Januvia holds off SGLT2s to keep Merck's Q2 in line

Merck’s diabetes powerhouse Januvia isn’t going anywhere in the face of stepped-up competition from Eli Lilly and Boehringer Ingelheim's standout Jardiance, the pharma giant has said. And that forecast certainly held strong in Q2, with the blockbuster--alongside hot new immunotherapy Keytruda--helping the pharma giant meet Wall Street’s expectations.

Revenues checked in at $9.84 billion, ever-so-slightly topping the $9.78 billion analysts predicted. And non-GAAP EPS, in turn, hit 93 cents, surpassing forecasts by two cents to make for what Evercore ISI analyst Mark Schoenebaum called a “reasonable” quarter.

Januvia and sister med Janumet--which continued “to hold up better than we had previously expected in the face of increased competition"--were a big reason why, Credit Suisse analyst Vamil Divan wrote in a Friday note to clients. The DPP-4 superstar franchise raked in $1.63 billion for the quarter to pass consensus of $1.57 billion, and it did so despite the threat from SGLT2 product Jardiance, which last year showed it could cut the combined risk of heart attack, stroke and cardiovascular death.

“The Januvia franchise continues living in positive growth territory”--at about 2% year-over-year--“despite SGLT2s,” Bernstein analyst Tim Anderson wrote to clients. But that may change if Jardiance manages to get its cardiovascular death data added to its label, a change that’s currently pending at the FDA.

Keytruda sales also surprised analysts, coming in $22 million above where they thought they’d be at $314 million. The hotshot med has been battling it out with Bristol-Myers Squibb’s Opdivo in melanoma and lung cancer, racing to pick up new indications and break into earlier lines of therapy. On that front, Merck is working to snag a go-ahead in first-line non-small-cell lung cancer, and “the attentions of investors in the coming year will focus on that indication,” Schoenebaum wrote.

In hepatitis C, a field the New Jersey drugmaker recently broke into with combo product Zepatier, things are so far going as planned. Revenues of $112 million were more or less in line, though the big test for the drug--which is facing down nemesis Harvoni from Gilead and Viekira Pak from AbbVie--will come when payer contracts are renegotiated for next year, Schoenebaum said.

And Merck will need those sellers to keep coming through if it wants to return to growth. Divan, for one, expects to see gains from Keytruda and Zepatier erased by declines from Remicade--which, facing new biosimilar competition, saw sales decline by about 3% quarter-over-quarter--and Januvia.

For now, though, Merck saw enough positives to narrow its guidance ranges. It now expects full-year revenue to come in between $39.1 billion to $40.1 billion, up from a prior $39.0 billion to $40.2 billion range. And on the EPS side, it’s predicting a mark between $3.67 and $3.77, up from the $3.65 to $3.77 brackets it earlier outlined.

- read Merck's release

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