Friday, October 26, 2012

Merck Q3: $0.95 Non-GAAP EPS; 5% Sales Down-Bubble From Currencies

All in all, a pretty solid quarter from the No. 2 publicly-traded pharma company in the world -- given that this is the first quarter in which Singulair® began falling off the patent cliff.

Although scarcely material, it is interesting that Victrelis® (boceprevir) -- the legacy Schering-Plough Hep C drug -- recorded just under $150 million in sales for Q3 2012. That reflects a pretty strong launch year, but the more important comparison will be against Vertex's Q3 results, for Incivek® (telaprevir) -- generally regarded as the more-efficacious of the two presently available major next-gen Hep C regimens. I still expect that split to be above 75-25, in favor of Vertex.

Again, hats off to Whitehouse Station -- this is very nice performance, in a turbulent transition over the patent cliff for several of Merck's long-standing, and largest franchises. One other important year-end metric will be revealed when we learn how much currency hedge loss the company has recorded for the year, in January 2013. The alternative metric will be the simple year over year sales decrease driven by the relatively strong US dollar in inernational markets.

Even so, Merck is naturally hedged to a fair extent, by holding manufacturing and research and distribution assets in local markets -- thus enjoying a counter-effect to the otherwise straight decline in USD exchanges, as these assets in local currency increase in value roughly an equal proportion. From the SEC Form 8-K, filed this morning:
“. . . .Our strong global sales this quarter offset the impact of the SINGULAIR patent expiry in the U.S.,” said Kenneth C. Frazier, chairman and chief executive officer of Merck.  “We will continue to drive value for our customers and shareholders through Merck’s four-part strategy of executing on our core business, expanding geographically in high-growth markets, extending our complementary businesses and excelling at managing our costs while investing for growth.  With our robust pipeline, we remain on target to submit multiple new products for marketing approval between now and the end of 2013, including suvorexant for insomnia, odanacatib for osteoporosis and TREDAPTIVE for multiple lipid parameters. . . .
In any event, do stay tuned for year end 2012 results now -- come late January 2013.

1 comment:

Anonymous said...

Condor, I wasn't sure where to post this but figured this post was closest to the mark. On Friday's edition of Mad Money Cramer went on at length about Tesaro Biotech and how their anti-nausea cancer drug, Rolapitant, looked to be very promising. What would be of interest in this story to you and your readers would be that Rolapitant was acquired through several licensing deals that began with the Merck-Schering merger. This is a Legacy Schering drug Merck needed to sell since it has a drug in this space already. Various sub-licensing deals landed it at Tesaro where it now appears to be more safe and effective than the Legacy Merck drug it was thrown over for. Tesaro is also entering a licensing deal with Merck for another product on Phase I at present.