Merck Profit Falls 14% on Sales Drop; Confirms Collaborations on Investigational Cancer Immunotherapy

   By Tess Stynes 
 

Merck & Co. (MRK) said its fourth-quarter earnings fell 14% on weaker sales as the drugmaker also was hit by expenses related to its cost-cutting efforts.

Merck confirmed that it has entered three separate collaboration agreements with other drugmakers to evaluate Merck's investigational MK-3475 immunotherapy cancer treatment -- part of a promising new class of experimental drugs that unleash the body's immune system to target cancer cells. Merck will collaborate on studies of MK-3475 in combination with therapies from Pfizer Inc. (PFE), Amgen Inc. (AMGN) and Incyte Corp. (INCY). Financial terms weren't provided about the collaborations, which may provide a view of how the future of R&D may shape up.

Merck's research-and-development chief, Roger M. Perlmutter, said Merck is looking at MK-3475 across a wide range of cancers, both as a standalone therapy and in combination with other treatments.

"These new collaborations with Amgen, Incyte and Pfizer underscore our shared determination to evaluate treatment regimens with the potential to provide meaningful benefits to patients suffering from cancer," Mr. Perlmutter said.

In addition to working with the three drug makers, Merck will start looking at the compound's potential against 20 cancers it hasn't yet been put up against.

For 2014, Merck forecast per-share earnings of $3.35 to $3.53 and revenue of $42.4 billion to $43.2 billion. Analysts polled by Thomson Reuters expected a per-share profit of $3.48 and revenue of $43.35 billion.

The company also expects 2014 adjusted marketing and administrative as well as R&D expenses to be below 2013 levels due to continuing prioritization and focused spending on core product lines and upcoming launches.

Merck has struggled with patent expirations for top-selling drugs and setbacks in its efforts to bring new products to market, trends that led to the company's October plan to reduce its workforce by 20% over the next two years, including reductions in its research-and-development unit.

Merck reported a profit of $781 million, or 26 cents a share, down from $908 million, or 30 cents a share, a year earlier. Excluding acquisition- and restructuring-related charges and other items, adjusted earnings rose to 88 cents from 83 cents. Revenue decreased 3.4% to $11.32 billion.

Analysts polled by Thomson Reuters expected a per-share profit of 89 cents and revenue of $11.36 billion.

Sales of Merck's previous No. 1 product, asthma treatment Singulair, which lost patent protection in 2012, fell 38% to $298 million, on top of a drop of 67% a year earlier.

Type 2 diabetes drug Januvia sales fell 1% to $1.12 billion. Sales of the drug were soft all year, a marked halt to the double-digit percentage sales gains seen since its 2006 introduction.

Write to Tess Stynes at [e-mail]

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