Latest / Beta Finch - Merck - MRK - EN / Merck Q3 2026 Earnings Analysis

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Merck Q3 2026 Earnings Analysis · Beta Finch - Merck - MRK - EN

• 0:08
  Speaker 1: Welcome to Beta Finch, your AI-powered earnings breakdown. I'm Alex.
• 0:14
  Speaker 2: And I'm Jordan. Today, we're diving into Merck's third quarter
• 0:18
  Speaker 2: 2026 results reported this past Thursday.
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  Speaker 1: Before we get into it, quick disclaimer. This podcast is
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  Speaker 1: AI-generated content for educational and entertainment purposes only. Nothing we
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  Speaker 1: discuss should be considered investment advice. Always do your own
• 0:34
  Speaker 1: research and consult a qualified financial advisor before making any
• 0:38
  Speaker 1: investment decisions.
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  Speaker 2: Good to have that squared away. So, Alex, Merck's a
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  Speaker 2: company everyone's watching right now because of the keytrade of
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  Speaker 2: patent cliff looming. What did the quarter actually look like?
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  Speaker 1: Solid, honestly. Revenue came in at $ 18. 1 billion, up 5% year-over-year,
• 0:54
  Speaker 1: or 4% excluding currency effects. And they actually narrowed and
• 1:01
  Speaker 1: raised the midpoint of their full-year guidance, now expecting $ 66. 80
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  Speaker 1: to $ 67. 3 billion in revenue and EPS of $ 2. 77 to $ 2. 82.
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  Speaker 1: That's a good sign.
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  Speaker 2: Companies don't usually raise guidance if they're nervous about the quarter.
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  Speaker 2: Let's talk Keytruda specifically, since that's the elephant in the room.
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  Speaker 1: Right, the Keytruda franchise. including the newer subcutaneous version, Keytruda Clex,
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  Speaker 1: grew 6% to $ 8. 6 billion, still their biggest product by
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  Speaker 1: a mile. But management was candid. They're now approaching peak
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  Speaker 1: revenues in certain indications, and growth is moderating as they've
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  Speaker 1: basically saturated the eligible patient population.
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  Speaker 2: And that subcutaneous version, Clex, is actually really interesting as
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  Speaker 2: its own story. $ 830 million in sales this quarter. And
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  Speaker 2: there's litigation drama in Europe. A Dutch court issued an
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  Speaker 2: injunction over Hyaluronidase IP that's blocking sales in several smaller
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  Speaker 2: European markets.
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  Speaker 1: Yeah, but CEO Robert Davis was pretty firm that this
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  Speaker 1: doesn't change their confidence. The U.S. business is humming. They're
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  Speaker 1: targeting 30 to 40 percent subcutaneous adoption by end of 2027.
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  Speaker 1: And the affected European markets are described as lower volume anyway.
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  Speaker 2: OK, so that's the Today story. But the real headline
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  Speaker 2: for me is what they said about 2027. Because that's
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  Speaker 2: when the real Keytruda cliff pressure, plus generic competition for
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  Speaker 2: Breedion and Genuvia, starts biting.
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  Speaker 1: CFO Caroline Litchfield called it directly. More than $ 2 billion
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  Speaker 1: in headwinds next year from generics hitting Breedion, the Genuvia family,
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  Speaker 1: and Adempis. Plus continued Keytruda moderation and some German pricing
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  Speaker 1: policy pressure. But.
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  Speaker 2: And this is the part one think investors should really
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  Speaker 2: sit with. She described 2027 as a year of investment,
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  Speaker 2: not decline. They're framing the whole key to the loss
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  Speaker 2: of exclusivity period as more of a hill in revenue
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  Speaker 2: rather than a cliff, with earnings expected to largely mirror
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  Speaker 2: that shallow dip and then resume growth.
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  Speaker 1: That's the bet they're making. And it's backed by what
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  Speaker 1: might be the most exciting part of this whole call.
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  Speaker 1: the pipeline news out of the ESMO Oncology Conference last weekend.
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  Speaker 2: Walk us through it because there were a lot of
• 3:29
  Speaker 2: acronyms flying around.
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  Speaker 1: The biggest one, SACT-TMT, their antibody drug conjugate, showed nearly
• 3:36
  Speaker 1: a seven-month improvement in median overall survival for endometrial cancer
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  Speaker 1: patients compared to chemo alone. That's a disease with rising
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  Speaker 1: incidence and a really poor prognosis, so that's meaningful.
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  Speaker 2: And then there's intismatogenes, the individualized mRNA cancer vaccine they're
• 3:54
  Speaker 2: developing with Moderna. This one actually got some strong outside validation.
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  Speaker 1: Right. Dean Lee, their research chief, quoted oncologist Anthony Rebus
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  Speaker 1: calling the melanoma data a landmark in cancer drug development.
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  Speaker 1: It showed meaningful improvements in recurrence-free survival when combined with
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  Speaker 1: Keytruda in resected melanoma patients. They're now talking with the
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  Speaker 1: FDA about filing it.
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  Speaker 2: What struck me is management explicitly said this product's commercial
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  Speaker 2: profile turned out better than what they'd originally baked into
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  Speaker 2: their long-term targets.
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  Speaker 1: Which ties into the bigger number everyone's anchoring to, that
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  Speaker 1: $ 70 billion revenue opportunity by the mid-2030s that Robert Davis
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  Speaker 1: has talked about before. On this call, an analyst from
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  Speaker 1: Goldman Sachs asked him point-blank whether that number is still intact.
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  Speaker 2: And his answer was basically more confident. Not less. He
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  Speaker 2: noted that number doesn't even include their recent Prometheus acquisition,
• 4:52
  Speaker 2: doesn't fully credit their PD-1-slash-VEGF-BIS-specific combo therapy, and doesn't reflect
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  Speaker 2: the upgraded profile for inosmotogene. So if anything, there's upside
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  Speaker 2: to that target.
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  Speaker 1: Let's not forget Winrevere either, their pulmonary arterial hypertension drug.
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  Speaker 1: Sales were up 94% to $ 694 million. They're expanding it
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  Speaker 1: into a new patient population with a phase 3 trial
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  Speaker 1: called CORAL, targeting a form of pulmonary hypertension tied to
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  Speaker 1: heart failure that currently has no approved treatment.
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  Speaker 2: And then there's Lipfendra, the new cholesterol drug. Early days,
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  Speaker 2: but they reported over 11,000 prescriptions for more than 6,500
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  Speaker 2: prescribers in just a quarter, with most coming from patients
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  Speaker 2: adding it onto existing therapy rather than switching off injectables.
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  Speaker 2: That's exactly the uptake pattern they wanted to see.
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  Speaker 1: So pulling it together, what's the investor takeaway here?
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  Speaker 2: I'd frame it this way. This was a trust-the-process quarter.
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  Speaker 2: The near-term numbers were solid. Guidance went up. But the
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  Speaker 2: real story is Merck trying to prove, car by car,
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  Speaker 2: as Davis put it, that their pipeline can backfill the
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  Speaker 2: Keetra to cliff before it even becomes a real cliff.
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  Speaker 2: Oncology diversification through SAC-TMT and the cancer vaccine cardiovascular expansion
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  Speaker 2: through Winrevere, and new immunology and ophthalmology shots on goal
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  Speaker 2: all matter here.
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  Speaker 1: And the risks are real too. Generic erosion starting in 2027,
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  Speaker 1: vaccine hesitancy headwinds on Gardasil, ongoing litigation on Clex in Europe,
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  Speaker 1: and plenty of binary clinical readouts still to come over
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  Speaker 1: the next 12 to 24 months.
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  Speaker 2: Before we sign off, everything discussed is AI-generated analysis for
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  Speaker 2: educational purposes. Past performance doesn't guarantee future results. Please do
• 6:45
  Speaker 2: your own due diligence.
• 6:47
  Speaker 1: Well said. Looking ahead, the next big catalysts to watch
• 6:50
  Speaker 1: are the ATLAS-UC readout for Tolto-Kibart, the Berlow ophthalmology trial results,
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  Speaker 1: and more SAC-TMT and entesmodagene regulatory filings. Merck's betting big
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  Speaker 1: that science can outrun the patent cliff. We'll be watching
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  Speaker 1: to see if the cards keep turning their way.
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  Speaker 2: This has been Beta Finch. Thanks for listening.
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  Speaker 1: See you next time.