Merck & Co. (MRK) 29 Jul 212021 Q2 Earnings call transcript

Good morning. My name is Mary Serran (ph), and I will be your conference operator today. At this time, I would like to welcome everyone to the Merck and Co.

Second Quarter 2021 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 turn now over Relations. [Operator would to the Investor instructions] I VP like call Dannenbaum, to Peter go Please ahead.

you, Merck Davis, and Financial our Merck's Executive Officer, Human Welcome call. Thank Health, Li, Caroline me Frank Chief good Officer. President Clyburn, Dean XXXX of of With Rob Chief quarter Labs, conference to are today Dr. and Mary, Research Litchfield, second morning. President

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

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

excluded are You the and Provision during may prove from based Securities I should uncertainties results of differ Merck's note today's of considered the are the forward-looking statements call some U.S. Harbor materialize, of forth the that we forward-looking those inaccurate Act materially and reconciliation that press in made you non-GAAP have to a and Such may of release. Private of underlying statements. be set in the remind our the current actual assumptions within Safe beliefs If these provide statements statements make results we XXXX. our meaning subject Litigation significant to like on would our or Reform from management, uncertainties. risks that

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

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

surrounded deeply and mission important Peter. Merck be is as resources Thanks, in life-saving to I'm perform good talented under upon. and has us every of vaccines of our new to who are strength build on a drives my development to morning, research and you commitment bringing around and life-enhancing in behind role people focused and unwavering growth today the intently fortunate colleagues is is and special CEO. world. to leadership, I'm by and and dedicated animals honored to Company, and is to drivers, what key Ken's I everyone. investment the speak medicines focus put tangible, longstanding real, that prioritization in intend day. a of The position This us to And

do, in to center I creation. Research As the I investment our and to success ongoing who best believe Merck and is, Merck's of everything consider is future, we the value at to continue and core with patients Development, sustainable, path is

go about best as external well we to how However, patients, we innovations delivering must as internal evolve. those scientific bring how the and both opportunities,

colleagues CEO, path. of Employees external broad that I the transition R&D role stakeholders. feedback priority. candid confident I strategic investment to There's on from a reaffirms we're heard What As should and agreement solicited our that I highest remain my the are right in convictions.

future. commercial pipeline. delivering now We're will both and engine executing continue and clinical do rebuilt and a we're into successfully research And have our and robust businesses to We have health growth well reinvigorated human on and animal strong discovery so, development growing our the across

to I the We have a them, need need change nimbler, reach to While who team. address of it's to for global scale commitment to that embracing I in future leader, more priority innovations delivery value environment. pledge focus as patients, we we closely words. which more shareholders. move my we patients and than and leverage are to performing. leaner, both on and biopharmaceutical need and to value I that louder delivering the We need speed, matching And, and intentionality, and all be the the a growth while management to broader promising, evolve is it's not and new With with digitally-enabled. can that a and need me know also speak to the agility, leader Actions in do about about right to with urgency, the challenges. for ensure remains Merck the accelerate path, to global biopharmaceutical our current into of to understanding, work we long more and pace future, our

growth. strong turning we very Now, performance quarter, to good the had with

of Our also Dean access remainder the a few healthcare results business on our clinical growth to pandemic speak demonstrate year. moments. in will continued impact providers strong to is lessening. meaningful improved, We're making we expect of that Patient which in the has the the and advancements, just

the in a business complex execution achieve period my seamless a meaningful now in And during and spin-off, we growth milestone focused, which and a only what successfully faster Merck more accelerated transitions more interruption, increases Company. a in is delivered future. Organon completed transaction Company's underwent this is an to catalyst Our leadership our an can growing confidence Company, in history. organization without independent becoming important efficient, our

to moment about growth and KEYTRUDA confident strong I'm cancer again continue spend foundational that come. a which quarter. me will achieve KEYTRUDA, speaking be therapy to this Let strong growth for experienced a very years

leader sustained to a immuno-oncology, into determined leverage this success. are in We are and

our more XX in set we our XXXX, highlighted are of presentation. ASCO base. of by we rapidly new portfolio, a than potential oncology Across tripling our diverse investor assets, indications current expect which oncology We advancing recent many over

the in outside we will providing areas that successfully well breadth long into oncology a do leadership the our navigate the in strongly transparency biology partnerships, I future. loss our of leaders underway. have help cancer given we our exclusivity, valuable array this. pipeline the I of of we on both Externally, KEYTRUDA believe investors external into importance with understand extend opportunities and will period the us eventual clinical opportunity disease are We into of outside see insights into efforts this breadth of in of also oncology. and of Internally, of intensely as as will expanding potential providing the important KEYTRUDA, increased With wide focused portfolio innovation. within, are our

on we've done HIV with assets, promise, on our events broader acquisitions, pipeline development As next-generation candidates, we're of that as vaccine licensing partnerships, science. and scientific aggressive add and to top believe, cardiometabolic investor leaders, important we are as collaborations. such best are assets, are Executing portfolio, in other priority, planning Business and highlighting areas is role, appropriately oncology we an and and our yet focused as others. emphasis and we the increased accessing our putting great pipeline, intend islatravir, deals external well our deep the BD commercial of we value-enhancing ensuring through our our suite to dive hold underappreciated, our recently plays

unbounded to platforms products, by seek in though areas. that be will to us modalities, we therapeutic important mindful portfolio the are allow need new of have a and We establish area, time. We'll over balanced beachheads

Our and good recent its a example asset this. acquisition of Pandion immunology of potentially foundational is

value transactions that is disruptive, patient new instead address are through easily momentum, less of needs we Organon strong look in and flexibility the the the given late-stage integrated products all innovative will both most from to given are operational billion where of the have principally we that consider opportunities, early introduction financial cost and $X We interested And distribution at of our sizes, derived spinoff. by and energies. deals particularly

Before discuss I responsibly. quarter Human I know act applaud Health in corporations I investor want the to societal and to the Frank turn second appreciate to you to performance that over and our call in increasing business, demands

all committed in environmental, me a social, this performance across In has strong believe I'm citizenship, With to fact, that, our corporate record the of continue history remaining a will and and track area. value strong for our leader sustainable long and I and to issues, Merck call Frank. has over to let turn stakeholders. governance of create

Thanks, Rob. morning. Good

and these Human excluding the continue to normal demand As largely business, demonstrated Health resources of world, half to underlying the Oncology, wellness we're exchange. rates normal has continues benefited catch-up returned we've missed seeing in vaccination levels impact Rob procedures urgency more on strong reallocate engaging momentum business highlighted, visits around and underlying achieved to investing screening our to surgical growth office patient In we for the drive improve. have business with visits, and encouraged second portfolio. in rates, our are The of teams We're our the our quarter, these will we Across U.S., that and encourage favorable trends, screenings, XX% And of been physician-administered that physician levels. products, to accelerated more in agility the the drive our quickly activation confident by programs, oncology including for doses. the to momentum regain year.

of basis. ex-exchange to reflecting brands. quarter the global performance over second grew its Now, position course eligible of share also class. demand. has and new KEYTRUDA comments I'll on sales the in turn KEYTRUDA new of strong oncology, maintains increased immuno-oncology within growth, cancer, to will of $X.X My the be an to XX patients. key continues our U.S., XX% the lung its X strong KEYTRUDA billion, leadership continued demonstrate In pandemic, out capturing patients market the In

and renal see adjuvant cell to tumors, key high melanoma, indication. continue strong across bladder, our We all carcinoma, including growth MSI

to data in to near of year. quarter, and hepatocellular label. and look in also PARP strong KEYNOTE-XXX renal look recent Additionally, cancer, and quarter, launch head launch neoadjuvant China. ongoing in the adjuvant metastatic We're adding XXX. the in breast following in carcinoma. in the approved based to overall Growth off forward to in Lynparza LENVIMA setting. launch potentially grew in at cancer launch with excited be launch the be we cancer of combination renal the the by recent approval NRGL the reflecting future to very launches of cell by inhibitor. we We're driven neck carcinoma excited Outside indications presented LENVIMA start cancer the the and increased a cell And to carcinoma to KEYNOTE-XXX our leading the we carcinoma. by listing and XX% continues growth on and U.S., to based potential on KEYTRUDA XX% breast plus demand indications, triple-negative OlympiA approvals in grew are the forward adjuvant upcoming in endometrial in KEYNOTE ASCO future, a driven remains the and continues of KEYNOTE-X also recently lung this and survival

return recovery lockdowns. on visits. additional U.S., of XX%. in due which Our impact a Sales provide the growth I'll manufacturing, to the driven benefited year's by vaccines from due improved last a wellness higher negative Outside China. in to quarter, strong portfolio GARDASIL sharply by to level details also driven was sales very increased demand more U.S., increased moment. the the supply had were normal a from recovered In growing of

increased by driven Our as to hospital year-over-year, last surgeries business continued grew recovery. year. BRIDION sales from improved patient's its access XX% hospitals

execution. Turning market resulting gives the and the we recovery that have a in to from outlook. we second recovery our strong very both commercial saw will quarter us half strong confidence

Over physicians of returning early ensure Merck for visits. quickly patient their it's and the that detection, the health quarter, recognize first importance and resources to focus and putting patients are campaigns pivoted routine activation to screenings, to offices

organization. Our in our has increased resulted importantly, continued GARDASIL meaningful in teens vaccination access we've has of in half increases as to time lockdowns to year-over-year force many and to continued dose. in to which to our We of that of have drive back significantly encouraged lead to-date, were the tumor the rapidly if expect public demand across at health shown efforts underlying particularly against drive us future markets will supply, groups, healthcare second will patient COVID our X are accessing with back-to-school vaccinated Of ex-U.S. rollout confidence pandemic allocate COVID-XX teams help recovery we we've in our one-third will made of and in Lynparza, a very been as pandemic. the are growing key continues constituent the paired benefit commercial increased demand than will In vaccinations, and the execution improvements we've to seen the our we to And sequential the right improvements gives areas continues seen and portfolio,, including working enable patients unable by as these across near-normal partnership KEYTRUDA, efficiency meaningful year, the throughout to us seeing for as from that growth we outpace And in we fulfill oncology, Furthermore, sustained least note, of that drive in strong the more the Merck regulatory with U.S. broad chain, of productivity confident across also adolescents, improvements providers. half agility supply. We types and supply innovative disease. with GARDASIL allow season. rates These assume such improvements approved, -XX performance and previously to have ensure in global we LENVIMA, doses overall strong and remain and growth and in especially for Overall, GARDASIL in stages the for year. look demand appropriately markets approvals, expect increased we demand, alone geographies. belzutifan, in China. major the to and growth. to

successfully of complete would Company mention around our of to All strong drive of execution year. to the we're first like spin-off in strong Before enabled I the our commercial the while, Organon. conclude, that the colleagues the the growth to half I working world

results the execution. spin-off achieve to even more growth focused third fourth business our drive in close, strong To quarters. in benefits to growth and stronger to that we momentum, are We organization, the are ability commercial meaningful the has regained commercial including well-positioned the through confident and

Our not we the in to confidence look only innovative long-term underlying resiliency, forward the our demand turn portfolio rebounded that, over globally. medicines call its Caroline. With demonstrated vaccines. and value return patients has to and to but robust a [Indiscernible] growth. And demand-driven its to strength, for I'll with

Thank Frank. you, morning. Good

improved. the business for patient recovery strong driven in meaningful products the the pillars of our across growth Our and delivered underlying growth demand business access continued as quarter, by

to operational animals and enable to worldwide. improve the will us our As and delivering confident wellness by revenue for we meaningful value that financial creating we are mission of expansion, drive margin long-term our strength, exit people our growth shareholders position the quarter, on health and to and

our increase our Now, foreign were continuing excluding impact of Further Company of be of reflect to an basis. which the or adjusting underlying for XX%, my ex-exchange remainder the of estimated Total year-over-year, the of impact pandemic, evidence will total $XX.X revenues operations second exchange. comments billion, basis. XX%, turning quarter strength revenues Merck an results the positive of grew X% The business. on on a

exchange, three through year-over-year mix. higher in manufacturing development product items in increased of ago, costs, our and increase foreign er by Operating the promotion costs, was a P&L, for Animal XX% adjusted billion, XX.X% high when clinical showed increasing Animal, X.X% driven by to swine, partially highlighted, will respectively. effects vaccines which reflects return costs products. year walk as care X.X%, adjusted momentum, pressure, of XX% our pricing products. business for Animal the driven the our comments quarter, Frank Companion for Health XX%, As demand on these in and activities reflecting higher remainder increased global of X% parasiticides, including last our you the from strong pipeline, stage growth offset as Health an poultry was higher very or expenses our pandemic. global margin sales higher Health impact driven the key growth driven be of estimated the global The XX% for by increased growing pandemic support for quarter estimated favorable basis. improving ruminant, XX% across I'll the demand impact. an XX% by to my line intelligence a increased $X.X Animal decrease Human largely In Animal had demand a well was XX.X%, drivers. early when of products, investment Gross across along Companion BRAVECTO Health of by effective quarter, tax year. Livestock, the outstanding with and and livestock Performance unfavorable now of demand for grew rate non-GAAP and ed in and

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

achieve to you of turning Before Organon. of guidance, briefly a remind of our the XXXX I to benefits to want expect the result we spin-off as

that revenue our drive very full completed, unlock as out a and future. Company to And XXXX, the the Merck about to continue accelerated and underappreciated. pillars profitable we potential We're spin potential excited With focused believe now of positioned our our growth. is we is look better more to growth

the XXXX. we for the and and largely patients Health trend have this Now, adapted pandemic of assume continue. impacts to will systems

year. expected narrowing representing less of of XX% than to range growth our exchange revenue $XX.X $XX.X foreign a strong mid-July rate. including are that billion demand billion, and our the underlying momentum remainder We us of to pillars execution The for from strong and continue raising positive to our the to growth see X% using provides XX%, impact confidence commercial will we with throughout

higher expect sequentially total be such, quarter. to we As in consecutive each revenues

be between expected and Our XX% to is XX%. gross margin

at grow growth. and to sustainable patient accelerate rate, expenses promotion, by activation near-term high programs business our pipeline in by revenue our driven exciting operating support long-term to to and investment a investment, increased R&D expect We advance increased single-digit to momentum,

be from were as a as a reminder, margin guidance operating As XXXX. operating our lower they will significant combined leverage continuing our operations in implies range Company, than what

continue in and of income our In by approximately expense, XX% other XXXX, growth expect expect investment to of than addition, accelerated margins driven we operating revenue expense and greater $XXX in million. business. In we our disciplined

billion We We XX.X% XX.X%. rate to full-year between be expect our outstanding. assume tax X.XX shares and

positive non - $X.XX, and Taken to XX% to reflecting between together, exchange growth mid-July GAAP range of rates. approximately we me, be using of to -- impact This XX%. $X.XX X% from excuse includes EPS the foreign between expect

allocation your GARDASIL, strong in Frank and in areas to Health. revenues growth products, business. our consider on: various the expected As also to two we Animal Animal momentum and and Health were you models focus of described the continued GARDASIL expect there in acceleration

as revenues and not KEYNOTE-XXX, Our launch updated of reminder, the include guidance benefits the potential of the from a also approval molnupiravir. of reflects does

lie to deploy intend development from We allocation. the absence value-enhancing strategic cash $X-billion business support will development, key our through and dividend we distribution parameters to that we and cash time. align in Rob over ratio share brands, progressing committed opportunities of a return the Turning meaningful Organon, will which patients received and succeed ever-changing to We is to a opportunities outlined. equipped In a to remain meaningful our with remains in is an the to turn value and in sustainable Dean. of Company, investing as Merck financial leaner, prepared to innovative more increase and of I'd payout conclude, pipeline, and leverage to now look over shareholders on business capital that call we repurchases. our better the landscape. drive strength, to that, which to Merck in our will like operational we shareholders. To capitalize growth focused, for agile creation position With long-term and ahead,

to cover here I'm Thank milestones on pipeline. oncology, key and initially over clinical will overview the past to in be delighted an then across quarter. provide you, today updates, I progress made Caroline. of the regulatory broader

is urgent to checkpoint an decline The therapies a this positions in As for cancer strong from rates also to report plus XXXX there Society cancers, rapid XX targeted make advancements prostate, deliver where there our from breast, reiterating an it's need potentially and momentum Rob in notes American just well. decline noted us to inhibitors. highlighted, indications been continue which beginning immune and decrease has oncology this Cancer we approvals a And and in show in to research, the One to is pipeline, factor lung other by worth Merck and attributed XXXX. to that death our recent accelerate impact. report is -- A XXXX. in goal; including new melanoma death

Notably, In options for hopeful historically, treatment the that this aggressive during limited, targeting contributions, most several breast continue several being have achieved we We been advancements milestones the am and breast cancer. made which, cancer, options will triple-negative subtype which to to patients. of cancer, announce quarter, improve fuel women's industry-wide, last decline. treatments pleased I are advances the for our will

Phase risk ago, local which first and of treatment, KEYNOTE-XXX presented chemotherapy early event-free These patients. on any FDA from adjuvant in was or primary cancer KEYTRUDA, treatment from III chemotherapy approval remarkable reduction X or The is precluding based post-surgery. to evaluating or distant high-risk, were the new breast demonstrated neoadjuvant study, practice-changing surgery, XX% just results second monotherapy for alone definitive a as results death weeks triple-negative then with combination in pivotal indication recurrence, as a in cause progression survival malignancy, compared stage the

from equal metastatic combination III chemotherapy we the meaningful positive KEYNOTE-XXX whose KEYTRUDA Now triple-negative express with triple-negative Phase KEYTRUDA with announced in study, metastatic overall additionally, clinically a breast untreated first with to combined therapy in top-line survival evaluating PD-LX cancer. positions combination significant patients chemotherapy to show be proportion survival or score tumors to overall with breast results, cancer, This anti-PDX the statistically in in than greater XX.

recurrence, certain clearly of cancer. invasive benefits early to results AstraZeneca, aim death, cancer, second our will cancer Lynparza Lynparza with Also stage BRCA from expand at global by results indication include presented We high-risk risk the and ASCO overall findings breast OlympiA survival with and evaluating regulators or continues to patients full to the early-stage we HERX the will to survival. partners trial These work existing we'll submitted breast Results trial, the breast at cancers, treatment adjuvant demonstrated XX%. Phase be along for with share authorities III soon. regulatory evaluate the to for reduced negative germline of that

with additional cancers at strong agents. making check to treated. with progress the to stage ASCO, need strategy Kaiser are and to our significant presented that of - earlier The expand is we oncology assets the at we multiple potential early unmet our data are breast one into also partners area way Seagen, early studying of conviction example that positive is with in Now, lines of is the this in change stage Merck patient have our encouraging HERX breast therapy clear in cancers. our cancer an It HERXCLIMB patients [Indiscernible] from establishing

advanced the where results Eisai, with for year. this earlier indication across along study confirmatory cancer our received partners the progress at from We III showed And Phase and survival expanded finally, the an investigating for trial, patients their women's endometrial more we making of KEYNOTE-XXX III of for and certain overall of status. approval Phase KEYNOTE-XXX from an bevacizumab LENVIMA combination positive to the progression-free PD-LX KEYTRUDA survival. the carcinoma, metastatic, treatment also be FDA we broadly. meeting persistent, with with have pivotal cervical results its are We of met at without recurrent, treatment and regardless combination endpoint an Results trial the upcoming platinum-based chemotherapy patients dual with The from and or with will KEYTRUDA first-line cancer, presented submitted regulatory authority. primary for in medical of

Additional FDA approvals this quarter included X new indications for KEYTRUDA.

The the first junction based trastuzumab chemotherapy locally is of with metastatic study. or patients or in combination gastric and unresectable Phase KEYNOTE for advanced on the with first-line adenocarcinoma from treatment HERX-positive III gastroesophageal KEYNOTE-XXX results

for expanded approval a quarter. carcinoma second KEYNOTE-XXX II by The patients surgery advanced decision under on locally an cell accelerated the The cutaneous we from renal review, in expect based was disease carcinoma. also cell Phase approval This on And third that first-line not KEYNOTE-XXX, granted granted for curable indication radiation. with is or study. was FDA advanced treatment, a based priority Phase data and X squamous

Now, Lynparza European was certain outside a the results esophageal U.S., adenocarcinoma, in the agents. approved conditional cancer with who new prostate advanced progressed with approval treatment PARP patients to be hormonal metastatic first gastro prostate for on certain or granted China, for certain cancer, esophageal new inhibitor This for is prior And cancer approved in plus China. KEYTRUDA, Commission from castration-resistant in with following KEYNOTE-XXX. patients chemotherapy, based indication the junction HERX-negative

KEYTRUDA earlier ASCO by significant virtual of III data with after meaningful lines statistically authorities Results and of adjuvant to and of benefit regulatory the survival. therapy pivotal carcinoma submitted recurrence, certain evaluate overall given be Now, Phase global was cell continue also from compared reduction in trial risk to supporting KEYTRUDA new the KEYNOTE-XXX or will disease renal presented. death, will in a placebo. meeting, trial patients clinically to at surgery for demonstrated XX% the of the the treatment the

be evaluating III We are includes making chemotherapy strategy a initiation This lung trial, formulation believe cancer. an more formulation our of Phase a combination additional and with of make early to presented III carcinoma belzutifan cell to additional non-small X of will be patients. with study action in with benefit studies the development patients in extend are Phase to for unrolling in progress Two This And this Phase data good the a program important that expected September, XXXX. renal FDA expected KEYTRUDA and Pembrolizumab continues gaining an at subcutaneous soon progress readout option date a finally, momentum. could with in patients. ASCO new We on with cell in

to to decision to our India, in several pipeline. and in the Indian the outbreak enable made of generic Now, turning response SARS-CoV-X In we to license with income molnupiravir access voluntary broader low agreements through manufacturers. middle countries

by We help are are ongoing III by we've the studies a the announced October Infectious excited and Microbiology of we to crisis. different patients molnupiravir in While to progress remain studies data from with continuing the Biotherapeutics, with our Along populations, being both in partner we readout forward the We the Phase recruiting the patient in II/III in to phase India encouraged results at the from presentation date. full data generated seen and of the look look the portion to study Ridgeback Phase XXXX. Clinical the Disease Congress the of European hospitalized of timeframe. we and dose-finding and this forward outpatient

tolerability a our molnupiravir islatravir and III HIV, continue program, as new in our progress prophylactic to option, Additionally, postexposure we we evaluating at inhibitor. of a posted In study setting. to PrEP reverse oral Society safety meeting II Phase transcriptase International presented the nucleoside support the of once few profile data a monthly weeks AIDS on investigation islatravir translocation the to and ago first XXXX. development half readout forward a the in Phase look continued

to results an to that VAXNEUVANCE, disease. from settings. Along stereotypes announced circumstances, continuing the with shared prevention Building including serotypes. in to empower populations evidence of option discussing also on XXF. forward immune studies X pneumococcal in and that program at XX, adult adults prevention geographies VAXNEUVANCE, These to including the new invasive range note XX VAXNEUVANCE and trials, Phase of X healthy may XX invasive Phase vaccines. populations approval in VAXNEUVANCE we caused lower protection pneumococcal XXF pediatric for candidate broad superior to a potential are positive response received primary this important regimen non-inferiority development risk. look achieved further diverse based conjugate for robust and the our vaccine and disease safety partial with pediatric vaccination VAXNEUVANCE, or evaluating not in moving and endpoints III and who in their PCVs. study clinical through our on a pleased unique to to date, immunogenicity data immunogenicity adults achieved setting the have vaccine pneumococcal full first in series islatravir across with children treatment of by pneumococcal PCVXX and infants PCVXX, supporting position have pneumococcal started We to valency healthy of who use are and our In enroll years with am or forward serotypes X either with suite, FDA vaccines, offer met for We maintain engagement also I PCVs the can progress immune patients the response clinical catch-up previously shared of increased a III for and and a received have promising adults the we a for ACIP, the data studying with showing older induced in serotypes

globally. our from efforts year. for progress to vaccine read data Labs, this I/II Research in improving later remain excited and that conclude, stemming people out anticipate treatments affect our Merck the To evaluating adult to Phase diseases contribute continue pipeline, I and our broader VXXX, to from options about program, We that focused

We our to promising patients many harness while and pipeline broad therapies with cancer for of as deliver the to continue of our and therapeutic speed urgency as benefits candidates. possible, a advancing on strategy vaccines

I Now the to will call turn Peter. back

Thank Dean. you, themselves more session? limit Mary, ask each you will help start to that we to question-and-answer questioners today, Thank question. the to to get analyst you. please And X

first instructions] Morgan. Chris line Schott question JP of [Operator Our the from from comes

open. is line Your

the much so Thanks question. Great. for

Thanks the on little a how just you that a accelerate If through competitive Company post is versus therapeutic Company's have business diversification? that bigger thinking series investment as priority. oncology can more more a For all much. cons but everything, deals about just at I larger know walk they in my one think there more about where transaction way to to equal, bringing obviously just the X bias strength the not Organon priority, question is I'm a area a R&D looking transactions you environment? else other But here, development deals? -- your smaller point? and are one you the highlighting, at innovation maybe Rob. a a since get would And versus trying the the you're you're for you or this picture elaborate Can so consider pros if of is just and bit

question, the appreciate I good Chris, No, Sure. Sure. morning. and

to more upon do I and want But to HIV, as ourselves, walked -- I on we a going I both a also Company in and outside recognize add prepared build think know that hopefully heard to prepared upon. all the sight across we're areas we need pipeline, have remarks, Clearly, I But we're about we breadth can the well actually lot of across something with that that as just remarks, as player as and well And what to just the do upon already strength over Obviously development, to said, we starting we assets lose this bring We of broad comment ourselves focused it we and touched And we with KEYTRUDA really in don't see we're augment of be forward internal we made a can oncology, As KEYTRUDA, very time, of oncology that. it's we focused strong position that in through, oncology have oncology. to vaccines. want Dean build that. want you reinforce, that, we and strength assets, the and pipeline. said with a and we through in that, and have need confidence the to do. there. see the also Dean leveraging beyond in I the very need and a really what to business foundational

our advances to needs, of think area at I because space I -- we will strength largest business we and As the in where area. and development, look a we the think in a that still still right ton able the focused always the area now data despite one unmet you the look to if about there's KEYTRUDA the opportunity. And of and to have of truth other we've majority what of This don't KEYTRUDA position patients, for an space as There's still the are really I with is have which they're for to of within the this this need. patients agents, the said, new done the leverage of in phenomenal made delivering be face. science oncology unmet differentiated, yet observer of is solution a in they space, unique best cancers being be have select the

than that we both. to to be to the would I continue But have well. balance be outside do we recognize So to of looking see strong oncology, do there, as a outside we and that, have balanced, the more areas to I we And things to on leverage look focus. that, portfolio in will also and but are like in oncology we foundation, where areas. augment data us Build the lead need can

are if deals earlier we that -- side really a part question, through are to doing deals. portfolio we we believed And But to them, we've clearly continue value, to very doing between large the will value. where on the historically. foreclosed and deals, more deals, those if we get of in one we to small. believe by and science deals. development and move we not On a perfect have larger Driven informed bring the the the bit we're synergy-driven areas And find from right can to as second we where of we was would value. greatest add a small those the and key little is we component, whether need the believe, they go, to can world bring about Those not clinical are finding where do is we've prowess I cons we large or the the on as impact first you had the in science. pros large always think the continue But bring said, we been assets it's

our this don't And I of those large to we go deals the focused we across have pipeline. the portfolio enough on type think we through on science, own to add need time. at can with what deals firepower

Chris. you, Thank

please. question Next

Our with next Umer is Evercore from question ISI. Raffat

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also probably enrolled analysis are that with I'd I signal. the in your still primary Hi trial? very guys, probably bit And for up. I thought seronegative within way next data. my be thanks limiting taking I if so question. it. is cleanest feedback log of it fair X.X that Thank on at on this, the you're in mover I'd less it's see there's embedded observed presumably, you've little seropositives like year And where days, much on that's amount that's benefit magnitude benefit patients My the wonder, as what load almost drop? looks ask needle for viral biggest you n is you of on you. you're think to the numbers a about most I clinical And the we that five that because population And than seeing, since the feedback focus X.X molnupiravir, trial curious. coming mobile though antiviral think looking question a what's even hearing the to the the are

Dean. is this Yeah,

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next thanks, please. question, Umer, Great,

with Our next line Chen from question of Louise comes Cantor. the

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longer you. My months, XX next you think Thank you've how taking would say know I for given the how Thanks about opportunities. some your expansion that term we Hi. question. margin over just should progress? question guidance. is for my But let's

Thank Caroline. your for this is Louise, you question.

expansion come is and to will enable our operating And efficiencies the will come which First, to of I'll from come Company, expenses mix. we we through that said, growing revenue a It have, $X.X business commitment support through will the It opportunities deliver period. And long-term revenue drive rich. expansion. change it growth. will over few a from the will in with therefore that pipeline to focused factors. expecting also billion And long-term product we drive margin as different near-term us growth. X-year start are margin That to are efficiencies in a also our across our from our come and also

to Finally, specific result of expect we in the of GARDASIL. XXXX step-down KEYTRUDA an royalties, do in increase as margin a and

grow guidance at expansion, year margin of increase point X our assumes continue you And the margin expansion So coming year. to out look I as think percentage the that to midpoint for this as I range margin. that expect in about to the

Great. Thanks, Louise.

Next question, please.

with comes next the Goldman line Terrence question from Our Sachs. of Flynn

open. is Your line

there's for internal Great. of use the setting and if you're the curious amount your And tremendous guess, obviously just view would timelines any latest Organon then for a Thanks on of question. of but be Rob, been I new of valuations. that to welcome transformative asset for as were proceeds to Dean, Thank particularly taking the some months. XX to XX progress any out these, potential with Rob, having you. touched years you ago? the platforms as last over antibodies XX as of Two-parter: And stand you

Terrence, for thanks question. the

to how and As want put it I on we market to limit factors, because, a we're fast on look move looking with obviously, don't based actively time and forward, of want speed. some is trying assets having. own discussions we're timed down. BD, through are pipeline on the the to their in we're focused in ways but to it's now, not deliver find Right to and where lifecycle,

want what Caroline's I we going to I make not make eventually, cash opportunities, before we put forever. find is, trying to we're really we the on that sure priority sit to But those think say that if determination. on first don't BD the

a technology data much advancements of that in so are think platforms whatever of of lot important, question, are in almost I'm and critically there's movement a engineering. laundry movement in call to lot something. -- it degradation. them. of not it's And Clearly, all such said, second I I In will platforms. in in interested relationship there's what data we would antibodies. saying focus I say, your molecules, list just in important to I a protein platforms that miss that Clearly, conjugates. in as are going making but And movement protein there's technology there's for as also movement antibody-drug you such in Clearly, There's

one and always were is recognized, also vaccine we've mRNA especially of speed but the of for invest in demonstrated in for one a SARS And of us about, we really is to first critical mRNA. often that's the monovalent people think relationship something in which a the think vaccine vaccines, to Company, And that I as for success the questions relationship to scalability. oncology. -CoV-X ID,

and GARDASIL. mRNA that with little use programs those take taking programs vaccines, to pneumococcal benefits oncology. interest we're is complex believe emphasize of lessons so with where disease, place of clinical And where we we're mRNA as I'm that on of the don't a to do have not Outside mRNA Moderna technology. and profound vaccines outside think said, And we're so that programs prioritizing We that's vaccine. we would continue productive partnership implored. bit Where of sure some to -- want it. will careful such I vaccines is be those the multivalent a where place I that as a infectious such progression an that vaccines. proven with more drive of very I is a watch

of these adding And we to would be lot you create my we scientific that of need focused. we valuations. I And we know, as opportunities. we where differential we value go read out there, What that's fully still after strategically while pipeline. to but a part are opportunity, point didn't continue tend valued. appropriately where obviously Terrence, our presents just really to can we question That on based capital to we're And last we're still are answer apologies. what's recognized to challenge, of aggressive I on see your as the the marketplace seeing things believe I in there's space. flowing a And I be the biotech into the apply recognize if that we

Thank you, Terence.

Next question, please.

Baum the from Andrew Our Citi. next of question from line comes

line is Your open.

[Indiscernible], [Indiscernible] a you the Rob, stating I'm with axis degree a I need that credit growth great doesn't highlighted The -- including previously, curtains market Without of end at pipeline reason shown have Merck The the to as such is on historically. the recognizes you're pipeline decade. on the to say raise doing, that islatravir. focused

safe large you to And [Indiscernible] just Merck we should to among islatravir intellectual have your You on. infringes see Yes, [Indiscernible] expect believe others. Do program then in an that they're add being Thank When a very question. property? has raised? taking of spaces it you. curtain committ.

to very you try be with will came Andrew, garbled. To question. the honest very, through we you, answer

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HIV we portfolio some to that what outside KEYTRUDA. early-stage Portfolio that recently insights give did to our with we of said, showed We the and broader I As is work focus. when an did oncology -- the you broader area of

forward, session. as thought obviously, plan lot as growing see we'll and probably very year, we areas have in move and we want closer thinking conviction think area our next the another then, a to where an about Our we And we're broader there. to interested We're highlight end opportunity probably, going is we approach the as portfolio into mentioned, is we think and have year. vaccines we to I I clearly, as move to of of But cardiometabolic interest.

over be we'll IP will I to if in be I'll the if got asking where Dean some were I that issue question -- turn a you of if those he's right. we future. the So islatravir. pro-drug focusing then aware think with saw areas And

Right.

is of is foundational first terms of our what that all, So for a that's treatment. and and Islatravir one built on element strategy in could build on, monotherapy prevention combination

the in interest Islatravir we of believe kind it in strong of and mechanism. take this Islatravir, as validation So I how

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Andrew. Thank you,

please. question, Next

Leerink. next line Graybosch the of with Our from comes question Daina SVB

Your line open. is

just on your Thanks Didn't and ask want it consider preview of the around October to analysis. vaccine best wonder June AICP meeting, could for X right. and the the Serotec I the other case give one strengths you pneumococcal. for base of I us All if question. some given strongs? your

take Let that There We're far performance protection broad serotypes serotypes than point. others. on certain are disease-causing in data the an against important to are showed that and persist. serious which confident important all for clinical and very This are me that serotypes be basis strength the more immune improved filing, serotypes the will the of our for Not I'll serves Frank. vaccine event it VXXX program first it of pass as and then the equal.

understand I be the ACIP very important thinks to will so, the how epidemiology think one at it through and that. And

we've standpoint. an stereotypes with quite important Now, demonstrated from response non-inferiority PCVXX, superior X have that epidemiologic shows the are have we and that that immune to shared really that we data for

- other to And VXXX relationship also are the advancing bespoke in aggressively relationship pediatrics. to but also not adult also we that to the to more the vaccine advancing share issue we VAXNEUVANCE, on think advancing that want so. I focused in elevate we or a it or next just are hope we're I Frank? data that over adults, year is VXXX, just

And of -- about future PREVNAR is, waiting XX. question we're we franchise. very a the pneumococcal vaccines, what we're better say overall and all understand I are for your the ACIP, opportunity really, one, to excited have on To the VAXNEUVANCE, would recommendations, the PNEUMOVAX, we

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franchise in X When VXXX I would for trials to vaccines overall VXXX. our out, at vaccines pillar We have Phase the there beginning. adults. We're think the well, if pediatrics both Pneumovax, for the you in as is mentioned competitive also this is highlight excited very VAXNEUVANCE heard as the mentioned, long-term. near-term plays but talked confident very for a have adults continued continuing offering would for and, we I as Company, opportunity we risk we'll and growth in very that Company I how we about look some as for our us and develop that being expressively to in aimed a we're say, to So the see the as have being III about we're also growth pediatrics and pneumococcal in for

Daina. you, Thank

Next question please.

from Our the Meacham next America. of Geoff from Bank line of comes question

line Your is open.

thanks Good think off I just of morning the Rob, question to about you the for strategy guys. want spin, and the and guardrails ask coming another what are the Hey when completion see to BD. question.

I expected is, more you but lead take or favorable on expanding expansion question apparently to of the orphan then diversifying science put to margin therapeutic whereever point there's oncology you're revenue So priority And that Thank finer footprint you, now your the thoughts drug away neuroscience, on mix know the FDA have. over the takes would you. from what up areas. the a environment? arena are a the

the I Geoff, question. appreciate

clarification diversification. combined have as As with to about that and the agent there. data the see we from do a with to area as a That's we'd have from earlier, from is leverage we to we how strength have, the I Obviously, development margin have relative a business -- believe One, KEYTRUDA diversification diversification of it much needs balanced couple Company, -- point. have, either think said, a against to we KEYTRUDA, like we more there. foundational get say oncology can the your would to need rests X we field. I out and balanced oncology. position tested, said with, being away basically it's still or we difference broad And bring for in we we where think the away every about we portfolio, I still that goals huge our that an versus over pretty insights I important time, comments. make unmet

do then diversification we us see goal look And areas. future an therapeutic I into and -- so for important other I for oncology across should also future. believe as broader And expansion the

We have vaccines. position in a strong

what neuroscience, We we as area. fact, neuroscience stage we can several on actually To in are make that. looking your comment on there. excited do so space, We've programs we're where about question an And ongoing cardiometabolic a the have in prioritize. Dean early mentioned

foremost, And in our about science. growth. I investment and First business, that, is and sustainable in long-term innovation prioritize

or of both the believe And deliver I and we growth. I expansion growth, margin if to invest matter so prioritize will investing it's But that in we reduction driving always cost always will in can that. business. bring operating a

that if question to landscape. understand proof-of-concept movement advancing. in our to I that me I be In important had although that changes we're [Indiscernible], understand Tau diseases, very biomarkers, the that and for rare level orphan relationship a of that highlight very how deals example, want situation, being right. anxious has changed is we're example, we're play It the biomarkers the we because show replicate. the of reason to that also disease should very utilize events and oncology, us, giving Whether And shot very or which intense ability that's to movement the in for biomarkers interested do to neurosciences, How you're of of to is and phospho balanced should in you emphasize important navigate, patients. shifting set how interest must by program, like head pathways would for relationship beach recently of at it's important. non-cancer There to really cancer a about, for such especially possibility and and that want that enthusiastic been that and able we FDA is that the the clinical at to has neuroscience. that biomarkers importance Tau I as that in biomarkers. quick can quickly. very importance of can you're best and take think we But do clinical Let rare way strategy looking assets is a an something possibilities, broader to expand disease And from cancers. then see diseases expanding the rare to at in I and once move into we're with

neuroscience MK programs, how And is well. business taken in we've navigate have. is in The we accelerate Phase other look development account that changing it also changes for it how depression. the is we're field something we have that we programs important. and and we neuroscience Schizophrenia, at as MK-XXXX affecting in MK-XXXX II is treatment-resistant that regulatory landscape advancing We have for It the

X you, get o'clock. more a to it's realize minutes We We're going late go Thank Geoff. to questions. few to

Mary. question, please, Next

next of with Ronny line Our question comes Gal from Bernstein. the

open. is line Your

-- if about a multivalent me I using squeezing in. was morning, thank for Good wondering can on you you bit and approach. little about talk a mRNA more

problem. or Is just that a a to You vaccines notice it's issue of impossible hard this be theoretically multivalent? engineering issue, an getting RNA messenger

it more issue take more any you with issue. I'll valence a in multivalency that have question. is, the The becomes vaccines, that it's complicated

to in field the relationship that you I overcome there technology say was those barriers. of Science the impossible. be mRNA think race don't an where that call some other anything's then that The there are to -- to of and have add is is that issue be trying technology, parts framework clinically. impact me would reactogenicity the out I would And there field need, lay and of remiss and to dose every are what interest that where something. will time initial an think the intense we But places the to I it I development the other for would more you changes. discovery

you, Ronny. Thank

question,please. Next

Mizuho. Our of Goldstein next question Mara from comes line with the

open. is line Your

had going We and to something being little days government negotiate only ago, pricing, saw continue on, industry year, pricing one major that you a the things few a administration, on came systems. a for in was the increase. settled bit we major of on for Biden about Merck had pharmaceutical of that about a was issue Thank question. the I a that taking to this part pricing pressure the potentially the waving, is as to the into a think beginning be Medicare question hand commented -- Great. I of of able

XXXX, just and wondering, the So what XXXX, around rounding out as into are? Company's of I'm thoughts pricing

for now dialogue that with tapping to right also, to pointing administration as we assume the communicated only reinforces a question. take on you're a pressure. continues the then, I'll to price it, be that points. expect we the in of face threat Biden with we've we I think that have you. couple One, all Clearly, pricing that Thank Yeah. we as as the the expectations pressure continue But Congress. there. And see growth focus does think forward, I our look we of Company past and meaningful ongoing to that on

risk will to the about And So you Company. believe be position long-term of we important price. driven growth by than volumes I think that's our more as continue the think

price. As how out-of-pocket patients. policy we to revenue to need be we're be of and of foremost actually to our the patients the want, achieve achieve innovations we plus with goals. perspective, the as best look for think that a in goal. U.S. aside, that costs recognize them. generation That are engage want about we next we think government out need can work that you willing years, from can reducing for over Putting to to we're We want it to discussions the because of also And them innovation, our is about willing, largely able around X we a I the very protect regardless goal. risked bring it that Understanding, to and with ensure next goal

it's I think you innovative here the industry and it. invest want it. and need in we can that whole important moment, robust you shown at situation It's drive because with country why COVID the our has a and

But out-of-pocket savings they where it we’re see that areas that to look reductions don't to. in our is legislatively again, the about shift or kind we in really So that's focus. either can otherwise, of patient it's their where any cost pocketbook, opposed

Thank you, Mara.

Next question please.

Gould is question your next with the line open. from comes of Barclays, Our line Carter

the a the of Good to in morning. second and -- you with I you the very performance coming for wanted your with that quarter hoping had in little online. LENVIMA. messaging really a context additional nice more capacity taking the there. half ask color supply exactly performance the GARDASIL, in drove Thanks I the around GARDASIL expect bit what get on China, to on performance Was touch the question.

be you. would fronts those So some helpful. on Thank color

grew it that patients It this was we quarter, continue forward Yeah. we I was Hi, anticipate driven exchange. small for the of think GARDASIL that penetration Carter, significant it’s very relatively growth China you GARDASIL. China. still we as in because number XX% Frank. exclude Yeah, foreign by will mentioned really strong as move we if strong of and have Very the and

to very So Lynparza, highlight very I'd see there. strong clearly KEYTRUDA like quarter. also again opportunities did oncology, see this within we that we strong LENVIMA, grew growth,

of growth well. that, growth to number for seeing in a also and are our we diabetes as drivers, Januvia still addition in in strong So China

that we to continue growth. we'll anticipate So see

to very we China this and on products I strategy innovative ties within our portfolio our in are for we China. pivoted of where focused future growth and more why the think confident well very that’s

Carter. you, Thank

last question. one We have time for

question line Steve Cowen. Scala, of with from the comes Our next

Your line is open.

the number been A recently. is it much. is that target very in you initiated on update What you interesting? Thank Can an antibody? new anti-IoTX sees have Thank you. provide trials Merck of that this

those is mechanisms. carefully own initiated responsive, this Pembrolizumab, a who clinical understanding IoTX is that in is looking from patients watching that the importantly, more very Yeah, we’re at patients and and looking data not It us program at who possible but by trials are responsive with -- those what a patient are program pipeline. was our are

The interested. third of but But myeloid cells, have such that. reason hypothesis, inhibitor. a there's T-cell make quite and really inhibitor, checkpoint is been discussion cells, whether is but class important a of as that sense another point is other in just fundamentally, And have that that would is not of always science and that would so trials checkpoint why that's a I is to empathize some great be I it a IoTX the very frankly, second is we clinical immune point we're the all could interesting show

mechanism, what is, just it cellular for approach in interest will and how to fact our that And I the advancing in companies are support IoTX the believe us our based follow And that benefit they differentiated clinical broadly. us attacking is We have highly first-in-class advancing of it. not that but in in advancing just see on we data the trials think the a it, cancer see lead but is we're other that IoTX. we'll to molecule,

Steve, good Rob to Thank it turn remarks. you some and closing really I’ll for for you thank your all today. questions

Peter. Thanks Great,

I'm as get we'll that value counting so. place do sense confident As is to of the and committed we so. creation. a is to growth committed will you shareholders for evolve, think be Company And to we that hold I a to need it make the do we are team happen and able and know my frankly hopefully discussed see Merck world to we that about a we're that, us. matters. delivering have and we're we special as significant well, to sustainable know know we on who I I'm that patients deliver do is and growth today, what want we confident opportunities in for importantly, our the And

to forward we and progress giving rest great forward, our look to day. I as So wish updates you have I you your all on a move of

much. very Thank you

This this call, conference concludes thank for you participating.

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