Merck Reports Better-Than-Seen Profits, Buy Of Cancer Drug Maker--Update

By Angela Chen 

Merck & Co. agreed to buy a privately held developer of cancer immunotherapies for at least $95 million and raised its per-share earnings guidance for the year after reporting better-than-expected profits for the June quarter amid lower costs.

Sales, though, fell a worse-than-expected 11% in the second quarter, hurt by currency changes and recent divestitures.

Merck said cCAM Biotherapeutics is a biopharmaceutical company that has cancer treatments in early stage clinical trials. Merck has been working on expanding its pipeline, especially as sales in the most recent quarter were driven by the areas of oncology, diabetes and hospital acute care.

"The acquisition of cCAM supports our objective to advance the care of patients with cancer by stimulating tumor-directed immune responses," said Roger M. Perlmutter, president of Merck Research Laboratories.

Merck said its all-cash purchase of cCAM Biotherapeutics includes the possibility of up to $510 million in future payments based on certain milestones.

For 2015, the pharmaceutical giant now expects full-year earnings between $3.45 and $3.55 a share, up from its previous range of $3.35 to $3.48 a share.

Shares of Merck, down 1.7% over the past year, rose 0.9% to $57.50 in premarket trading.

Separately, Merck said, the U.S. Food and Drug Administration has accepted for review the company's new drug application for grazoprevir/elbasvir, a once-daily, single-tablet therapy for hepatitis C. The agency granted priority review for the treatment with a decision expected by Jan. 28.

Merck, like some of its rivals, said a strengthening U.S. dollar and increased generic competition sapped results in the most recent period. The latest quarter saw a 7% negative impact from foreign exchange, and a 7% impact from the divestiture of its consumer care business.

Pharmaceuticals, the company's biggest revenue contributor, posted a 6% decline in sales to $8.56 billion. The animal health division recorded a 4% decline to $840 million.

Sales of arthritis drug Remicade fell 25% to $455 million, and sales of cholesterol treatment Zetia/Vytorin slipped 16% to $955 million. However, sales of diabetes treatment Januvia edged up 1% to $1.6 billion, and sales of Proquad improved 10% to $358 million.

In all, Merck reported earnings of $687 million, or 24 cents a share, down from $2 billion, or 68 cents a share, a year earlier. Excluding certain items such as acquisition-related costs, per-share earnings grew to 86 cents from 85 cents.

Total sales fell to $9.76 billion from $10.93 billion the year before.

Analysts had projected 81 cents a share in earnings and $9.9 billion in revenue, according to Thomson Reuters.

Write to Angela Chen at [e-mail]

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