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The third-quarter earnings season was at its peak this week for large drugmakers, with several companies — Eli Lilly LLY, Merck MRK, Pfizer PFE, AbbVie ABBV and Novartis NVS — announcing their results.
Here's a recap of the week’s most important stories.
LLY’s Disappointing Q3 Earnings
Lilly’s third-quarter results were weaker than expected as it missed estimates for earnings and sales and also lowered its financial guidance for the year. Sales of several key drugs, Mounjaro, Zepbound, Jardiance and Verzenio, missed expectations.
Revenues of $11.44 billion rose 20% year over year. Sales of Lilly’s popular tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound, disappointed due to inventory issues, per Lilly. Mounjaro recorded sales of $3.11 billion during the quarter compared with $3.09 billion in the previous quarter. Zepbound recorded sales of $1.26 billion in the quarter compared with $1.24 billion in the previous quarter.
Lilly lowered the upper end of its previous revenue guidance while significantly trimming its earnings expectations. The total revenue guidance range was lowered from $45.4 billion to $46.6 billion to $45.4 billion to $46.0 billion. The earnings per share guidance was lowered from a range of $16.10 to $16.60 per share to $13.02 to $13.52 to include IPR&D charges.
Merck Beats Estimates but Cuts 2024 View
Merck beat estimates for both earnings and sales. Earnings declined 23% year over year (excluding currency), while revenues rose 7% year over year. Sales of Merck blockbuster cancer drug, Keytruda, rose 17%, driven by rapid uptake across earlier-stage indications and continued strong momentum in metastatic indications. Sales of HPV vaccine — Gardasil and Gardasil 9 — fell 10% due to lower demand in China. Sales of diabetes medicines, Januvia/Janumet declined 38% year over year.
Merck narrowed its sales guidance for 2024 from $63.4-$64.4 billion to $63.6-$64.1 billion. Adjusted EPS guidance was lowered from $7.94-$8.04 to $7.72-$7.77.
Merck and partner Moderna initiated a second pivotal phase III study on their personalized mRNA therapeutic cancer vaccine (V940/mRNA-4157) in combination with Keytruda for an adjuvant lung cancer.
The INTerpath-009 study will evaluate V940 in combination with Keytruda for patients with resectable stage II, IIIA or IIIB (N2) non-small cell lung cancer (NSCLC) who did not achieve a pathological complete response (pCR) after receiving neoadjuvant Keytruda plus platinum-based chemotherapy.
Global recruitment in the study has begun, and the first patients have been enrolled in Canada. The companies are already conducting pivotal phase III studies on V940 in combination with Keytruda for earlier-stage NSCLC, adjuvant melanoma and phase II studies in other cancers.
PFE Beats Expectations, Ups 2024 Guidance
Pfizer’s third-quarter results were strong as it beat estimates for earnings as well as sales. Revenues rose 32% on an operational basis, driven by higher sales of key non-COVID products like Vyndaqel and Eliquis, new product launches and newly acquired products from Seagen. COVID products also contributed to top-line growth in the quarter amid heightened demand for Paxlovid during the recent COVID-19 wave.
Seagen drugs contributed $854 million to the top line in the third quarter. Revenues from Pfizer’s non-COVID products rose 14% operationally in the third quarter, following a strong performance in the first half. Sales of key drugs Xeljanz and Ibrance declined in the quarter.
The company also raised its 2024 earnings and revenue expectations for the second time this year. Adjusted earnings guidance was raised from $2.45 to $2.65 per share to a range of $2.75 to $2.95. The total revenue guidance range was upped from $59.5 billion to $62.5 billion to $61.0 to $64.0 billion.
ABBV Rides High With Skyrizi, Rinvoq
AbbVie beat estimates for both earnings and sales. Sales rose 4.9% year over year on an operational basis, driven by higher sales of key drugs like Rinvoq, Skyrizi, Venclexta and Vraylar. Sales of blockbuster immunology drugs Rinvoq and Skyrizi rose 47.4% and 51.5%, respectively, on an operational basis due to label expansions to include new patient populations. AbbVie raised its EPS guidance for 2024. The company expects adjusted EPS in the range of $10.90-$10.94, up from the previous guidance of $10.67-$10.87.
AbbVie announced a definitive agreement to acquire Aliada, a private biotech, for $1.4 billion in cash. Aliada makes drugs for neuroscience medicines, leveraging its novel blood-brain barrier-crossing technology. Aliada's lead pipeline candidate, ALIA-1758, an anti-pyroglutamate amyloid beta (3pE-Aβ) antibody, is being developed in a phase I study for Alzheimer's disease. The transaction is expected to be closed in the fourth quarter.
AbbVie announced a collaboration and option-to-license agreement with EvolveImmune Therapeutics to develop next-generation cancer biotherapeutics leveraging EvolveImmune's proprietary EVOLVE platform. For the deal, AbbVie will make an upfront payment of $65 million to EvolveImmune with the latter also being entitled to up to $1.4 billion in aggregate option fees and milestone payment plus potential royalties.
NVS Beats EPS & Sales Estimates
Novartis also beat third-quarter estimates for both earnings and sales. Its sales rose 10% at constant currency (“cc”) in the quarter, driven by the continued strong performance of Entresto, Kesimpta, Kisqali, Cosentyx, Pluvicto and Leqvio.
Core operating income rose 123% at cc. It also raised its growth expectations for revenues as well as operating income in 2024.
Novartis expects 2024 net sales to grow in a low double-digit range versus the prior expectation of a high single to low double-digit range. Core operating income is projected to grow in the high teens range, up from prior expectations of mid-to-high teens range.
The FDA granted accelerated approval to Novartis’ drug, Scemblix, for expanded use in first-line Philadelphia chromosome-positive chronic myeloid leukemia in chronic phase (Ph+ CML-CP). The approval is based on the ASC4FIRST phase III study. Scemblix is already approved for previously treated CML. Novartis believes that the approval for expanded first-line use broadens the drug’s eligible patient population by almost four times.
The NYSE ARCA Pharmaceutical Index declined 2.34% in the last five trading sessions.
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
Large Cap Pharmaceuticals Industry 5YR % Return
Here’s how the eight major stocks performed in the last five trading sessions.
Zacks Investment Research
Image Source: Zacks Investment Research
In the last five trading sessions, AbbVie rose the most (7.5%), while Lilly declined the most (7.2%).
In the past six months, while Lilly rose the most (28.6%), Merck declined the most (20.2%).
(See the last pharma stock roundup here: RHHBY Earnings, Other Pipeline & Regulatory News)
What's Next for Pharma Stocks?
Watch this space for NVO’s third-quarter earnings update and regular pipeline and regulatory updates next week.
Pfizer, Merck, AbbVie and Lilly have a Zacks Rank #3 (Hold) each, while Novartis has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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