Merck stock jumped Thursday after the pharma Goliath said it's already on the hunt for acquisitions worth $1 billion to $15 billion to contend with a patent cliff for its bread-and-butter cancer drug.
The company's statements come less than a month after Merck announced its $680 million takeover of Harpoon Therapeutics. That followed its much bigger $10.8 billion and $11.5 billion acquisitions of Prometheus Bio and Acceleron Pharma, respectively.
Keytruda accounted for 45% of Merck's sales in the fourth quarter and almost 42% of total sales last year. So, when the cancer drug loses patent protection in 2028, the company will need to have other growth-driving moneymakers in place, Merck stock analysts say.
Merck is planning to expand its pipeline with more Phase 3 studies, Norstella analyst Puru Gaur said in an email to Investor's Business Daily.
"To strengthen its market position and portfolio, Merck is exploring subcutaneous (under-the-skin shot) formulations of Keytruda, mergers and acquisitions in the $1 billion to $15 billion range and potential partners," Gaur said.
On the stock market today, MRK shares jumped 4.6% to 126.38. Merck stock is in a buy zone above an entry at 120.78 out of a cup base, according to MarketSmith.com. Notably, Merck stock belongs to the Dow Jones industrial average.
Merck Stock Rises On Surprise Profit
During the fourth quarter, Merck earned a surprise profit of 3 cents per share, on an adjusted basis. Analysts called for a loss of 11 cents per share, according to FactSet.
Earnings plummeted 98% year over year. That's in part due to a $1.69-per-share charge tied to the company's collaboration with Daiichi Sankyo. The two companies inked a deal in October to develop three potential antibody drug conjugates, or ADCs. These drugs target only cancer cells, potentially limiting the damage to normal cells.
Total sales jumped 6% to $14.63 billion, above projections for $14.49 billion.
The strength came on the back of Keytruda, which brought in $6.61 billion in sales, growing 21% year over year in constant currency. That topped forecasts for $6.41 billion.
Bearishly, sales of Gardasil came in light at $1.87 billion. Though revenue from the HPV vaccine rose 27% year over year, analysts expected a stronger showing at $1.92 billion. Gardasil accounts for 13% of Merck's sales.
Vaccines Show Promise
Beyond Keytruda and Gardasil, Merck's rotavirus vaccine, RotaTeq, had a strong performance. Sales surged 34% to $185 million. RotaTeq sales came in well above forecasts for $160 million.
Sales of Vaxneuvance, which protects against 15 different types of pneumococcus bacteria, advanced 28% to $176 million.
For the year, Merck expects sales to be $62.7 billion to $64.2 billion. That's in line with Merck stock analysts' forecast for $63.47 billion. The company also calls for adjusted earnings of $8.44 to $8.59 per share, easily topping expectations for $8.40.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
