(Reuters) – Merck & Co’s (MRK.N) shares jumped almost 5 percent after the U.S. drugmaker reported better-than-expected quarterly results and released favorable data late Monday about the safety of its Januvia diabetes drug.
The second-largest U.S. drugmaker on Tuesday said it earned $953 million, or 33 cents per share, in the first quarter. That compared with $1.71 billion, or 57 cents per share, in the year earlier period.
Excluding special items, Merck earned 85 cents per share, well above the average analyst estimate of 75 cents per share, according to Thomson Reuters I/B/E/S. The company incurred significantly higher costs related to acquisitions and divestitures, while having smaller tax benefits than a year ago.
Company sales fell 8 percent to $9.43 billion, but would have fallen only 3 percent if not for the stronger dollar. Sales topped Wall Street expectations of $9.07 billion, helped by hedging against foreign currency fluctuations.
Despite its strong first-quarter results, Merck only slightly raised its 2015 earnings forecast, to between $3.35 and $3.48 per share, excluding special items. It had forecast earnings of $3.32 to $3.47 per share.
Januvia sales rose 3 percent in the quarter to $884 million, while a related drug called Janumet rose 7 percent to $509 million.
Late on Monday, Merck said Januvia achieved the main goal of a long-awaited heart safety study according to preliminary results, which likely removed a cloud of uncertainty from its biggest product.
The Tecos study involved 14,724 patients with type 2 diabetes and a history of heart disease.
Januvia plus regular care led to no significant difference in a composite of time to the first cardiovascular-related death, non-fatal heart attack, non-fatal stroke, or unstable angina requiring hospitalization compared with usual care alone.
Significantly, there was no increase in hospitalization for heart failure in the Januvia group versus placebo. Analysts said that could give Januvia a leg up on rival drugs that have shown a potential heart failure connection.
Sales of Merck’s animal health products rose 2 percent to $829 million, but would have risen 13 percent if not for the stronger dollar.
“Overall, a solid Q1 with raised guidance,” Sanford Bernstein analyst Tim Anderson said of Merck’s report. Among large U.S. drugmakers, he said, only Merck and Bristol-Myers Squibb Co (BMY.N) have raised their 2015 forecasts.
The two companies are leaders in immuno-oncology, drugs that harness the immune system to fight cancer.
(Reporting by Ransdell Pierson; Editing by Nick Zieminski)