Merck & Co. (MRK) 4 Feb 212020 Q4 Earnings call transcript

Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to the Merck & Co. Q4 Sales and Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator Instructions]. like I Relations. call to over now to Investor the President, turn would Vice Peter Dannenbaum, please ahead. Sir, go

our to conference Thank Merck fourth Chairman Research Marketing President our Financial and Chief Rob Clyburn, by morning. Officer; and Officer; you, our Chief Welcome Labs; Executive and our Lara, Ken Frazier, Frank quarter Today Mike call. Commercial of Davis, XXXX Chief I'm Dr. joined good Li, Nally, Merck's Officer. Officer; Chief Dean

Before started, few like point items. to we I'd get out a

see You GAAP costs acquisition-related we and will such restructuring that our have items charges, results in certain items. other as

products. materialize, risks Harbor on provided I forth Private the uncertainties current within may we XXXX. units a from our based press If a XXXX supplemental results You today's of considered of uncertainties. and quarter today. statements that announcing significant have reporting should underlying the are Merck's be our and understand make posted prove the in management the to provide are made the statements these beliefs the remind release provision statements. those to or Such to Securities actual of differ recapped subject forward-looking on And results for assumptions inaccurate and set U.S. include Safe our quarters reconciliation the meaning materially during call help from that the note Litigation sales forward-looking you press Reform of of statements we our that you in may to would our Act like the the and also table some also non-GAAP in are the website in excluded we We've business financials change release. based

results certain Merck this our in statements. Our obligation cautionary factors undertakes from differ to and that publicly including statements the XA identify forward-looking XX-K, made risk update morning. Item forward-looking projected any in statements SEC of could company's to any XXXX cause materially actual the filings, those no

presentation Our with With SEC filings, the investor are results our that, an posted call merck.com. to over of all highlights like turn I'd today's earnings release to Ken. and on

Good Thank call. and all today's for joining Peter. you, you morning, thank

our to few extraordinary to my this has I'd over our been company financial make other perspective, support distinct privilege this colleagues future decades. a announcement. all like morning's as throughout of comments to CEO results great Before and thank I for a its about honor and period. their the past serve turning Merck this It

exciting leadership for that this elements in Davis Merck future growth. prepared the and in lie knowledge challenges Merck provide well the Rob innovation of and years. the opportunities change team cure Merck coming We He many to leadership will the outstanding suited on well to profitable senior to ahead. are help is before as take well has that place the making it, our capitalize on as for a the and in strong scientific company

future. Merck's commitment assist rest the of even of will at capabilities to for June, Rob, I and Dean extremely and an decision-making as am divisions, operating it ability to to of Research, a Rob's day-to-day which as but Human strategic I begin Health, Rob, end April. in transitioning the current Board and well of the to period as of Merck's who Chairman time strength, as At will I Animal Merck guide confident Manufacturing CEO in senior team. point Given is the title the to good the Executive of reporting the assume and and people a him. Health, our direction time begin the believe to President remain retire brighter company company's position will some

innovative and the made earnings pandemic, our return remains for to pipeline this development. Moving the demand underlying Despite strong and meaningful in to and medicines year, expectation portfolio, vaccines a added to for particular in strong. advancements from our business assets revenues growth challenges in Despite guidance And the XXXX. important impact achieved XXXX, our through growth reflects our on results. our Merck initial our solid

by Looking out our we assets potential in our gives patients supply goals. will uninterrupted, is later help And XXXX, and encouraged for who ongoing around internal our growth industry's also this return rallied market across with pandemic potential remains the to employees to the believe next. Merck sight to and term, our progress filings the us scientific the innovation. science the commercial to to revenue business societal industry also. doing our pipeline continually in of work the developing drivers in effective amazed and execution the start regulatory development, on to underscore of to line and decade accomplishes have by an These Merck committed underappreciated. significant by we in address investments line are world. response into increasing in continue and bringing the adding COVID-XX achieved that successes clinical I'm I'm Longer advancing world inspired the normalcy. keep to biopharmaceutical what vaccines I dedication track experts of to and value further through remain

treatment oral patients, acquired and OncoImmune, in VelosBio an on CGEN of transactions have pivotal seeing vaccine and of move look as business candidate, the such strong development that highly promising forward X results COVID-XX MK-XXXX, in innovative ArQule internal We COVID-XX happening the including discontinued research our Ridgeback. in just front, pipeline. total and lab, late-stage completed pneumococcal OncoImmune research and continue in important our our programs accelerated remain but to enhance We including not HIV we pipeline recently, trials. of treating collaborations, critical patients. potential Phase I More molnupiravir severe COVID by We forward. across oncology, contribution am with a XXXX, the candidate our broad the on candidate medicines and important to to acquisitions, but focused development we in of COVID-XX including have our vaccines, to could We encouraged antiviral our believe our the and therapeutic disease. development and XXX make and of

to on Our remains late track the spin-off completion quarter. for Organon in second plan

confident to and opportunities focused independent, have ability pursue strategies Organon company, will to to market and As to business Merck I'm respective value and the more more shareholders. bring effectively more their patients

confidence I in in pipeline leaders by challenging of and a proud this Let company how maintaining success me and the advancing conclude environment. expressing continuity Merck am the team's in business my of our

officials to bring normalcy. to and like the with together outlook. frontline colleague, the on recognize healthcare back and of that, review to performance our my I'd world thank to and Additionally, the government our pass And Rob, details it workers, I'll scientists working to

to success benefit to achieved we Thanks, remain important to vaccines sustained honored clinical look do and Ken, for my work and humbled both transition ways, that be we commitment patients Merck we this make everyone. shoes but its to focused notably need continuing into named benefited revitalized easy be within Merck personally will to so our people to years with the both permeates Chief patients Under the want as I'm medicines in our good Merck's growth, company center put mentorship legacy. scientific position discovery come. research excellence and continued achieve company morning, his scientific principled do as everything forward we through from many and Ken's improved unrelenting guidance Ken employees. long I as important worldwide, able issues him from of of for won't on be commitment and and innovation thank innovation success, has that to employees the pursue Ken's has and in KEYTRUDA, we through confident financial important many ongoing his pipeline scientific talent facing the Merck's has value Ken's save culture mission contributions leadership. leadership, to with sustain long-term The today. professionally also will including most the future of the to the and at strength, we Merck capability Officer. and I for will Executive on serve that. patients from Ken's and will and bring company us and next The and and me which and and a innovation. to valuable society shareholders. to however, fill operational and His of the benefited Under build them. the of who extremely lives many leadership, source a both

the turning Now business. to

us Merck global amidst a challenges to a employees hard work resilience is countless that talent, Our true in pandemic year testament and dedication of brought the worldwide. the

our the growth potential beyond. for strong while been X% the pandemic growth our excluding approximately year-over-year environment ex impact have growth exchange, this in pillars in science-led in negative would the our $X.X billion strategy in we for impact have key we XXXX the revenues. Underlying Our confidence performance to and business X% growth year pandemic reinforces for it Were demand deliver or X% our allowed impacts, not and to exchange. of absorbing of estimate approximately for

an Total impacted increase million pandemic. results. currency. to nominally Fourth the to of by billion, year-over-year, impact results $XXX were were and company excluding Now approximately the fourth negatively $XX.X of our turning quarter X% revenues quarter foreign due both

comments approximately will X% have ex Excluding on an be basis. this ex impact, my exchange. fourth The would quarter of by exchange remainder revenues grown

grew position to revenues continues benefiting Our tumor billion in billion. $X lung and increased leadership key Human for all U.S., to in In usage types. X%. by cancer In across $XX the the KEYTRUDA sales maintain and strong the its KEYTRUDA is XX% Health to from XX% Oncology, quarter year

Lenvima uptake see from weekly carcinomas, lung in KEYNOTE-XXX to for Outside in of in In drivers by driven year volume oncology the year-over-year. the in QX in remain growing growth. KEYTRUDA contributors price growth demonstrate strong half growth than continues strong KEYNOTE-XXX EU. growth and newly first of to and imbursed lung are XX%, further Japan, including and Uptake cancer meaningful underlying renal and key adjustments offset indications. U.S., to respectively, more markets XX% and the Lynparza continue to growth the cancer, endometrial portfolio, be regimen. our outside broader continue dosing our the We

stockpile million impact by continues impact a the below replenishment quarter quarter had CDC normal in to be positive visits, United year-over-year, of initial the sales fourth the $XXX in grew and portfolio vaccines borrowing the GARDASIL $XXX impacted $XXX the the combined XXXX, particularly in of wellness States. year-over-year. million mostly reflecting from which million Our

continued Our continued hospital gains, the by sales elective BRIDION XX% offset grew improvement driven surgery share by procedures. year-over-year, market in lower part in performance showed quarter. fourth

extra an quarter again for X%, parasiticides. grew of vaccines Our from Animal delivered Health of grew Companion partially growth. X%, X% by primarily of with business reflecting and distributor Antelliq, reflecting and offset a strong animal billion purchasing month sales Animal demand $X.X companion sales acquisition the Livestock patterns.

of well manufacturing Turning grew XX% to variances, of Operating Gross had comments exchange. neutral partially rest basis. savings by foreign the ago was and a and percentage quarter, to My offset increase points, driven points spending, percentage mix be expenses of equity in pressure driven the largely billion. donation to a in X.X for favorable research rate advance decrease offset to our year-over-year tax the due P&L. a to securities. $X.X Operating ZERBAXA, COVID will by from an inventory recall was our X.X product incremental impact XX.X%, a Other the write-offs on year-over-year operating higher pricing quarter Foundation. as mix. non-GAAP expenses X% year margin quarter Merck increased income spend were by reflect as The the from overall as favorable earnings in a of by effective due to growth programs. COVID-XX R&D a income

Taken together, share, increase $X.XX we earned of an XX%. per

that unpredictable reflected company release are our our quarter volatility. These be operational detailing quarter-to-quarter results before Now, guidance improved in in first highlight changes to I performance our we implementing alignment our in want ranges. beginning our between XXXX and of reporting changes details result the and outlook, will non-GAAP press better a underlying that the

no impact these an results changes is cash non-GAAP flow. forward, will on to have going our While impact there

guidance. XXXX to Turning

X% a expect we represents $XX.X assumes versus which of exchange Merck, be growth X% impacts excludes and the from percentage half roughly first using year. impact billion, pandemic of billion potential revenue XX% For from range XXXX, of approximately COVID in billion, mid-January $X the of roughly any our revenues assume therapeutics. year We points $XX.X to X positive foreign to to largely This full or rates.

including Our margin a gross XX% points roughly the reporting will due benefit X.X of be change. to percentage

to of rate. the We closer COVID, grow operating impact be expect to grow at high for expenses operating would expenses a expected single-digit low to to double-digit Normalized mid-single-digits.

an our We other net resulting interest expense million Under our by guided largely to prior $XXX in of would million $XXX expect expense is million and reporting, have expense. other that on on we will $XXX mark-to-market our by This an sale Preventice, and driven in unfavorable other non-GAAP. income, income line, fund of swing. excluded our indirect gains the driven include difference in Moderna, which an holdings, gain amount expected be expected expected now investment gains from investment of

year we between anticipate and our to full And be expect rate tax shares We X.XX XX% billion XX%. outstanding.

together, we reflects EPS. impact includes EPS expect roughly versus of our XX% XXXX from to growth Taken foreign to to recast exchange $X.XX This which of between X non-GAAP XX% a be points. range $X.XX, percentage positive

in we new the reporting benefits growth of from convention recorded EPS gains disproportionate Our the removal the equity mark-to-market XXXX. under

more operating only our EPS expect XXXX. of guidance new reporting X under or $X.XX margin under point either leverage reporting. strong benefit The however, we to percentage is versus previous reporting in Importantly, method, XXXX

will on innovative in assets. near of delayed and as the the visits We ability we in driven to remain continue procedures and portfolio both our ongoing We impact our grow long-term, monitor through wellness of XXXX. confident derisked to by into pandemic the and and move

turning Organon. to Now

metrics which are in I second -- The billion. Organon we that part we track even remain sit complete We say, here high achieved level provided Organon, will quarter the In should to today. unchanged. $X.X spin-off of we Organon, merits on more are the late brought the in XXXX, will place the a ago for The of of we year we as take revenues spin-off as second largely of transaction this clear strategic expect products quarter.

diminishes, growth to billion. of this $X We of revenues base expect brands expect achieve the to Off billion the we low on XXXX in $X.X key revenue exclusivity Organon to as of Organon to achieve loss and impact the of mid-single-digits. negative longer-term

in a operating XX% margins This will within approximately the time. as and reflecting company Organon's to with operate increase As post to expect operating range non-GAAP standalone costs be of a over to to spin, we to incur continue additional Merck, mid-XX% compares difference company. EBITDA range prior Organon the now transferred in This of proportion grow a to Organon the time. capital initially be XX% to high and initial lower expectations. slight are from an guidance our over margins assets versus is to expected independent to decrease expected a are due our margin

We $X.X dividend billion billion. initial $X.X debt to spin. prior to to receive to special expects billion expect of have Organon a Merck $X of tax-free $X billion to the

Organon be to We a meaningful expect Merck. that to continue dividend to incremental pay entirely will of that

XX% as to than reporting expect our of in For deliver XX% operating versus greater greater percentage margins than $X.X over of XXXX, the expected of efficiencies to years, which incremental including $XXX increase of change. impact our an the expectation enable of a X We of points XXXX, result in prior is approximately million included operating spin-off Organon billion of is guidance. X approximately now Merck, in

that key growth strong intact, the for New XXXX will to our approximately drivers estimate business as the previously costs a netted in basis. time the of conclude, Year. we efficiency to and on in overhead growth please into incur be we which will $XXX to confident reinforces in into confidence Organon our our target. overall products, These aware allocated year the we strength are For To Merck be the and over will and costs XXXX million modeling reduced future. and XXXX Demand purposes, we that deliver stranded long resilience continue are begin be -- full remains

position external like and our back opportunities, the decisions With success. turn make capitalizing pipeline, strategic We to I'll will spin-off Organon both continue in right financial and for meaningfully call Ken. to that, invest of our to internal our position to over use the strong to company the continued

you, Thank Rob.

Roger's the Merck's of As to research to retirement medicine, Perlmutter's pleased to keen cornerstone of and leadership in system. including he is key who Merck, We leader Dr. and physician role I'm on persist a vaccines to dedication of He Merck. I've will who leadership the late-stage at healthcare translational forward discovery innovative real advance take Dean academic carefully confident leadership, the bringing his we and as leading has and delivery today's of as under for Merck to positioned assets. hands-on prior uniquely scientist while Laboratories many alike. technologies well breakthrough Roger under new research, found pipeline. exploited in is shareholders successfully R&D Dr. why underscored an for and areas we our and of call. welcome company I'm where a and he make difference planned innovative science Research Dean Li, this understanding Dean's Merck's in promising in Dean? Merck's times, experience mission, important a role has believe a continue is and to will is early early of patients legacy that that This medicines was transition

to Head delighted be I'm Ken. as Merck you, my earnings here Laboratories. for call Thank first Research of

for so will in the developments, business broader on milestones, oncology an COVID our recent effort, pipeline cover provide I key research our and clinical my pipeline. And then today, updates first and remarks update regulatory

the on candidate, those immune those development tolerated, were VXXX. and that, discontinue COVID-XX COVID study of vaccine while clinical with our to Phase Merck programs, X was for to VXXX has well were decision vaccines its reported observed Regarding based other research infection finding This natural responses and the vaccines. showing made from inferior authorized decision

who to in the trial. and volunteers collaborators our are this We grateful participated

now Our often MK-XXXX our COVID-XX molnupiravir, two MK-XXXX. and therapeutic shift, as candidates, advancing efforts known

have which date is meaningful. it the in we in current data emerging may we of studying which, trials May hospitalized to first molnupiravir, Biotherapeutics, the in and our developing pandemic if continues we are efficacy novel play The to important an share primary XXXX, but non-hospitalized Molnupiravir publicly, with candidate as possible has progress Ridgeback is course, interim that X/X patients. role quarter antiviral completion in orally other well Our potential the collaboration Phase available coronavirus in would infections. as

our We have therapy added XXXX. results OncoImmune. through XX the protein trial recombinant of to checkpoint. the Final of fusion is targets quarter. infusion have We COVID-XX the novel by in a MK-XXXX candidate acquisition in address IV recently This available immune in agent, capacity been first over by administered second million to the end expected production scaling the are that and the of clinical -- expect courses

be improvements carcinoma. esophageal based are response overall note first-line at the oncology. the and renal new or with date clinically regardless to secondary KEYNOTE-XXX. of on In U.S. next for we triple-negative based in XX on significant FDA presented ASCO in combination improvement to target this Turning chemotherapy expression accepted of patients Also Priority for with KEYNOTE-XXX KEYTRUDA first-line statistically score pleased PD-LX breast week. rate. combination Review KEYTRUDA for carcinoma approval survival, GU KEYTRUDA Working The the FDA combined treatment patients fourth demonstrated last in in survival express results overall approval positive and and XX. KEYNOTE-XXX, been will PD-LX The from untreated an the versus additional KEYTRUDA these metastatic quarter, partners in with cancer, supplemental tumors Application These whose Drug received with a results Eisai, was across is primary The proportion previously of our New April data the treatment at with the cell at meaningful XXth chemotherapy progression-free greater. Lenvima and results for progression-free tumor a marks of action quarter, survival, type from endpoints, sunitinib plus approved. demonstrated trial which has with study for in

chemotherapy. KEYNOTE-XXX treatment all early. announced and the a stopped KEYNOTE-XXX in also Lenvima by across KEYTRUDA endometrial committee KEYTRUDA data opportunity of We The kinase combination improvement of plus evaluating inhibitor, plus KEYNOTE-XXX independent of for the The significant Lenvima. monitoring success that Lenvima endpoints second-line presented KEYTRUDA that reinforces the was carcinoma versus multi-tyrosine reported demonstrated

studies XX in combination this spanning types. explore to tumor continue multiple We

chemotherapy with an breast to and from KEYNOTE-XXX, cancer discuss In month. patients with ahead, alternative third that Business MK-XXXX, with completed The is conjugate analysis is quarter, this fourth a data solid X the FDA's patients BLA the lead patients antibody the partnership tumor with study interim we with early-stage, looking of triple-negative as along whose malignancies. adjuvant for with acquisition and of our investigating tumor-targeted with regimen. we antibody currently a under are development data Advisory drug opportunity, compared Committee in underscores review next with Drug to Phase currently in the conjugate. in VelosBio, Phase PDUFA candidate, targeted Now LIV-X RORX Oncologic conjugate known priority. look meeting X evaluating as VLS-XXX, a study includes we to FDA commitment hematologic remains This neoadjuvant developing treatment evaluated forward being antibody-drug the Seagen date next-generation from that using drug of from a

T-cell targeting already third and Janux commitment with our collaborations to Therapeutics on support Therapeutics to engagers, K with part tumor targeted NK technology, tumor AX Dragonfly strategy for technologies. recently at Biotherapeutics with These Artiva underway explore work collaboration as engager design Now NK collaborations, therapy a we along cell and Biotherapeutics and opportunities of to cell evaluating technology. new targeting with aimed their our entered

pipeline. to Now broader our turning

candidates, We and Each pneumococcal continue age one our for groups. VXXX. across VXXX, vaccine disease against targeted pneumococcal progress different of prevalent designed production VXXX to is suite serotypes

of one causes invasive serotypes, candidate The by in most pneumococcal XXF, levels with Priority vaccine VXXX for disease granted July target currently produced serotypes in for of was children. for comparable and of observed. Robust pneumococcal of to responses XXF recently also available disease-causing invasive adults and common response is For pneumococcal action all date diseases Adults observed VXXX, our X, the unique vaccines antibodies FDA in administered XX-valent were the the conjugate adults. the prevention XX. higher Review in serotype

seen linked, older; the to XX cases. pneumococcal and X% Now of in and adults disease and in the been have invasive among XXF adult XX% of XX% U.S., Europe, aged XXF serotypes

on trials and are Phase X studies year. VXXX pediatric Our results we anticipate from this track, these

VXXX, to pediatric VXXX. the both the X our adult The XX disease nucleoside continues in translocation X are addition to new islatravir, and novel for infectious VXXX in for our PrEP space and and IMPOWER populations inhibitor progressing In reverse Phase HIV HIV and XX transcriptase progress we next-gen setting, we of begin trials, PrEP infection. IMPOWER in expect the treatment soon setting. to In at high-risk acquiring recruitment different vaccines,

have Research will Now IMPOWER and islatravir in capsule men PrEP islatravir at for adolescent findings safety oral sex offer interim achieved Prevention the oral these of efficacy presented who who as a that of men. X the HIV evidence XX XXX once-monthly interim for recently trial sex for transgender HIV. XX at X and with show IMPOWER in tolerated. as girls. regimen to women the XX evaluating evaluate provide These threshold at Also, milligrams in men that once-monthly the monthly setting, Phase option adult and same study, were have These potential women each islatravir the efficacy and with oral evaluate and XXXX. will PrEP islatravir from are regimen acquiring the PrEP pharmakinetic results further a people well the positive a results doses of doses milligrams, of risk

which oral option. treatment our we in a weekly advancing into study non-nucleoside This potential as we announced once-weekly combination in expect study, XXXX. are Phase combination MK-XXXX, read reverse in X to on islatravir combination we Phase as of half in islatravir inhibitor, with previously, addition, Phase plus currently X, a a the transcriptase MK-XXXX builds Now out X islatravir start second once-daily the doravirine to

worsening therapies for take Peter. investing and to with our advantage Research our supplementing back our call who’ve at the while develop to are vaccine following patients opportunities. for new and therapeutic and with for patients disease. we of This internal Review. turn pipeline Finally, continue strength Verquvo approval received complementing other to We on well exploring new failure external Priority heart to Merck built option experienced in commitment will in FDA cardiovascular positioned [considerable] now I areas, oncology full Laboratories modalities

in as additional X recognize could We questions ask to please as you many But we're analysts the limit that the you, AM. I Lara, get question. today, to call past Thank Dean. extend be start there to yourselves and to prepared could you queue, X please? order possible,

Mr. your Instructions] will So the Fernandez. first come of question Seamus from [Operator line

the So Rob, congratulations on CEO appointment.

forward. sense a to moving thoughts Just Merck of of your wanted in terms get

You've strategic talked patent that expiration. as of in part to a a upside What a of the plus company of for restructuring? business that can just really is sort that part you But of future company be basically is, Animal that, you the the that are going Merck? underappreciation XXXX do give perspective, XXXX you to Could obvious as of the Health your then the the needs its expectations. to And thinking XXXX evolution see to to in the question from do how regard? think in company the relative just just as follow-up us about thoughts about around you consensus continue KEYTRUDA approaches

the for question. Seamus, Thanks,

what and doing to think what who point important obviously, months the think stage more we're achieving from seeing core with the really KEYTRUDA the driven of, and are, you're we're discovery of excited pipeline, see what innovation come is As there'll the into to about. dialogue. to which time we we the look the strategy obviously, is be we've forward, I a clinical from a development drug the we with But been a growing perspective, as first I earlier fruits level, at have as perspective, quarters revitalization and as the scientific the on in by we move under, we're continue a strategic that highest focused which and of which lot

science, beyond best So to and as the execute company into really time it the is frame, the or foremost investing and inside the XXXX the on we behind focus to company, look whether and from it first have. outside comes at continue XXXX we on pipeline

lot have entire VXXX, our we've franchise got We've got that coming. we're pneumococcal near-term -- a We late-stage great the building. launches of islatravir,

oncology, comment in which be I'm others We have of and obviously a sure whole to opportunities would host on. happy Dean

at to into it efficacy to well extend both the as oncology do what KEYTRUDA's of other fields mechanisms, we combinations reach breadth as as well broadening we through patients have. number the Looking its of as can and broader which serves

focus all that efforts. be be we will where to will So our continue

way As also highlight and even start things think beyond time we will committed XXXX that realize, augment with that. urgency development of talking of we a have have opportunities changed. have I JPMorgan an about continue and it we continue is to think growth underappreciate need so we though, that alignment and been then as we won't to as beyond -- all opportunity frame. I real to grow KEYTRUDA. scientific we Clearly, That we we have to started that really strategy That business now at the to what people in at mentioned. the our change the that, that, as see between with Conference, to we But that what the look. opportunity an we do change. But we move and through We've we won't will are grow endeavor tied pretty and around I when to is into then look But actually, hasn't consistent do we to to business development. value is will

business. part continue of more regard Animal with a see then to Health Animal Health, from And as So the to this of regard. that same we strategic

space. in the overall the accretive the at products best-in-class that to we and it for positioned look within position continue delivers, you is It's it. to growth Merck investing products Health strong side. leveraging business health animal pipeline growth, it's think Human the on very to I portfolio the existing And are which have If we show a is very function through synergies good have has, we the the MRL both of with also it but through

So sit this mind. we've see a as I forward, looking are but we And at the part core that and I maintain Animal are see we continue strategy. something Health because looking here, said, to grow will in portfolio, always our advantaged my is tells of we owner, everything our most as we as me

please, Lara. Next question

Andrew from Mr. Baum from Citi. come will question next of line Your the

is a dancing in seem But pair A assume -- long-acting whether, be remains quite be should on a lot the or trials? another quo to explore that was treatment in bridge of as can combination very doesn't Dean's options. partner from comment for And bridge different cabotegravir to the was separate that could intact of formulations, eyes islatravir Roger at the setting, inhibitor, you you on please. other can question delivery interesting? leadership, look including whether whole capsid status fresh then secondly, cabotegravir the aside you not right under running combination we perhaps without the a fixed-dose setting. islatravir With there determined PrEP may

Yes.

think of So one to how is I'll comments way levels tissue of and resistant And administration, dosing thank sort that about might lens treatment. one favorable can for islatravir. we both the this want that just PrEP believe that PK will question. frame route that make a think some in you to the is, be to it about profile, combinability. schedule, is foundational And and medicine, in attribute with recognize

the we're mechanisms weekly, out it and an many integrase once class. something so doing which to once with if what in just is, but to believe I've as different that's daily, can is different is as is combine that relationship is, an And treatment this laid this class cabotegravir, important Merck. tell foundational molecules. question molecule dear I that many very actually inhibitors, important you that's could It's we

at -- allude be of medicine And the carefully. that, that's at we to, for provide of a at that you show believe a needs would and lot patients achieved a can combinations that many foundation combinations mechanism. to And us and that and which can And should we islatravir full so to believe that we benefit foundational, be new different as that should because we look to array it's looked look all foundational should that allow lenacapavir, prove believe then we that. possible

Next question please Lara.

from of line Your next Terence question will the Mr. Flynn. come

then Maybe aggressive on the of repurchase Organon. important for an provide be $X and share COVID X dividend in career of a Phase XXXX. billion have to the if have MK-XXXX, the And this how in And was question in-house? Ken's well question. contribution the wondering building some are the outlook in a and going drug that just Dean you if coming to just remarkable Ken, $X that was from front? again, on comment initial billion just as you wondering best on on regarding on from -- paradigm, X-part I guys you data maybe your Rob, future. already a for on can role Obviously, luck. perspective congratulations, new responsibilities and wishes you best I I Congrats Rob,

the go first for Thanks and Terence, it Maybe comments. question, congratulatory to for you the and I'll thank turn over Dean. then

we about we But as talked, as As you internal saying, business funding share go. and repurchase, would prioritize beyond capital where funding foremost, business continue from really like to development perspective. R&D at a the capacity it's development. see have as look Obviously, our we and efforts been efforts want to we've that, to first we've expansion underway we

we But also we've repurchase say to grow that just been we're looking and to to been up cash, not is cash looking have so that to share And rating. credit holding clear purpose. for grow our back we're on drive what not

Organon also basis. dividend return determinations if into we'll time, from -- make development, and and eventually, the the our to With the business cash to getting able asked be don't we're look goal those we an that will to shareholders, business potential closer as for over on coming the to $X -- billion dividend that first the And we billion to explicitly find we return those $X it But would, then foremost, opportunities that's utilize will to ongoing if be shareholders. the about and don't late And second XXXX. of you those from we similar opportunities quarter second So we answer, half spin. have get development. to

Yes.

analysis. establish of XXXX a And not different dose. at Phase us that sort at It taken terms is The to available Phase the to different the X of has X. have all component trial. Phase is a analysis to In look question, that X/X interim in critical it's of the fully data relationship interim of we this point,

Terence. you Thank

Next question please.

line JPMorgan. from will Your Mr. question next of from come Schott Chris the

equal, been deployment slowdown congrats questions obviously just bias a and for about in a transactions pauses I guess in your well a of we organization? one towards to specifically X-part the remains all as occurring transactions both on Ken series multiple a be I versus Should the Biz a think BD, question think brings or that big would larger Dev. had and organization. and as It's Thanks activities, focus focus big on about given in And capital Rob. you transitions any leadership are the assets. then else smaller that of larger the

of which we organization et but I you're think ease the at execution, direction cetera. of probably if everything, integration, So a you lean? about looking would issues know had choice,

let company to So growth. situation the the and me to is the position by behind The down respect. and make right that and forward this not faces start for Merck CEO to slow just of going the saying this responsibility team long-term the decisions have purpose autonomy any in evaluate transition the company senior to Rob

long-term any would So Rob. wouldn't that at into over I'll read we to that about steps turn steps for success. the with it be the all I And company's right are believe there taking hesitation this transition that,

your we we Research into to to smaller prefer science Labs Yes. believe look where for to preferred question life we on Appreciate Chris, differentiation bring then And earlier that. can that, our it and capitalize in and its composition of and about assets. continue great to and the Merck those find development, competitive business advantage bring opportunities

be to continues we point will focal look. that where So

times As past, it we've we in area. to agnostic many said -- therapeutic is the are

areas we've to terms Science recognize to looking larger scale obviously But dollar not terms. to the foreclosed potential. by be continue more clear disruption deals, look. driven always pipeline, our will to of science. the likewise, been in the we're its complexity to the will say augment and size, We revenue take at in augment us need than We to to

not mainly to will led, looking see a that we're and by opportunity at continue forward, it consistent So as transformative thing where and one way remains we synergies But completely as not be deal a to an as do science bring those see value. driven well. do we science-based driven by differential prefer

Thank Chris. you

Lara. Next question please

Cantor. next will Your of Louise Ms. come Chen from line the question from

currently, So KEYTRUDA? you anything that now? journey fit its is Rob, place the set for and the then, Dean, you pipeline could into you skill right there right where take about when And what of look make Merck experience your think in is your

Great. the for Yes. Louise, thanks question.

diversified I've dedicated to company where spent Lilly, look nearly the of that you the and a spent began business, the whole my XX back I've what and of at view And different industry. done, career healthcare If at to career years on and Baxter before Eli Merck. to pharmaceutical I running to my moving saw time side coming medtech the I before

medicine, our to externally. that focus of external invest than invest greater how the and more we as is our opposite. internal have so productive our looking it how really focus who seen drug, have in different forward, will that we dollar do important about the core new terms path we where such think to spend, can always But demonstrate reducing also to drive the the going with view do world focus And from from really I that. output, productivity, to we affordable we has you and we capabilities thinking, rather this dollar best value long-term to to is a the have and And to marry business we but scientific going it in experience as that an base we do do of I and grow, while we be ever we make find pressure, really then on how to of more think to that a where sure focused you're and to on succeed not continue our views. in efficiency we are, on of innovation the broad and it we is we challenge to greater is that technologies, make every leverage that are about how focus increasingly have the business increasing I ensure that we industry in We're going outcomes only make a to access. face get nimble, So margin our not way continuing the but be have believe, side-by-side we simplified and to think broadening a evolve a more new to lens a make look to

to, that. my the broadly And to Merck me leadership So being cores believe, the are positioned the a at. we're in here team of do of looking at and experience what I part those industry has

Let I that the X points. And mind, question. don't of grab would other just part sort make you of if me

to biomarkers. responses that very we're patients of been first cancer and to And all have The because with mechanisms, book type is immunomodulatory span And outdated one is, to immuno-oncology direct pembrolizumab revolutionized of through We Maladies, the say, of indications mechanisms with focused the Emperor and stage with reads dosing All that this medicine. has of that of value essentially tumor-killing agents is we largely is continue not looks it at done way has to administration, point biology out through cancer. BD. there. a to combinations, one internal and pembrolizumab. route co-formulations the want the if for access we quick is just the we tumor whole and combinations impact this And revolution so pipeline regimens, immuno-oncology want on which to by of agents driver that clear, extend and by deepen and want expand And

So and pembro that's IO, cancer.

the talked to matter next And chance have cancer, because Roger is transformative to not where pipeline. on and for in Rob allowed field Ken I transformation that were we and can mention. not have And I it one IO that remember do that -- and right anything that cancer, So occurs. that next not about have huge transformative has is therapeutic make an a is, reasons why that we should we always cancer revolution impact. have agnostic, you now point do do we I foresight know impact in pipeline and us our that in a that the where should see? important question of whole ask one know the this We the reshaped that my

or others? it now could be Could cardiovascular, the be whole whether in pipeline? not But seen So metabolism? in I something pharmaceutical the has industry. that, throughout have not say in general, Yes. in pembro it would neuro, whether field has whether of The do in it we be KEYTRUDA equivalent right whole to in be defined, time this my pipeline Yes. it field be it seen. at that point the

Louise. Thanks,

Next question please.

line come next from will Stanley. from Risinger of the question Your David Morgan

congratulations Yes. I as much, wanted and to Thanks to my very Ken add and Rob well.

how combination a including that opportunity treatment and are the So your assets my a combination and assessing bring versus internal the to move combination question forward discuss opportunity weekly is, opportunity weekly regimen? for seeing forward treatment for to HIV regimen external partnership pursue could you an you

and Yes. doing step PrEP, this medicine. we're is ourselves think others is, I'll at Fundamentally, And it we're it shot doing is we're and this to a that. it to a wise, what in take trying Dean. treatment. This that that we right? first to it important doing demonstrate really in is We're

I And do day, But with Q agree so we're Q doing you. week. stepwise

access to their have We be to to and for really important going think about medicine. what's patients the

that islatravir. both will we to as for the story create to And of dosing frequent comments? did want and treatment for Mike, options you full be explore some to places be frequent both less important dosing that suite less them build will PrEP. of But fully important are so for and And Merck that needs make

for Yes. Dave. question, you the Thank

things think a couple Dean add to I of to what said. just

And of up I of action. the of HIV format. value. islatravir market range do a whole foremost, across best partner ultimately a in ultimately we lot longer-acting is format. majority add will evolve We long-acting think being the see first will the it a a think to mechanisms think and to market a different we And of

PrEP I islatravir we need would further in PrEP partner space, look add don't that would space. is necessarily even the the then treatment weekly In I the And so be what the in starting we with out think space. a and place,

through so to forms And an think longer there administration, both other in we even the go a week format, administration can of space. than potentially in we oral route PrEP of long-acting initially and

so And looking we're at how market. the that's

Next question please.

Daina line Your next question will from Leerink. come SVB of from the Graybosch Ms.

and and in on wonder Thank talking and I about has assets in your you forward competitors question Tilos, the for KEYTRUDA. I the TGF-beta wonder virus me from could had around. trial current oncology recent readouts years, early oncolytic and couple us We've of on congratulations if to a the on IO perspective Design? Viralytics of acquired approaches. some negative Immune for Merck BD path including you update all

Yes.

a that. Let take me at stab

separated So of IO I might and related think how solid to about the especially to pembrolizumab tumors. sort space and one related

we of also the over X have into opportunity to And showed so advancing when pipeline, X about the you internal are our ILTX. mechanisms you're co-formulated, look they we at CTLA-X, immune be XX speak having Phase And our mechanisms TIGIT, in aware and modulatory clinic. LAG-X,

LIV-X saw radiation, that, right? is development with Seagen mixed essentially, and plus we word seems And sort other business that and tumor-killing -- KEYTRUDA, with there chemo a AZ, possibility a ADC confident chemo, from and simply that We're because the And when standpoint. transformative-in-class excited enhancement. us orthogonal. Velos that with best-in-class first-in-class, it's mechanisms of that there emphasize would be lung. Eisai with overused, for creates is of But ADC, or say caught pembro thing like you really because RORX works also with to development we're business standard-of-care but that the sometimes but in the the potentially well, I are mechanism that I surgery The

pembrolizumab. developing those advantaged IO. Peloton, molecule your a chemotherapy past going targeting precise. and we developing are And little to in interest combine partner more attention cancer where And and that's look not that would essentially I look medicine speed the you're in call that's company, an relationship to ADCs to many is must for that that in situation. biotech potential will that for we also to your But to our filing, but advance would what that, saying, ask a that if a nodal which if assets. hope you want on interested And Seagen, a advance to end as a Peloton a in emphasize a that. partner, that. advantage KEYTRUDA relationship pathway, HIF-Xα and foundational we would oncogenic who quickness, you're to with going at essentially internal you a simply situation focusing only a XXXX give just we're is I looking can I bit so by you're Velos, that But and drug also is you are are do can that that in can rigor external you're that with

are of most than and registrational trials, that when assets those we we with have XX other that in other would remind XXX that, companies. combinations including And say than trials, myself combinations so combinations X,XXX more from more I

So PowerPoint simply wet it getting do by by companies. at with but decks, actually looking not of other allows us to agents hands our the BD,

you, Thank Daina.

Next question please, Lara.

line Evercore next of Mr. question Raffat from will the come ISI. from Your Umer

the wanted focus trial? is my is Rob assume is to the that versus symptoms time the trial to loose congratulations MRL. enrollment first upcoming to non-hospitalized. is, And And as more to fair from study the I trial little My well. hospitalized and a on hospitalized the COVID in it question

we is vitro in on could against So attempting variants? us should hospitalized setting you activity your for difficult? the new that progress more And assume also update to characterize

Yes.

questions. So let me those take both of

we're both. in we do in The think first is to advancing it's it thing both. it important And

no both non-hospitalized the we this believe because hospitalized there's need we And think application patients. so to load. distinction affect viral advance viral will between it We that for or and

variants. let the In experiments, it to very sure, terms RNA doesn't molnupiravir would do works the by respiratory those was, mechanism -- me for all that just need for variants. other viruses. which many the other but for and would of It would it question, make We work molnupiravir coronaviruses. would I everyone the RNA make work predict we just viruses the many works question remind that

whole that that, difference to would variant So SARS-COV-X viruses. that that molnupiravir you taken there's your of variation with but the that is test classes much of mechanism every on is, care But than smaller a expectation prove variants need different within see be the variation, based by to question specifically, but variation to the answer is RNA we of action.

you Umer. Thank

please. question Next

Your from line Steve Scala next question Cowen. come of will from the

significant many my add dealing more it thanks congratulations me Schering-Plough. the let Ken, your to contributions. And once I contributions Merck you CV to through itself Ken of were and Vioxx buying again litigation risk deals. The arthritis of guiding and think finds oral Rob, to with don't big and X industry prefer for drugs your

market? the believe why your you later, years XX back perhaps not particularly Vioxx prefer the contribution? former, make it biggest it's was observations On what big deals would when since you do I on on And

So thank you here. for me for retrospective opportunity giving the

of I it. and of company's based but we decision were by repeatedly we what from able for of articulating interest us by strong I think really won largely the the one lesson we importance particularly won't I sense which time. heritage. best inside audience, do learned it one details withdraw about we you to jurors, go litigation Merck, Vioxx, a it that integrity to I I patients do as people have every more people start company Let thought company, about any was for was like see world also knew for case, remind And is the company that at into what for. this based saying, it this we because for And was that in the what stood on me of what the this on really drug, But defense. an in to that the if your to there's a on stand think the

smart deal where And very time On was growth at market was that done opportunity relative enough Merck relative of really the companies time pipeline, this to pembrolizumab. of of is, an that saw that the none we in an us was And we company to that its the as XXXX. valuations a different appropriate We opportunity know around the where, was to were the issue frankly, assets situation saw prospects. Schering-Plough, reality on acquiring that among were. back based were its at in in for world a the

from "Well, fallacy take at you deal did." classic So that the was that Organon learned people the on had narrative bow, that being the look a basic thing like at bought in example eye of we but is when think say, I that's company, when the we and work our actually I would research deal that Organon. a labs great that we a done one to

opportunity And for the not company an that for gave us opportunity only we so a synergies, growth cost knew based on buying us we but that were science. the gave quality an of

recover respond you And really so difficult problem and are this at our that history the at if the to to the research from. end they is of organizations day, industry, of think and with look for large transactions, the I

And think when mergers. the have It's through disruptive. or so right those your pipeline. now you that's don't. on you for get you at is opposed the I a pipeline main then day, cost still the what And developing I synergies, highly reason that we're they're end because either And of focusing

So question. the thanks for

Steve. prepared X some additional you, questions. continue to Thank I it's with realize on o'clock. We're

So next please? question,

of come Navin the UBS. Mr. will question line from next Your from Jacob

with In there congrats the trying to that to years? any as add revenues there's about both like to assets please. Organon, be, I had that what add us are furnish if I'll Wondering color some Rob, more ask past, model spin-off. if and the could course assets for could well Rob. to Ken few Merck to my the suggested may pipeline may help next Organon look the out just what to those as

Yes. Thanks for the question, Navin.

anchored to several look we drivers and up health key by you as business need for as for growing make the at assets continues is and you continue the So has niche. globally. contraception, which that years. that will a be is, important And in a It look blockbuster believe that is protection to It at growth fill women's the Organon going patent drug. to very it NEXPLANON, spin, business, sit foremost, within the that first

So broader and drugs is a women's fertility core that that is area including of other then obviously, growth. And drugs. business, our surrounding health the

business growing Merck if business, you that that So franchises, the core the some of and been driver. loss grow. continue is growth has and within excluding to of And impact could will dissect look of exclusivity at that key the

very you small growth grow will that. now, So meaningfully layer but business, growth. really, what accelerating will is really contribute business, and be investment fast is on a to very biosimilars further focused the upon And that which in the will the burgeoning then

is the really the experiencing out pieces the be comprise, recently, One, I Why loss or they think loss Organon, of years, mainly of business total revenue going we're XX%, XX-plus company. get the years So it X the will [NuvaRing]. between twofold. of couple to declining as X Most those of over of they're been percent is next has exclusivity. X of we over the last

we that, Zetia/Vytorin. Before had

hit LOEs. we've those So by been

through XXXX. have Those as As we should start look they really forward, don't we to sunset get those.

those businesses, development and it a will a through that and really growth to to formulation core going those start accelerate and focus been augment more long-term. assets have So of businesses they to strategy and which strategy then is good to shine, investment business allow

at focus think LOEs do they of real being the those out ask programs It's them, those forward look assets on extend I are to they of across really R&D and that's the So can the growth strategies There key with will no how moving they over. the base. more will how continue businesses broaden point. but how they them, focal can transferred

Navin. you, Thank

question Next please.

Truist. next the question will line come from Mr. Your from of Gregg Gilbert

of that in obviously on Merck a business And newer are X-parter are gentlemen. been the change? you again, all bridge or earnings well. helpful why the sudden least high for versus gap comments you performing why like helpful it's stood these at saying or this a and Merck Ken are better then at it's more? peers it do the not that's how how if newer would like moment your now, traded I for some to or and has Animal with in is it's likely gap Health, but decision served it elsewhere? time, trading enhance do but in to one XX valuable to years. be just Rob, bridge I realize to and investing But made certainly multiple I how between and better realize Maybe add Congrats, So times understand in to a alone guys been what roles. you'd Merck, And modalities how is to get at Dean, few it for line what that not the valued it's has MRL?

first that X say X question. I'll take things. I'll or

to difficult The first They're that quickly. you right it the we critical platforms, thing modalities move if for have is, It's makes platform. more products. focus important. you are on But don't it

we're last terms And increasingly more a for years, In clearly, company we over that's the company platforms chemistry. currently, we've become biologics a that of building KEYTRUDA. are our really well-known few with

be And bispecific going protein TriNKETs use will help therapy. to to especially it are we to those biologics, build engineering, to important. target in so us the continued biologics, evolution to space to very also And fields as between chemistry with and from that relationship immune engagers our antibodies

really is that's whole So drive the that is get group moving or on systems. nucleic play. about landscape, it's a important would throughout with you I to look because going kind platform? and that very have nilly sRNA in to decide in But the we has registration?" take one also at what a that modalities that So itself. development am don't "What from One the say to do this What we group, cool." specifically willy I it want am at platform delivery look we is say, whether neat of Those -- to but gene them discovery I'm look and a can't interested going "I product? by to I at. or What acids, talk enamored platform, platform to How the I we mRNA

Rob? Okay.

Animal to the on Okay, question Health. great. And

by -- we objectively. we would look I at saying, obviously this So start

about of objective And the long-term should assume is long-term is of an think Health there our from form philosophical creates comes analysis It Animal you not opposition to So that's creation. thinking we that differently. Merck value some focus, shareholder. value what greatest for the

the at if have asset, collaboration coming business coming with you what happen would from start outside is rightful you and where Animal the meaningful decompose see look owner from with start we Health and challenge the this for Merck what's Labs. business Research that of in why we're would like to growth I happened synergies do Merck. to the really and that As fact I the feel we

I the the new in the are the We're vaccines. animal side. leader leader And going we the the long-term obviously, working health from coming products. in Health of growth are big portion to also are, in mentioned, in that see a with is MRL on products Health As catalog. coming those through at and instances, human on health And they've animal side. coming looking products products Animal in there companion a new new we're discovered, vaccines And space many Human on vaccines

alignment and in It's businesses and health those And So leverage I focus the growth. from to innovation at across each then to is company they're time. have that not that accident a It's the because by one beyond take there's you a synergy, a of our pillars their that, at driving one of nice fastest-growing animal the think them look of our and ability excellence, on and space. facts synergies. the

spun company Zoetis focused a invested they if you decision had Animal it focused as out. So high-margin has bring and effectively multiple already in out to take Health when business, off. Pfizer Zoetis, and to a look in. not They if We own, business margin allowed spin really that and back Pfizer focus weren't expansion a just That been allowed have, said that low-margin much. our investment invested. in where that maybe made because we're business to one was at example, that

today. opportunity big I drive not both and because opportunity lift frankly growth margin big there's to a and the margin invest we a not there's growth fully So acceleration the believe

then which business in it's that is we Health have to annuity-like also, as our And value It's to cash think And think accretive you So Human have ask an is to created. what the allows accretive long-term away important. from we to as be diversification you you will it's Merck? to know it. look it's I that regard, contribution look at where, believe growth, forward, flow, business, the we one continue to

did that's for So believe we continue of will I few long-term make. make we where drives just our consumer, we saw points with is keeping the that's the of to for facts, a different as set And would a part as and creator we Merck note, would the business thinking. right and best I the this did we what our of But value us decision. that shareholders,

Thank you Gregg.

We have time for one more question.

Your Goldstein next Ms. the of from question line Mara Mizuho. come from will

of what CFO to that benefit once have with dividend bump as post And could does I in guidance ask, upper So ratio aspirational incremental well? for role have is end with change just the also spin occupying operating you, if out, CEO? position margin your that the the that the and payout as looking you for question of just from the seat, I a having new the you transitioned are Rob,

Yes.

that company, next to person with I an on be fiduciary to, regard the would for expect you think that the I strong the a first what can CFO the and from So is foremost, company. the first CFO important obviously, what question, of is role and to play have

how productivity have we every as challenge There's we more find to we as are But shoot goal on -- that get would grow company to and look place, us. as in in Merck the the margin whole going that company for in around spin. to there's is divisions to XX% We're continues to both divisions, and to to and but how more to sit our And always But think to we corporate dividend are ratio. solutions the question CFO is table integrated optimization then to be be XX% can transforming that for that important frankly, CFO, business at investing the one my strategically. and start a dollar. is expansion, to the find that's to at looking the your because, start can with kind look drive whole that each of I to those pressure. thing help. post drive reassess we're the the what going On to perspective, And And it an and comments, paid. earlier tax at dollar -- that's growth. importantly CFO sure an where focus reporting still the a long-term our expected. obviously, I ability area What to meeting think partner will, can world between responsibility. to those we're going We're the see The margins, the know I to That's ways that allowed where, me is view to mentioned even scenes more continue productive from on if now, to you a I is that the inefficiencies, can invest controls CFO crossroads be for. as you And is between it range. You have more allowed not go. the efficient around we'll shooting at its believe change the eliminate and we of and differentiates that do. to and that make stakes right being should that go, And and we the sat compliance of met me payout the that you the now, does do,

closing Thank remarks? have you, you Mara. do Ken, some

Thanks, Peter.

with to As investing you've term. business longer leadership, for model, future continue importantly, executing the it we patients deliver to necessary how operate important our will heard, clinical value with that working taking strategy I'm positioned are the changes XX be and if I'm and privilege It's handing job right confident in while and growth Merck for forward, a that be going we this shareholders our charge future. charged and for on years. to opportunities our strategic been pleased we and this also commercial priorities want and fresh in new to the making at have this Rob company and in interest continue in your hope the and New thank I business time. team to actions to for you Year. senior I and Happy for and for and healthy the continuing to over support. a us And the joining at look follow intermediate our opportunity a taking short, with you

you, all. Thank

Thank again, you, Thank thank you, for you much, participating. today's so This And sir. concludes everyone, presenters. conference.

safe now disconnect. Stay a may have and lovely You day.