Despite early doubts, Merck's COVID antiviral beats sales expectations and drives big growth

Once hailed as a game-changing treatment for COVID-19, the shine quickly came off Merck and Ridgeback’s molnupiravir when trial results revealed efficacy of 30% as opposed to the 50% figure reported by the companies at an interim stage.

Then, when Pfizer strutted an 89% efficacy rate for its rival Paxlovid, even more questions arose about the relevance of Merck’s pill.

But four months after the FDA approved both drugs on consecutive days, molnupiravir remains a commercial force, especially outside of the U.S. On Thursday, when Merck reported its first quarter earnings, sales for the pill came in at $3.2 billion, topping Wall Street’s expectation by $500 million.

Merck now expects molnupiravir’s sales for the year to fall between $5 billion and $5.5 billion, narrowing its previous guidance of $5 billion to $6 billion.

While demand for the pill has been low in the United States, it remains robust worldwide, the company said. The drugmaker has shipped 6.4 million courses to more than 30 countries, with 5 million supplied in the first quarter. The company has signed contracts to provide 10 million courses this year.

So what about the 3.1 million courses the U.S. agreed to purchase? When an analyst asked on Thursday, Merck dodged the question.

“We have actually had utilization from 500,000 patients globally,” Merck chief financial officer Caroline Litchfield said. “We’re seeing strong utilization, especially in ex-U.S. markets.”

Thanks to strong molnupiravir sales and continued growth for immuno-oncology superstar Keytruda, which came in at $4.8 billion for the quarter, a 23% increase, Merck topped revenue expectations.

The company pulled in $15.9 billion during the quarter, a 50% increase from the period last year. The strong growth prompted Merck to bump up its sales guidance for the year to a range of $56.9 billion to $58.1 billion, up from a prior window of $56.1 billion to $57.6 billion.

Also contributing to the revenue surge were sales of HPV vaccine Gardasil, which reached $1.46 billion for the quarter, exceeding Wall Street estimates by $200 million thanks largely to strong demand in China.

In response to the report, Merck's shares increased by 3.4% by mid-morning.

"The robust sales for Merck's key products underscore growth across oncology, vaccines and animal health," analysts at Cantor Fitzgerald wrote in a note to clients. "Therefore, we believe multiple expansion should drive Merck shares higher as earnings visibility improves beyond Keytruda's patent cliff in 2028."