Merck & Co Inc. stated a fall in third-quarter revenues and narrowed its projection for full-year performance. Meanwhile, the company said that its new cancer medicine won a breakthrough therapy designation from the FDA.
The second-largest U.S. drug maker reported a 4% drop in revenue to $10.577 billion in the third quarter from $11.032 billion a year earlier. Analysts had projected a revenue of $10.64 billion.
Net income declined to $895 million, or $0.31 earnings per share, compared to $1.12 billion last year, or $0.38 per share. Excluding restructuring costs and other items, earnings fell to $0.90 a share from $0.92.
“Last October, we launched a multi-year initiative to transform Merck and build a platform for sustained, future growth,” said CEO and chairman Kenneth Frazier. “One year later, we delivered solid third-quarter results and are making steady progress in our transformation, including divesting non-core assets, reducing our expense base and investing in our promising new product launches and pipeline.”
Last month Mercks cancer immunotherapy received the approval of the Food and Drug Administration. Merck said 900 patients were treated with the new drug within September. The company named the medicine Keytruda and it is the first approved anti-PD-1 inhibitor to be released on the market.
“Keytruda demand looks strong and obviously the breakthrough designation is a huge positive for Merck going forward,” said Tony Butler, an analyst at Guggenheim Securities LLC, cited by Bloomberg. “They’re doing a great job on the oncology front.”
Keytruda is the first medicine of a new generation of oncology treatment that uses the bodys own immune system to eradicate tumors. To focus on the further development of its cancer pipeline, Merck stopped research operations and cut jobs.
Companies like Bristol-Myers Squibb Co. and AstraZeneca Plc have also shown interest in the immunotherapy cancer treatment and will compete with Merck and others for market dominance in the area.
The company narrowed its adjusted full-year earnings per share range to between $3.46 and $3.50 from a previous projection of $3.43 to $3.53. Merck also estimated full-year revenue between $42.4 billion and $42.8 billion, a $400 million trim from the top of the prior prediction.
Merck & Co Inc. gained 1.73% on Friday and closed at $57.61. On Monday the stock fell 2.36% to trade at $56.25 at 16:07 GMT, marking a one-year increase of 20.86%. The company is valued at $166.18 billion. According to the Financial Times, the 19 analysts offering 12-month price targets for Merck & Co Inc. have a median target of $64.00, with a high estimate of $72.00 and a low estimate of $57.00. The median estimate represents a 11.09% increase from the previous close of $57.61.
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