Merck Reports Strong Q3 Results on Gardasil and Diabetes Med

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(Written by Alexander Crawford. Institutional data sourced from Fidelity.)

At a time of significant restructuring to adapt to generic competition, Merck & Co. (MRK) reported an otherwise impressive third-quarter earnings report last Friday.

The drugmaker reported higher earnings and sales than expected by analysts surveyed by Bloomberg, and the company raised its full-year earnings forecast on stronger than expected sales of several of its medications. 

The Earnings Report

“Bottom-line” net income rose to $1.69 billion (55 cents a share) from $342 million (11 cents a share) a year earlier, when results included a $950 million legal reserve charge. Earnings excluding one-time items of 94 cents a share beat an average estimate of 15 analysts surveyed by Bloomberg by 3 cents.

Sales rose 8 percent to $12 billion when analysts had expected sales of $11.6 billion.

Merck also raised its full-year earnings forecast excluding certain items from $3.68 to $3.76 a share to $3.72 to $3.76 a share.

Generic Competition

Merck’s greatest selling product, asthma drug Singulair, will be facing generic competition next year as its patent expires. In preparation, Merck has been reducing costs by cutting staff, eliminating 11,500 positions last year and planning another 12,000 to 13,000 to be cut by 2015.

CEO Kenneth Frazier said in a conference call that Merck researchers “are really identifying ways to improve the efficiency of the R&D process,” and that the company is “firmly committed” to continue investing in new research.

Gardasil and Januvia Beat Estimates

Supporting Merck’s higher than expected earnings, sales of its diabetes drug Januvia and cervical cancer vaccine Gardasil both increased 41% to $846 million and $445 million, respectively. Seamus Fernandez at Leerink Swann & Co. referred to Januvia’s sales as “incredibly strong,” saying “vaccines were strong across the board.” He also said, “across the board, it is a very high-quality quarter.”

Merck said sales for Gardasil rose because of increased demand for use in both boys and girls (the FDA last week recommended routine use of Gardasil in boys to protect against cancers related to human papillomavirus), as well as introduction of the vaccine in Japan.

Other Reporting Companies

Q3 earnings season continues next week with over 800 reporting companies and over 30 from the biotech industry. For a look at the reporting companies, we ran a screen on next week’s reporting biotech firms with significant net institutional purchases over the current quarter.

The smart money seems to believe in these names…do you think they’ll have as strong of a third quarter as Merck?

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1. Access a thorough description of all companies mentioned
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List sorted by net institutional purchases as a percent of share float.

1. Oncothyreon Inc (ONTY): Focuses on the development of therapeutic products for the treatment of cancer. Market cap of $292.25M. Earnings to be released on 11/07. Net institutional shares purchased over the current quarter at 10.1M, which is 25.59% of the company's 39.47M share float.

2. Achillion Pharmaceuticals, Inc. (ACHN): Engages in the discovery, development, and commercialization of treatments for infectious diseases. Market cap of $440.63M. Earnings to be released on 11/08. Net institutional shares purchased over the current quarter at 8.8M, which is 18.32% of the company's 48.03M share float.

3. Insmed Incorporated (INSM): Focuses on the development of inhaled pharmaceuticals for the site-specific treatment of serious lung diseases. Market cap of $87.65M. Earnings to be released on 11/08. Net institutional shares purchased over the current quarter at 2.6M, which is 14.81% of the company's 17.55M share float.

4. Bacterin International Holdings, Inc. (BONE): Develops, manufactures, and markets biologics products in the United States and internationally. Market cap of $131.24M. Earnings to be released on 11/10. Net institutional shares purchased over the current quarter at 2.3M, which is 9.61% of the company's 23.93M share float.

5. 3SBio Inc. (SSRX): Engages in the research, development, manufacture, and distribution of pharmaceutical products in the People's Republic of China. Market cap of $251.15M. Earnings to be released on 11/11. Net institutional shares purchased over the current quarter at 956.0K, which is 6.92% of the company's 13.81M share float.

6. PharmAthene, Inc. (PIP): Engages in the development and commercialization of medical countermeasures against biological and chemical weapons in the United States. Market cap of $81.99M. Earnings to be released on 11/07. Net institutional shares purchased over the current quarter at 2.0M, which is 5.82% of the company's 34.38M share float.

7. Sunesis Pharmaceuticals Inc. (SNSS): Focuses on the development and commercialization of oncology therapeutics for the treatment of solid and hematologic cancers. Market cap of $63.06M. Earnings to be released on 11/10. Net institutional shares purchased over the current quarter at 1.4M, which is 5.35% of the company's 26.15M share float.

8. Affymax, Inc. (AFFY): Engages in the development of drugs for the treatment of serious and life-threatening conditions. Market cap of $189.13M. Earnings to be released on 11/08. Net institutional shares purchased over the current quarter at 1.6M, which is 5.22% of the company's 30.67M share float.

9. BioSpecifics Technologies Corp. (BSTC): Involves in the development of an injectable collagenase for various indications. Market cap of $108.29M. Earnings to be released on 11/07. Net institutional shares purchased over the current quarter at 200.7K, which is 4.87% of the company's 4.12M share float. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , Technology


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