.
Its performance was in sharp contrast to Bristol Myers Squibb’s rival immunotherapy drug, Opdivo, the sales of which were down 6% (Bristol Myers blamed inventory and order timing issues).
In addition to the long-running competition between Keytruda and Opdivo, the companies continue to compete in oncology. Bristol Myers has bought its way into a commercial KRAS asset, through its $4.8 billion purchase of Mirati — though the drug only brought in $21 million in sales last quarter. Meanwhile, Merck is advancing its KRAS-targeting drug, MK-1084, into a Phase 3 trial.
Li called the program one of his “more favorite projects,” noting the prominence of KRAS mutations in non-small cell lung cancer, where Merck has a strong presence through Keytruda.
Merck shares were up roughly 3% Thursday morning.