By Ransdell Pierson
Feb 5 Merck & Co Inc's quarterly profit
and sales just missed expectations as its medicines faced
competition from cheaper generics, but the company announced
potentially lucrative new cancer-drug partnerships with rival
For the full year, Merck expected to earn $3.35 to $3.53 per
share, excluding special items. The average analyst estimate was
$3.48 per share.
"Overall, I view this guidance as 'good enough,' given
fairly widespread Street concerns about a 'mega-miss,'" ISI
Group analyst Mark Schoenebaum said, adding that investors
remain more focused on prospects for the company's array of
Separately on Wednesday, Merck said it plans to test its
closely followed immuno-oncology drug MK-3475, in combination
with medicines being developed by Pfizer Inc, Amgen Inc
and Incyte Corp. Financial terms of the deals
were not disclosed.
Merck shares were up 0.3 percent in midday trading on the
New York Stock Exchange, after rising as much as 3.1 percent
earlier on Wednesday.
Schoenebaum said investors were enthused about the planned
new studies of MK-3475, a so-called PD-1 inhibitor that works by
harnessing the immune system to find and destroy cancer cells.
Industry analysts believe the medicine, if approved, could
generate annual sales of $2 billion or more and greatly improve
treatment of melanoma and potentially other cancers. They also
believe such immuno-oncology drugs may have special promise if
used in combination with each other.
The second-biggest U.S. drugmaker said on Wednesday it
earned $781 million, or 26 cents per share, in the fourth
quarter. That compared with $908 million, or 30 cents per share,
in the year-earlier period.
Excluding special items, Merck earned 88 cents per share.
The average analyst forecast was 89 cents per share, according
to Thomson Reuters I/B/E/S.
Revenue fell 4 percent to $11.32 billion. Wall Street was
expecting $11.36 billion.
Merck shares rose 22 percent in 2013, underperforming a 27
percent average gain for other large U.S. and European
drugmakers, amid waning sales of its Januvia diabetes medicines
and uncertainty about its drug pipeline.
The company is hoping that MK-3475 and other drugs will be
approved and revive sales and earnings growth, following
failures or setbacks over the past five years for its treatments
for heart disease, osteoporosis and other diseases.
Sales of Januvia, Merck's biggest product, fell 1 percent to
$1.12 billion in the fourth quarter, while sales of a related
combination medicine called Janumet rose 11 percent to $503
million. Double-digit sales gains were seen for arthritis
treatment Remicade and HIV treatment Isentress.
But sales of asthma drug, Singulair, now facing generics,
tumbled 38 percent to $298 million.
Sales of the company's animal health products, which usually
prop up results, slipped 3 percent to $871 million in the
quarter. They were hurt by the company's voluntary suspension of
sales earlier in the year of Zilmax, a feed supplement that some
critics have alleged caused dangerous weight gains in cattle.
Merck said on Wednesday it will study MK-3475 in combination
with Pfizer's approved kidney-cancer drug Inlyta, and separately
test MK-3475 against various cancers in combination with a
Pfizer immuno-oncology drug called PF-05082566 (PF-2566). The
Pfizer drug targets a protein called the human 4-1BB receptor.
Incyte and Merck will conduct an early-stage trial of
MK-3475 in combination with Incyte's experimental INCB24360 - a
so-called IDO inhibitor. They will be tested on patients with
advanced lung cancer, and other advanced cancers.
The Merck drug will be tested with Amgen's experimental
medicine, called talimogene laherparepvec, in an early-stage
study of patients with advanced melanoma. The drug, nicknamed
"T-VEC," is a virus that is injected directly into tumor tissue
in hopes of stimulating the immune system to attack cancer
Shares of Incyte slipped 1.5 percent to $61.97, while Pfizer
shares eased 1.3 percent to $30.78. Amgen shares were little