Home health remedies Merck looks ahead to a COVID drug and vaccine—and a Gardasil recovery—as...

Merck looks ahead to a COVID drug and vaccine—and a Gardasil recovery—as pandemic takes a $2.5 billion toll


Merck & Co. is having a decent year, financially speaking. If not for the COVID-19 pandemic, it would be a great one.

The pharma giant said Tuesday that COVID-19 would take a $2.5 billion bite out of its 2020 revenue, more than the $1.9 billion it had previously predicted. Growth in drugs that didn’t take a pandemic hit has softened that blow. In a quote-unquote normal year, though, Merck might be reporting sales growth of 8% to 10%, not the 1% it posted for Q3.

But as a pandemic-related decline in doctor visits cut into Gardasil revenue and even dulled the edge on megablockbuster cancer med Keytruda, the pharma giant has advanced two potential COVID-fighting products—an oral antiviral that execs think could beat Gilead Sciences’ now-approved remdesivir and a vaccine. And, ironically enough, it’s collecting a hefty COVID-19 boost from its holdings in rival vaccine producer Moderna.

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The most obvious pandemic blow hit Gardasil, its human papillomavirus vaccine. Wellness visits for adolescents are down more than 30%, Merck EVP and chief commercial officer Frank Clyburn said during Tuesday’s earnings call. No wonder, then, that Gardasil sales fell by 10% in Q3, typically a strong period for the vaccine because of back-to-school physicals.

It could have been worse; the shot’s sales dropped by 35% in the second quarter. But as Merck’s second-best-selling product after Keytruda, Gardasil’s key to the company’s top line, and the pharma giant has been doing what it can in a pandemic environment—namely running awareness campaigns to promote wellness visits in the U.S. and continuing to call on doctors in countries where that’s safe—to rebuild momentum, Clyburn said. And the company is counting on new data out of Sweden that further add to Gardasil’s cancer-prevention case.

“We are seeing a more positive trend” in wellness visits, he said, and he noted that the shot is going strong in China as well as in Germany. “We have to see over the next several quarters how [the trends] evolve,” Clyburn said, adding, “our confidence in Gardasil in the mid- and long-term is very strong.”

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Unlike Gardasil, Keytruda did grow in the third quarter, but by 21% rather than the 44% it posted in the first quarter. The drug, which generated $3.7 billion during the quarter, continues to rack up new approvals—such as the non-Hodgkin lymphoma green light it won during the period—helping to offset the overall slowdown in cancer diagnoses and treatment as patients avoid clinics and physicians’ offices.

Meanwhile, the company’s pneumococcal shot, Pneumovax, took an upward leap in the quarter as the pandemic prodded people to get vaccinated against pneumonia. Sales were up by 58% to $375 million—and demand has been strong enough in some quarters to trigger shortages.

Indeed, after pulling in $12.6 billion on the quarter, the company did tweak its guidance for the year to $47.6 billion to $48.6 billion on the top line, compared with $47.2 billion to $48.7 billion previously. It increased its expectations for other income to $750 million from $550 million, the latter fueled in part by gains on Moderna stock, which skyrocketed as its COVID-19 vaccine advanced.

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But it’s 2021 that Merck execs repeatedly highlighted, not only for a resurgence in overall growth, but for its COVID-fighting work, both with Ridgeback Bio on an antiviral drug and on its own in-house vaccine.

The antiviral, molnupiravir, could fill a gap by treating people with mild disease—Gilead’s Veklury, aka remdesivir, is approved for hospitalized patients—and perhaps even as a prophylactic for people who have been exposed to the virus or are at high risk generally. Using it to prevent disease would depend on safety, of course, as R&D chief Roger Perlmutter pointed out, because side effects would need to be mild enough to justify its use in otherwise healthy people.

But so far, molnupiravir has come through on the side effects side, Perlmutter said. In current dose-escalation studies, the drug is being tested in a five-day regimen, twice a day, with some doses likely higher than necessary to work well.“Across several hundred people, molnupiravir has been well-tolerated,” he said. “We have not seen any safety signals at all.”

What’s more, based on preclinical work, “we do think that in terms of reduction of viral burden, it’s very likely that molnupiravir will be superior to remdesivir,” Perlmutter said. Trial data will be coming in “over the next couple of months,” with top-line data to follow as soon as possible afterward. “Certainly we will move expeditiously,” he said. “The world is interested in this, as we are.”

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Meanwhile, Merck’s vaccine tests are underway, and those trials should go forward as planned even as the frontrunner shots progress. With the case counts as high as they have been across the world, Perlmutter said he doesn’t expect difficulties enrolling people in a “relatively short period of time.”

As for where Merck’s shot might fit into the panoply of potential COVID-19 shots, Perlmutter said he’s hoping many vaccines will show they can reduce disease—“and ideally mortality”—caused by the Sars-CoV-2 virus.

“But in reality at the end of the year we will be sitting with what we hope are strong immunogenicity data,” Perlmutter said, with protocols ready to advance the shot into later-stage testing, adding, “We are as eager to see that as everyone else is.”

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