(Reuters) - Merck & Co Inc’s quarterly results beat estimates, but the drugmaker issued a cautious 2013 profit forecast and said it will delay seeking approval for a high-profile osteoporosis drug, sending its shares down 3 percent.
Merck will not submit its osteoporosis treatment odanacatib to U.S. regulators until next year. Some analysts had predicted the medicine could generate annual sales of up to $2 billion, if approved.
“We continue to believe in the potential of this drug, and look forward to filing it in 2014,” Chief Executive Kenneth Frazier said on a conference call with analysts who expressed concern about the delay.
Merck research chief Peter Kim told analysts he had seen complete data from a large Phase III trial of the drug. But he said the company would delay a marketing application to submit data from an “extension” trial, or a follow-up observation of patients who had completed the study. He did not cite any specific problems with the drug.
An independent monitoring board last July recommended the Phase III study be stopped because its data had already proven odanacatib reduced fracture risk. But the panel flagged certain potential safety concerns.
Merck continued with the extension trial, largely to better examine the safety issues, which have not been publicly identified.
Merck’s older Fosamax osteoporosis treatment was the world’s top seller, with annual sales of $3 billion until its U.S. patent lapsed in 2008 and generics flooded the market.
The No. 2 U.S. drugmaker earned $1.4 billion, or 46 cents per share, in the fourth quarter. That compared with $1.51 billion, or 49 cents per share, a year earlier, when it took charges for acquisition and restructuring expenses.
Excluding special items, Merck earned 83 cents per share. Analysts, on average, expected 81 cents, according to Thomson Reuters I/B/E/S.
Global company sales fell 5 percent to $11.74 billion, hurt by generic competition for its Singulair asthma drug, but still beat analysts’ estimates of $11.48 billion.
The company forecast 2013 earnings of $3.60 to $3.70 per share, excluding special items. The midpoint of that range is below analysts’ estimate of $3.68 per share. The company earned $3.82 per share in 2012.
Merck predicted sales in 2013 would be similar to 2012 levels, excluding foreign exchange factors, as Singulair generics continue to take their toll.
“Merck’s 2013 (earnings) guidance was a bit conservative, which could point to higher expenses” this year, said Judson Clark, an analyst with Edward Jones. But he said the flat sales forecast was welcome because analysts were expecting somewhat lower sales.
Peter Kellogg, the chief financial officer, said few drugmakers are able to keep sales steady if one of their major medicines faces cheaper generics.
“That means we have a tremendously healthy portfolio of other products to provide compensating growth,” Kellogg said in an interview.
Clark predicted Merck’s earnings would rebound next year and grow in the high-single-digit range in percentage terms, as experimental drugs are approved and bring in new revenue.
“We think Merck has one of the best drug pipelines in the industry and that it will drive growth,” Clark said.
Merck, whose $6 billion-a-year Singulair lost U.S. marketing exclusivity in August, is girding for more pain from cheaper copycats.
Its Maxalt migraine drug, with $600 million in annual sales, goes generic in December, and its near-blockbuster Temodar brain cancer medicine faces generics next year.
Merck said Friday it aims to seek marketing approval this year for five drugs, including suvorexant for insomnia.
It is counting on the new drugs to help cushion plunging sales of Singulair, Maxalt and Temodar.
Merck suffered a major setback in January, when an experimental cholesterol drug called Tredaptive failed to prevent heart problems and raised safety concerns. The drug, which was expected to become a big seller in the United States, was recalled in Europe following the negative study findings.
Singulair sales plunged 67 percent in the quarter to $480 million. Combined sales of diabetes drugs Januvia and Janumet rose 18 percent to $1.6 billion, fueled by growth in the United States and Japan.
Sales of Gardasil, its vaccine to prevent cervical cancer, jumped 61 percent to $442 million, helped by higher public sector purchases and demand in Japan and emerging markets.
Merck shares were down $1.35, or 3.1 percent, to 41.90 in midday trading on the New York Stock Exchange.
Editing by Gerald E. McCormick, Jeffrey Benkoe and Bernadette Baum