Lower sales for multiple medicines and a whopping charge for a big cancer drug collaboration drove Merck & Co. to a third-quarter loss of $56 million, but it still beat the muted expectations of Wall Street.
The Kenilworth, New Jersey, company noted that a June cyberattack that shut down some factories temporarily cost it $310 million due to lost sales and recovery expenses, and it expects a similar impact this quarter. The maker of Type 2 diabetes drugs Januvia and Janumet still raised its financial outlook for the year, but its shares fell $2.43, or 3.9 percent, to $59.56 in morning trading.
Merck on Friday reported a loss of 2 cents per share, after posting a profit of $2.18 billion, or 78 cents per share, in 2016’s third quarter.
Adjusted for non-recurring costs, earnings amounted to $1.11 per share, 8 cents better than industry analysts expected.
The latest results included a one-time charge of $2.35 billion for a new partnership with Britain’s AstraZeneca PLC to market their existing cancer drugs and develop new ones.
Merck’s key medicine portfolio revolves around Keytruda, an immuno-oncology drug approved for treating lung, skin and other cancers that works by enabling the immune system to better spot and kill cancer cells. Merck will now help sell AstraZeneca’s Lynparza, a drug approved for treating ovarian and fallopian tube cancer that works differently and should improve results when combined with Keytruda. The companies will test those drugs and AstraZeneca’s experimental drug selumetinib against various cancer types, and Merck plans to boost research spending in the field next year.
“This was a solid quarter for Merck,” Edward Jones analyst Ashtyn Evans wrote to investors, adding that she believes Merck will ” be a dominate player” in immuno-oncology over the long term.
Merck reported revenue of $10.33 billion in the quarter, down 2 percent.
Keytruda sales nearly tripled versus a year earlier, hitting $1.05 billion, and quarterly sales of veterinary medicines such as flea and tick killer Bravecto likewise topped $1 billion for the first time.
Sales of hepatitis C-curing Zepatier jumped 185 percent to $468 million, but Merck said increasing competition and fewer patients getting treated will hurt start reducing that revenue.
But pricing pressure pushed sales of Januvia and Janumet down 2 percent to $1.53 billion, and sales of the Gardasil vaccine against cancer-causing human papilloma virus dropped 22 percent to $675 million, mainly from the cyberattack. Recent generic competition to former blockbuster cholesterol drugs Zetia and Vytorin halved their sales, to a combined $462 million.
Merck said it now expects full-year earnings in the range of $1.78 to $1.84 including one-time items, up from its prior forecast of $1.60 to $1.72 per share. It expects revenue in the range of $40 billion to $40.5 billion, up from $39.4 billion to $40.4 billion.