Merck & Co. (MRK) 26 Oct 232023 Q3 Earnings call transcript

Welcome to the Merck & Company Q3 Sales and Earnings Conference Call. [Operator Instructions] This call is being recorded. [Operator Instructions] I will now turn the call over to Mr. Peter Dannenbaum, Vice President, Investor Relations. Sir, you may begin.

good and Julie, you, morning, everyone. Thank Merck's to Third Quarter Call. Conference XXXX Welcome

Dr. of on Rob Litchfield, Officer; and be call Chief Li, Chairman Officer; Speaking will Executive Davis, today's Research Merck Labs. and Chief Financial Dean President Caroline

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

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

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

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

that, along These the I'd our With today's the the accompany SEC During remarks. to of all speakers' release, slides, Rob. are over posted to turn section to Investor Merck's with will today's call, slide call remarks filings presentation earnings like prepared Relations prepared website. and our

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

and pipeline, team. tangible improve of that end, the in Their around continue executing I can of our and and innovation pipeline support advancing We're fundamental save strategy patients. the truly forward animals We're drives want We our to is for our global strong benefits business investments talented innovation boundaries efforts science to are across through of across business progress the everything strategic growth commitment providing we deep these the broad our enabling foundation our our drivers, acknowledge bring are our key diversity therapeutic to lives and progress pleased augmented to the world. success. Scientific and passion programs patients development. by areas science-led making our of and To that to our continued it we I'm of and modalities. do. significant and new with growing pushing strategy, by continued the the

rapidly cancers. is this of and important adopted product, objectives excited with space, particularly clinical by oncology. drug Sankyo recently patient being in privileged our commercial the conjugates. in for innovators them having begin significant has ADC proven we're lines, alongside that working which proprietary scientists We're science patients developed in potentially this addressing and achieve are these technology Daiichi unmet collaboration companies' need approved certain antibody ] with resulted to announced at Along X The an for Sankyo to [ first-in-class advance both Daiichi

we creation expertise the which execution in shareholders of patients transformative for and through for medicines amplify a for our also to and potentially arterial value ] approaching Sotatercept our the strong and basis long the has conviction TLXA profound development impact we development, is sustainable these ulcerative hypertension enable commercial disease. NK-XXXX, non-risk-adjusted Merck potential treatments these capabilities, strong programs our We're business This the pulmonary [ they added over our of and to expect complemented by colitis life-changing such Crohn's as may term. inhibitor on bring the other accelerate on that for believe Based patients, and applying mid-XXXXs. benefit revenue of strategic the clinical commercial multibillion-dollar each to we've

performance, speak quarter's Turning to that will XXXX to few reflected we outlook that in by continued a delivered performance. close full will We're Caroline minutes. strong year the portfolio. our is out growth with confident robust We for this which demand innovative in driven updated

our organization. to Moving research

mentioned, across KEYTRUDA. pipeline. multiple Dean promising having in we're significant therapeutic the the progress early-stage speak late-phase we're I for the the approval that resectable remarkable areas of As KEYNOTE-XXX of a cancers. our with neoadjuvant We're certain excited includes survival chemotherapy cancer continued position an we've and success making treatment by the making treatment leveraging notably will based cell oncology, results, achieved which improvement the and we're broadly very on in overall advancements to trial regimen In with adjuvant foundational regimen. in demonstrated and the a FDA to patients placebo recent KEYTRUDA non-small of lung This compared

In tumor addition, across we last and important numerous European sets wide Meeting of for molecules, types data at Oncology range presented Society week's a Medical indications.

our Our a into oncology leadership progress well the of set our decade. the programs across in broad next sustainability confidence of reinforces

exciting the patients our the making pipeline. Sotatercept Most and FDA in We're the and with results treatment launch early confident in the arterial hypertension. the on pulmonary Sotatercept accepted also We of trial, filing STELLAR look approval has paradigm the potential we remain significantly, our XXXX. review proprietary potential to to unprecedented progress that change suffering for for based cardiometabolic for forward

MK-XXXX. his on We their thank very needs. cholesterol with MK-XXXX continue addressing unmet on quarter the to team our patient disease Dean significant Phase and we've and elevated provide pipeline, commitment to clinical cardiovascular what advancing candidate, PCSKX potential focus this achieved to want impact expanding Merck's unwavering patients progress a as and initiated for pleased and we believe I oral scale. to global trials our to III also has benefit with We're for and We

needed to commercially the transformative world. significant investments disciplined urgency move now us save with opportunities deliver sustain also making of in on summary, around into we continue future. strong the to and pursuing executing purpose, operationally growth In to our well improve on the scientifically, and while We're the front lives to science

to that our patients, of to confidence call turn Caroline. global our increased we With stakeholders. we've I'll value deliver that, and will the over With shareholders all of to the team, efforts

Rob. you, morning. Good Thank

very Rob strong we our quarter, across in and driven near in our to strong confident term. underlying demand innovative by the As robust continue portfolio, results achieved this ability to we highlighted, remain growth deliver

making deliver also to disciplined science patients shareholders. and are leverage the leading-edge the We value investments around positioning into to to save and for well world us lives improve future, long-term

quarter our to results. revenues $XX Now turning were billion. company Total third

ex-exchange foreign business and LAGEVRIO from my of The impact growth comments an the remainder revenue the delivered strong on X%. exchange, will basis. be of Excluding

business its Health Human momentum. sustained strong Our

Sales growth business Health driven was LAGEVRIO, in and increased Animal X%. XX%, Excluding by our vaccines. oncology

in brand disease. the cancers, cancer. breast stages leadership cell of demand sales oncology, as patients driven Uptake grew KEYTRUDA setting, and cancer indications is as Xb in KEYTRUDA and Stage U.S., such to to metastatic the this In performance the our key non-small driven with earlier from triple-negative lung in significant increased for adjuvant and strong impact Turning global both metastatic by stage it XX% Xa reflecting uptake now strong, In brands. growth cancers was having earlier indications. continued remains of has for to increased utilization earlier-stage achieved of KEYTRUDA billion, $X.X by treatment

to physicians setting. in indication KEYNOTE-XXX and and lung provides by earlier-stage serve approved We with neoadjuvant usage additional the and patients including cancer the options leadership cell recently patients an treatment extend to well to setting. remain Our adjuvant non-small important our positioned exceptionally

than In usage this on ] bladder to the excited in If KEYTRUDA would the cancer, in of [ eligible eligible double to study based are results compelling population we approved, KEYTRUDA potentially from expand more patients for cancer. patient displace bladder study. the first-line KEYNOTE-AXX

growth had X% of driven was and the increased carcinoma triple-negative treatment as which certain cell in in growth renal Lynparza cancers, carcinoma, revenue cancer. this quarter. in patients the neck shipment types negatively by uptake breast and the growing Growth KEYTRUDA expect and high-risk including by by metastatic U.S., PARP driven well stage advanced earlier quarter. of timing renal head endometrial carcinoma driven U.S. we for was the China, alliance with market-leading Lenvima also cell remains Outside demand in inhibitor, increased of certain in cancer demand cell renal cancer growth XX%, the as and alliance with impact will fourth revenue early-stage

by sales in $X.X driven In benefited in underlying delivered which billion, from U.S., by in global particularly benefits continued strong European portfolio led and uptake in decreased China. due to ] markets. sales GARDASIL, its indication GARDASIL pediatric also CDC patterns. to [ vaccines Our increased the XX% demand, Vaccine the launch key the growth, purchasing of U.S.

market BRIDION sales offset animal Sales in portfolio, were of vet sales increased agents in the as reversal price X%. offset actions. higher among the actions reduction products. sales flat by as Livestock U.S. declined In was in neuromuscular a Europe. Companion ruminant partially Acute Health entry grew generic the impact blockade reflecting business share our visits demand Animal by as our Care due X%, for in well U.S., in pricing to grew Hospital

of will year, by last I foreign on compared Operating $XXX expenses and decreased the business as year impact charges the product to you will Gross P&L, with There non-GAAP billion. exchange our quarter, $X.X in million walk be the remainder were significant unfavorable mix. my consistent was offset with a now expenses comments was development from X% of no a ago. margin XX%, through basis.

XX%. early- pipeline, support of operating and with growth late-phase investments X%. expenses grew in $XXX increasing these research charges, expense Other million. was This Excluding development expenses increased robust reflects our and

XX%. Our was rate tax

Taken together, share earnings per were $X.XX.

transaction disciplined I and year, employed of are Sankyo. collaboration about wanted create This structure recently and touch meaningful excited we I to announced and to financial follows successful value very with the as opportunity outlook collaborations, briefly the the for the Before similar we prior a derisked strategic shareholders. have cover patients the in balance for Daiichi upon

our revenue increase growth Now exchange from and operational an This turning raise of collaboration mid-October of our to foreign rates. Daiichi. strategic $XX.X now $XX.X continuing strength reflects and full at business range guidance, has of revenue million which year-over-year guidance. approximate We XX%, enabled percentage negative underlying to excluding includes between to the be The approximately year XXXX LAGEVRIO double-digit billion, narrow revenue billion to expect us with point using our and XX% the strong X an $XXX midpoint. impact non-GAAP

XX%. Our unchanged approximately is at gross margin assumption

expenses, between Kelun. research $X.X collaboration We for operating This now and development reflects including with as those be billion. billion billion and and the $XX.X with to $XX.X well collaboration, Prometheus, associated Daiichi and in upfront billion acquisition expenses Imago, range estimate as $XX.X

does development transactions. assume potential additional business not guidance Our significant

approximately exchange $XXX We of to assume dollar net related expense recent strengthening Daiichi. higher reflects interest expense updated foreign now million, other which given and expectations

includes XX.X activity. development business percentage Our expected between which is an full year XX% to point to be our and related rate tax approximate XX%, impact

to tax shares billion underlying approximately XX.X%. outstanding. rate X.XX is approximately Our assume XX.X% We

a includes XXXX range Taken expect together, This EPS percentage X $X.XX approximately impact exchange points we rates. from using versus of foreign negative mid-October $X.XX. to of

guidance Recall, per onetime with our Daiichi, to and or assets Including prior range range share to been our advance collaboration to an charge midpoint $X.XX. of $X.XX, have $X.XX $X.XX. and $X.XX was the the with would guidance costs estimated of the from $X.XX the prior financing billion $X.XX $X.X

guidance from $X.XX. foreign exchange an from $X.XX, strength midpoint our resulting approximately current increase an partially represents offset of of approximately the of headwind Our business by $X.XX in incremental

Now our turning remain to allocation, capital unchanged. priorities where

We to and in near- investments long-term growth. to our will business drive continue prioritize

of We advance including pipeline, to Daiichi. significant our is collaboration are our team making comment with our the proud progress and

well positioning We us with to plan to dividend it tremendous to address pipeline assets many the for and our will in invest remain performance needs, unmet which significant to potential future. increase strong We time. over committed our contains medical into continue

to continues development be Business priority. a high

Our credit in our opportunities access opportunities compelling ability patients grade care, of track have to manner, and technologies strong the that of and and forward. additional a capacity, science-driven, to to value-enhancing demonstrates for to and identify potential serve rapidly maintain the pursue shareholders. our cash we We standard rating going disciplined flow, progress given ample capital-efficient and such advance science benefit transactions the the record importantly, our investment

modest of level repurchases. execute We continue a share to

and our business conclude, medicines confident we as exceptional of for the remain near the year, pipeline. long global and our the our the in demand finish term, in vaccines driven by very we To and outlook innovative

excellent call continued to are We future. us Dean. that, into I'd and will deliver like customers to position value a With of the shareholders and enable turn to to the well now our in financial over operational strength, patients, and execution

followed programs, Caroline. and I you, everyone. Good by start oncology Thank disease. cardiometabolic Today, will morning, our conclude immunology vaccines, with with

broadly novel based remarkable pipeline mechanisms oncology Over the modalities. is KEYTRUDA and establish leveraging immuno-oncology, our tissue with few precision has oncology focused This on last years, strategy on a properties the candidates of pillars: of diverse X to clinical strategic targeting. and

targeting continue novel combinations agents increasingly metastatic and sensitivity while conjugates to are in designed in investigating KEYTRUDA targeting, precision tissue to such multiple drug selectively as co-formulations. In killing. oncology, to and inhibit evaluate also earlier-stage in With the And settings growth. cell and we we pathways we disease increase immuno-oncology, immuno-oncology are cell cancer cancer developing antibody

are is pioneering respective to this Rally conjugate exemplified ongoing announced contributions candidates Sankyo. antibody ] ADC transforming platform. our with These humanized fully combining and of technology the made Biotech, talented to an in the strength, Phase with with in stage our Daiichi I. are with Phase investor team. an patritumab, humanized well Sankyo investigation By treatment in We eager patients. deruxtecan, clinical anti-HERX III; provided scientists ADC positioned Phase tag event anti-CDHX-targeted own latter have we by proven include our The novel ADC humanized working infinitumab, whose II; collaboration accelerate and with Sankyo companies' their alliance drug details complements first-in-class week, scientists [ The an X collaboration paradigm. Kelun recently benefit in begin advancing the our of earlier to innovative during investigation ADC goal deruxtecan, deruxtecan, or have potentially investigation of Daiichi anti-BX-HX Daiichi developed important

rate encouraging an This At ] cancer. TROPX triple-negative cancer, lung MK-XXXX, of breast hormone with SKB [ new for targeting and on treated objective activity in positive with in receptor XX.X%. data ADC patients MK-XXXX previously response for existing II XXX, ESMO, a cell data non-small builds HERX-negative showed metastatic breast both Phase antitumor or

additional We non-small studies, types. into are now starting cell and larger poised to initiate with tumor expand lung cancer

development are regimens survival concept certain advancing ESMO, targeting we clinical CGN and advanced carcinoma. with the patients checkpoint in chemotherapy tissue regimen by combination as proven for exploring EV-XXX, [ ADCs We types, evaluating KEYNOTE-AXX, and MK-XXXX KEYTRUDA with cloud first in in a potentially and a benefit are of the ADC and approval vedotin collaboration XX.X. also enfortumab of an of evaluating from of targeting with tumor Astellas At practice-changing combining the immunotherapy. ADC. inhibitor were treatment This urothelial presented KEYTRUDA plus data ], metastatic combination and first-line represents locally or Recognizing

reinforcing combination of in preoperative doublet routine therapy, evaluating KEYNOTE-XXX, benefit with earlier cell intervention. KEYTRUDA cancer. Turning early of KEYTRUDA to for resectable to followed by Xb the Stage immuno-oncology. or populations data presented with for enable Evidence patients X, screening non-small ESMO, Positive platinum lung emerge were chemotherapy, Xa chemotherapy neoadjuvant in adjuvant continues lung survival the to benefit stage of cancer further from to cancer at the treatment certain compared as KEYTRUDA in

approval patients approved with KEYTRUDA stage Based for cancer. label on treat with non-small includes FDA indication ] KEYNOTE-XXX KEYTRUDA the represents to results, lung differentiated that earlier ACE the last the KEYNOTE-XXX overall approved week, cell this survival. now has [ been X a cancer. indications for in

at data for HERX-negative were early-stage A-XX early-stage cancer. cancer; locally estrogen high-risk for women's presented patients additional studies KEYNOTE-XXX breast patients KEYNOTE-XXX and also ESMO: breast receptor positive cancer; advanced high-risk for from and with with in Positive KEYNOTE cancer cervical in triple-negative

the Now a recently XX. this action review KEYTRUDA granted priority based study, for January target FDA date upon of with

and to invasive based non-small collaboration in treatment been localized trial cancer start in posted improved III disease-free We the and KEYTRUDA VXXX poised has individualized cell significantly Moderna, survival for patients And finally, locally muscle with for lung combination is in therapy adjuvant with of KEYNOTE-XXX. soon. on KEYTRUDA carcinoma urothelial Phase also the earlier-stage neoantigen in announced advanced with now

is display a HIF-X patients vonhipo/lindal alpha broader certain in inhibitor, and to In continue tumors Precision with genetic of genetic disorder. yield our for evaluating underpinnings cancer-prone patients populations treatment of cancers disease, progress. rare WELIREG, Oncology, approved our ongoing. are efforts Studies analogous WELIREG whose

checkpoint by These carcinoma, and standard ESMO Spark drug a following supplemental for in survival Data clinically ] renal action with improvement priority FDA the progression-free of January adult the cell immune with findings showed Light review was versus meaningful evaluating [ date support presented at XX. which statistically WELIREG, from significant XXX therapies, granted care. advanced new WELIREG anti-angiogenic for of target and patients our application

III with renal cell and carcinoma adjuvant Phase are in and studies Additional advanced KEYTRUDA proceeding. in onlivacanib combination

at both of preliminary response oral XX%. KRAS for mutations, Notably, efficacy inhibitor, tumors combination presented harbor GXXC monotherapy in were safety non-small showed solid First-time whose arm and data cancer KRAS with as tumors our compelling lung KEYTRUDA patients rate the MK-XXXX, [ with for ] objective in combination metastatic ESMO. a and cell

with potential we KEYTRUDA. the the to MK-XXXX are by While data combine encouraged early, are

enrolling the with essential study [ begin evaluating hematologic tremendous a thrombocythemia, Phase patients an will MK-XXXX/orbomadenstat, In III second-line Imago. for space, Bomedenstet from need. acquisition patient our is treatment ] of in our we derived area

European Outside of non-small KEYTRUDA cell following recurrence, patients with And risk KEYNOTE-XXX. treatment chemotherapy high and of resection gastric treatment for or granted the of gastroesophageal for lung and the approval are combination Union KEYTRUDA, KEYNOTE-XXX. U.S., first-line in based for adjuvant trastuzumab platinum-based cancer on patients certain on for complete as junction with at based who adenocarcinoma chemotherapy, with

castration-resistant approved Lynparza, with in on Japan, BRCA-mutated prostate cancer metastasis prednisone metastatic the aboretinol PROPEL and ], distant with based study. was combination In [ for

to in address at be our Coast which our World be from majority Now Vaccine launch response specifically has the adults, a invasive West serotypes conjugate for designed first findings the VXXX designed would responsible Building specifically in Detailed in Caroline the for adults. studies. STRIDE-XXX STRIDE-XXX pneumococcal the of to mentioned, Congress approved, If disease on conjugate and the November. adult ongoing will study in the of STRIDE-XXX vaccine presented pneumococcal serotypes vaccine pneumococcal investigational pneumococcal broader demonstrated VXXX, XX population-focused vaccine all program. immune pipeline. progress to VAXNEUVANCE, robust conjugate continues our

Our company expertise, in both deep and and vaccines. immuno-oncology knowledge breadth depth given has of our

be We are III the Phase trial these MK-XXXX in patient in enrolled where in capabilities for first ready to the leveraging immunology is colitis. ulcerative

III month Turning treatment In currently right to programs. Sotatercept, in the ventricular Sotatercept patients under disease improved FDA with background at of for treated the size for arterial review a right European the exploratory data weeks we heart analysis with heart Last and Respiratory of data International XX echocardiography on cardiometabolic of hemodynamic pulmonary an top post-hoc presented right for hypertension. patients Congress, Society STELLAR by therapy showed adults in Phase and the with PAH reduction function from authorization and study, status.

an presented Phase the longest [ Tutera to efficacy addition, and safety we compound date. In analysis results potential the in ] for Sotatercept represent promising and data from this The PAH. the of durability analysis the extension III response open-label of support study long-term to

arterial review, serious regulatory Given biologics hypertension, application filings XX. target to our clinical need in and The under March work date of the for submit with teams Sotatercept. swiftly has the patient priority accepted action necessary FDA a pulmonary the regulatory license

use completed. the to European Products addition, Committee Medicinal Union the the for has submission In for been in human

momentum RLPCSKX development clinical in the for inhibitor. ] cardiology, our continues program MK-XXXX, in Also [

a Reef study as in the coral events of to as hypercholesterolemia. ] the respect patients Coral double-blind MK-XXXX, major in patient efficacy lipid well a population reef separate atherosclerotic randomized heterozygous familial We [ initiated ] with broad outcomes, reef [ cardiovascular evaluating have study a study coral and with

carefully our advance and moved the externally. efforts best urgency the while rigor last we and science internally coordinating Over to years, with X have

and adding diverse candidates continue modalities establish mechanisms same promising novel promising have We we I areas spanning creating our We but lives. underscore disease now to of a to with have of save still foundational pipeline be making medicines back candidates the we done, our of improve and And in that is in advances understand focused to properties the and At vaccines tangible call additional of and KEYTRUDA the turn while oncology. to time, excellence leverage expanded innovative purpose multiple areas. there Peter. work the are

to request to that we're single usual, And Julie, Dean. analysts questions. question, limit Thanks, a themselves ready as please. we take

Goldman [Operator Instructions] Sachs. Shibutani with comes from Our first Chris question

have certainly from comments some critical that of allocation you the very to important deals capital some The meaningful. done indicate been that mass, seem and the and you've standpoint done you've feel

the you portfolio billion. still do that XXXX done relatedly, to enough you Animal feel provoke revenue is fits set that but [indiscernible]? cardiovascular within you've You $XX to you've the goal reshaping And Health, there been in Do think building, still a there? could then

maybe and of we couple foremost, Rob, it, Dean is Great, Caroline and in comments. I made very the years and can today, as if we to through Dean jump about we've like. assets they'd made over good reference But Chris. progress start, and the This sit in. we or I'll feel the And appreciate last brought first the here

our growth with the to as mentioned durable we're You position making to cardiometabolic, progress moment. we oncology, and the Animal I'll broaden in get vaccines in also But drivers but a and Health. you immunology, you mentioned, have

been basis. in a next data year, hopefully STELLAR, nonrisk-adjusted confidence developing But with next year the seen and with -- past, Acceleron $XX-plus as we specifically excitement can tell greater we're early to here I from remind in original is received achieve sit the would we what higher launch of you, the from a the that we than tell even I comment. through opinion we've that on acquisition will key cardiometabolic be that was area, Europe mid-XXXXs. when given the as $XX programs have just on seeing made was and potential is coming and had it But that remind I'd in Sotatercept what remarkable today, billion the revenue that other approval and today we've our we we've commented leaders everyone of And said, we here to plus position the expected we you billion we that on potential could based today, internally, to in than sit of we what the people both

we feel feel but we're mean very It good. we So like done, doesn't we progress. very good feel the about

It as for Health, growth us. driver. to Animal an a you the Animal important as continue is then Health on business we reflected durable And business see

long that And that forward, be look business be the the our from Health benefiting from we on will continues synergies the and term. both value strategic coming the it we're Human to it have to that from we think growth, to brings us, has science benefits to side. where accretive that it us, a it we As synergies

So part the sit as tell at is strategic you, company. is of look I've philosophical it the and that changed. at -- regularly. as we're has we view But often objective that's remain it, committed here not very that to we I not can But look said, It's a view unchangeable. something about we today, a as we've continued our

diseases the cardiovascular unmet is that term. quite done the know to I we're would in that substantial. thing, related have made would just U.S. relationship question unmet need, we're metabolic revenue need in the and And near with add that in in the company, the as patient going I incredible X not and in don't we finance. to in field oncology to but advances Chris, and your world for ever be remind an but known just cancer, I

So we to committed very are still do more.

Our Goldstein Mara next comes with Mizuho. question from

track revenue curious, in it of to on or be a discussion percentage, thought KEYTRUDA be ahead components today? migrating about to you that to time where think therapy. earlier when Relative you originally the of and made the where you you point expect do you'd this I'm lines of around from at first statements you're to

get growth would our thought expect disease of come earlier we movement to that we've we to remind commenting XX% we from The ahead Yes. our into we where of And short just the be. stages of -- Mara, been -- as answer, in everyone, ahead are our revenues. of oncology sit But today, look are of would where we as of XX% with forward to tell here tracking be. global to where I total a we it can ultimately we being expected you, percent about we we

We're cancer, to the continued X And lung perioperative you results approvals what obviously, we're melanoma. space to people KEYNOTE-XXX, in RCC see the not going now this surprising building on that's for adjuvant strength mean the in across and in from seeing XXX, and phenomenal up when space. early-stage

like has in position, maybe if we're I'd anything ask very a to So she good she'd Caroline add. but

move we coming, we've I'd in potentially XX% given The indications. this indications Rob, your in of have the opportunity our We and only further progress. to had business made grow the many as point, data tremendous thing the tremendous KEYTRUDA really earlier bladder is setting. and stage we think forward, we're excited to add, the coming And about will other from lung, cancer we've year,

you have cancer evidence and only XXXX, an in earlier stage. detect trial, just And KEYNOTE-XXX Yes. in make this initiated. how that this clear lung But focused cancer, for we when how lung is KEYNOTE-XXX. on Sunday discussion X.X XXXX out we of EFS ADC and out everyone want And early-stage want cancer will catalyze we a watershed really was and Sankyo screen. would a really a KEYNOTE-XXX had happened It's to call we in X.X I years, I after we stage treat I a call OS to Kelun. metastatic in I because Daiichi just watershed for field. an that remind think past and earlier lung And benefit. is investor an the how only me, years change after moment the similar and early

about treating patients you think you early, X, and If Stage the XX%. those with can X mortality reduce by

in think it very just someone X get looking really regimen. I surgery People catalyze to carefully have should going Stage going why and are at why anyone -- this X, think in not to on X. to will people

have it's never many health important. think records, individuals people of easy incidental figure a detecting findings, CT chest early, or How up. day-and-age have followed X-ray and many with very of got it's In really terms to a how and out incidental chest I electronic there's nodules follow-up that little

change. the concept X adherence to X, by was think set And I And reduce will where it have the years guidelines early, were is where X% that think mortality screening only we ago, in would guidelines these X%. I XX%.

that With at no It's data longer the we have, much number that XX%. lower. is

And because think is Society, of the simplify is American the is that to those the NIH NCI, It cause stage I earlier in for stage the to important into men. and is cause individualized of moving the will for be guidelines most is INT, lung the NCCN, a we cancer. interest push cancer, commitment and earlier which highlighted, I/O not cancer, #X is our into and as #X so by women XX. which also, death march neoantigen therapy, Cancer our this inexorable of into and just this there And -- broaden lung XXX field

Gould with next comes Barclays. Our Carter from question

topic, Been a Great. questions on restrict any Maybe and lot the provide. ability love the I/O. the that to I/O at with Dean, is forth TROPX that and in X your of space the back key the the of the extent risk to forward. there may and to combine come additional your and back [ just get sort I'd of with ADC to of TROPX have combine there going ability thoughts your can ] going commentary to commentary myelosuppression you out

a from and can thinks can it it And how and the chemo, be you it but and to with be would type. And a we can to PARP, with agents, ADCs. can think field be be can about with X novel also it develops But highlight can line monotherapy, specifically Yes, late earlier. have combinations with think combinations. hormonal PD-Xs, also indication sight. in be RAS, and other those any I with be any in ADC X thinks tissue clear tumor One would advance that of about about it

a There patient past I I moment. that population cell X really chemo plus field And that watershed It non-small relationship indication was KEYNOTE-XXX. about the believe has cancer, in pembro in have has said do lung specifically think the how along in broad that to that well. was TROPX a evolved. In

in effective, to chemo, So how with way about in say would those KEYNOTE-XXX. substantially I what think ADC, a a that it have is advance want way who but us of PD-X I just over it, not effective combine think next-gen a that's about to to

our combinatorial we to adverse that and patients about be are to combinable, the chemotherapy partner, that and with with arena. advancing in our are shown medicine. ADC a be that think adverse interested tumors and able in TROPX variety effects those think that data all chemotherapy whether treatments, we're X effective. our III to keep is it's We and starting that has combination. partner, or Kelun, a room in trials regulatory But that The advance tolerable are have chemotherapy-based ability the very the MK-XXXX on and we the to on do that with payload is will PD-X to relationship ex-China valued in they there in of in to effects ADC, Phase Like

comes Our from next Fernandez with Guggenheim. question Seamus

talk to margin of out margin about offered, called I think, some wanted than you've and So historically, that XXXX the of margins targets just XX%. you better target

that Particularly trying how a towards for KEYTRUDA your the in get reduction context and of GARDASIL. to both burden, royalty we're in tracking better target. the Just sense of substantial

least anticipating upside If of disclose you so be there? wouldn't context mind, would quarter provide we third year, what what royalty should case at perhaps that the just for or was cumulative this the you burden we in some that can

on going look well the collaboration, research And investing products in result launching of investment, drive X% growing the Seamus, significant next seen portfolio you've the of expansion development be business. that in thank going Dean as as really on the from investing be strong obviously our the in the the year, that robust our but the at We'll as expect also start It expansion where that outlined question. several a we global our the we our will our expansion. roll-off that of noted in to we from comes X.X% from on the disciplined as product and next as margin noted, partially improvement. At costs. programs in same expect market year, comes in ] we're revenue continued of you financing that a we includes of We've investing we mix will start years. global line. wide over forward, just X.X% the royalties, sales, will about we royalty of the and predominantly company in knowing margin from the gross be that And pipeline. Daiichi GARDASIL of range and $X.XX time, well margin as KEYTRUDA we've last investing the again And really as has [ have that have royalty for and impact on X% our we to at margin sales the

with made have and also acquisitions We our making we're other significant pipeline with our collaborations, across many progress the assets. progress own internal

So XX% margin operating the in greater altogether, we than still to an year do point of XXXX.

ensure investments is care advance that drive priority. our business necessary our and pipeline to we will growth, to our forgo health we which really However, progress in not

comes from with Our next Terence Stanley. Morgan question Flynn

the mutant just first I that I what craft III for EGFR guys over frontline landscape. pursue try Dean ] some your there, on as the lung Maybe in you're about guess in means trial seeing on decision context the more the population, another any for weekend you population. talked to TROPX of the you [ data. then setting from including what landscape the know given the a here. trial cancer X Phase ASTRA to that out broader And

Yes.

So to about Sankyo, not indications our that of I just lay but partnership Daiichi talking certain to sure very that Kelun wonderful with I be want be clear public, those whether becomes we that are we're the make with indications we only sort or interested. would want out that

serious And see what's numbers. relationship the relationship are that's to is, [ there date, we in But number more ILD. construct that's of ] So to -- terms do terms small of the There in And in us still us broadly MK-XXXX differences allows question. to interesting And things indications. other that. to broadly. two, we have and of is X and advancing thoughtfully interesting payload, at XXXX, in in it the for it in us combinability the about relates the that the do its least terms for linker, one. Number really think is to not of broader to

So we're very in interested advancing.

revealed, was -- it think tell just and good you, that XXXX data first should have I'll be been specific have, the is of advanced. we data trial that and that's it's and we the terms In we quite driven because the of

the indication. advance confident based partners, EGFR is and us generated, We in Kelun and data mutant are the advancing have on but population going other in to our we're advancement that in specific very that ones,

question next comes Citi. Baum from Our with Andrew

[ design relation stats you type and from vibostolimab the ] trial. [ hierarchy. assuming TIGIT ] have in where I'm to KV-XXX clinical using template your a and and Question a that KEYNOTE-XXX, similar you are for

very next hierarchy a at of the of beginning following the with expecting PD-LX-enriched design year, this Given end comments interim of an interims? were is place, we Any potentially either the timing in on trial year. or

was by the in out which let we disclosure, we I interim that. drugs, need to would publicly analysis. of we interim in develop for to when they make analysis, them the that timing commented and if relationship say generally And relationship those who been we're not known of there's on the laid analysis to analysis prior do that what we do has just happening. not significance especially out public significant, that great Merck general In generally your we do structure leaders from But something I/O, known. we how And interim to in that. our has basis lay do, observations that's they're of come. laid have principle, timing interim for the If

question next Cantor. from Louise with Our comes Chen

launch. wanted how And uptake strategy? to about go-to-market do ask how you quick expect your What's you're I to Sotatercept, preparing be? for you that

jump you Rob. tell Yes, well add miss Caroline we prepared. I if I'll can anything. Louise, this that and would maybe feel in, is I

we've States. been the sit opinion are the high. in you is demand from have launch. obviously, the from today, upon we're the we hearing in to to be what working of be -- supply feedback market, seeing supply from the anticipation the given market what ensure able we here in patients of key happening But this and warehousing as And So to leaders will marketplace launch of United quite for Sotatercept so

expectation our you launch strong this drug. So is a will with see

can have within our a very is and to organization. tell invested this group U.S. focused you, now job U.S. an I our -- manage in sole built business, And we've whose launch. actually We

expectation, manufacturing as we're both think I commercial uptake. the said, from from with go strong that quick perspective, with so very a this I a And should perspective prepared and a

And the a study. expect would thing we would Europe strength I next see in require the given data, year, is, other the thought approval originally to we do further which highlight of

But want also feel but you and anything would not States, only in Europe Caroline, add? are preparing in we So as preparing we're well, both. the United about to we good

Rob. you anything No, to? I you'd want Dean, it, captured think

there targeting inhibitor. that Yes. basis what -- This emphasize really the is I to important in the pulmonary just is out genetic Activin But you is the genetics first fundamental It's activin tells is, want most be is drug disease. Sotatercept. the occurs first the the that first of imbalance to artery going hypertension.

really important. the -- do U.S. ability why data is this the do of was EU. be already talked Rob previously. is that STELLAR a about for was to PAH. drove watershed and moment what think this to I because quite I So And And And said is the reason watershed that's happened EU. going impressive.

have is remind trials that other What would coming we everyone I through.

is ZENITH, the in the Hyperion example, out and sort Cadence. Sotatercept. going only those back to to Should are calls of soon launch. that help is and days. read that many phone getting anticipation I'm of -- mentioned, endpoints in March talked research endpoints. did Caroline primary has like whatever for will that patients The physicians in that that's mortality field We of people is have was and have uptake year at I And that academic launch, where the a something this warehousing that the or I Rob estimates X as next ZENITH, Sotatercept, of that the place the as Rob relatively this a of about think look

from Chris JPMorgan. next question with Schott comes Our

growth GARDASIL. you the here. years. few on question much more a to how just ramp very interested had ahead, just over impressive looking in I for seen obviously see past from -- We've this for But opportunity franchise some I'm

how much continue biggest ultimately, the out So maybe the this little roll just product? can elaborate this larger time? needs what a franchise kind Where more just of point? to kind are opportunity become bit over at And is on to of unmet the

I no, Chris, question. Yes. appreciate the

of most is cervical which this do cancer, fully we increasingly if people one, would what's and GARDASIL So that prevent recognize very that certain can people can we business. cancers fundamentally cancer, proud head neck I of And prevent the important, strength the we get vaccinated. feel fact prevent say increasingly [indiscernible]

the you that see starting that important. to So are fact progress is

that that will But business as that's we to continue over by saying by I start very to look revenue this communicated at we achieve grow $XX is in we've going XXXX. remain and of forward, confident a billion would business we the expectation going the

in how business. So the changed has see we nothing

positioned. significant sites, investments perspective, know, from we're and well on X we've in And made manufacturing that capacity. they're our We've you brought now now. As ramping

we're well so doing quite And that perspective. from

and we which have and middle you, manufacturing markets. drive about plans we tell penetration costs, huge And developed confidence objective and exists that think business first foremost, that Obviously, exceed the have middle these in income And do. a drive that then even be a had to revenue then opportunity into as require world, intention I to a really, we achieve the lower in great drive put to And potentially potentially far that our to I but And beyond meaningful to have and low variables. And this really still objective time. while just to that's will price as X as to focus I our going us incremental X the down markets. continue exist what that we and income And the to can would buckets. to ability discussed, low to an continue will we've we do. over achieve said, come opportunities points, that that down in

XX, young as nationalization to program, through at people the think Obviously, women there as young address. girls. now -- primarily then continues you It's growth States largely States, is China, currently to part there still recent broader to population in markets, large why with cohorts it age at aimed an be the the outside the the real is important segment United we're into going come. are Increasingly, to increasingly in we've move through markets established a more It look expansion to mid-adult going public the opportunity the age to driving States. driver to Europe, a programs date, we growth. And a been to and vaccination opportunity in is that ability go be got a of in United to of we driving the United about growth driver and

activation. as that, That can we be started difference in look we've here is is we and at consumer it in and to So investment of the that's a growth. do like we're But to work China the going that. lot do United States. as takes demonstrated lifting. to of investment, it do and we're Obviously, to this lever lot of We've starting requires going another to take and committed doing commercial heavy a

variable another at. that's we look So that

vaccine. gender-neutral this we the you get where have not drive cancer markets near-term is Europe, X gender-neutral which to real cancer We real getting those female that still And drive is up. with understand bigger to approvals. we -- rates that in the it markets both And is approvals And it's is a growing opportunity and is in markets a do in opportunity which neck have to male-dominated and I And look primarily there vaccine, see as probably as the to incidence increasingly a to gender-neutral still cancer, people is approved do continue vaccine. of female at this head China, the largely it, bring particularly XX opportunities of then markets cancers, an just a is gender-neutral vaccination seen a to even lastly, only push opportunity. have more markets only and think like

behind indicate the of don't that with long-term this variables invest So will I But we're lift. there's a potential. It's ultimately, we Dean But it. going those opportunities anything you see And determine our will Caroline, across maybe and determine those, easy. really be across or to success to that all success franchise. heavy want going it's to would add?

relationship adopt a highly would cancer, prevent cancer. to to -- something effective vaccine just a -- gender-neutral position on emphasize KEYNOTE the would at ] about is everyone is with related do that effect showed you cervical KEYTRUDA remind women's And be MRL, that about that as that cancer, want comment points in of and in that another make Yes. to cancer we X advancing fourth We ESMO, to cancer, X people in at recognizes, but that in also can earlier can we're trial gender-neutral A-XX. said. [ filings gender-neutral. I cervical had talk I what cervical cancer would many but itself. part This cause is that really is radiation. sure combination is that was emphasize directly of still this cervical the chemo and important. I also And the this to just make to women in stage leading I relationship places Carticel studies

months hopefully like up, So among X that be the that, I I cancer. next And might early think, PDUFA is a is are date in PDUFA to stage. that's coming the relationship coming ninth and X date that up believe that in

cervical trying we're So critical being cancer to around things at what earlier [ but do play a driving driver also those that into gender-neutral, stage, are and Merck. all ] Carticel,

Thanks for the question, Chris.

Julie, question, hour. have some to We time the past go and take additional questions please. next

from of comes Bank Meacham America. Geoff question with next Our

even Rob A Dean ADCs. or question for on

you Merck. of deals, approach important partnered think a is have guys you number have this And done obviously So clearly, assets. strategically for

investment is thinking I'm in the platform building is Dean, especially, partner out as you shifting I/O is and Merck out, the making how paradigm programs much So question the in-house? beyond an broader just ADC a of called earlier.

Yes. I'll one. Thanks that grab for that.

that very lucky Daiichi advances clinical our with programs and So scale. And we've Sankyo. at been Kelun to partner

also ADC KEYTRUDA. relationship companies in We collaborations to other clearly have with

hoping data towards. of So the wall what are understanding a might that we navigate field have we of

there chemotherapy they're chemotherapy. ] everyone payloads chemotherapy And thinks there probably different [ I not there. be people to antibodies, change linkers. each just last X about component. like are will right would as be the antibody for There targeting has emphasize structures the for different that there will has of and only X classes just be well how out terms why able are there XX reason to years, of topo And -- that X-based as major X said, microtubule-based X there changes a tissue are use, the now, in

we that that the in in what as doing Daiichi is that and off clinical have our So platform as where is we'll in KEYTRUDA. doing invested both build with separate, those we're Sankyo programs with we're from relationship an but learned ones well collaborating ADC with Kelun we're others

and So we hope of the we internal head build programs next its in couple the have and those to that during within we to built clinical company, see years. expertise continue

Our Scala TD Cowen. comes next question with Steve from

] are that sales a to number, and current from What And now? hasn't VAXNEUVANCE's in seen landing. a pediatric market Merck's it there? comments I with pediatrics line held it well ahead sales XX% in is the with $X U.S. where [ in share billion inflection why grow big of share prior the an XX% of market plans is mean of it's share

So any color would be appreciated.

and can Yes. we jump on that public XX% But private low Steve, others answer the in. maybe so is share, then and in that I'll jump in your market. both are

you're So seeing that the quarter. is in what

million was to of products. approaching, roughly think, I think for about the U.S. I $XXX million total the business $XXX

much we seeing much consistent So pretty expected. we're growth is and with got expect, what we pretty share we actually what the

to So in you're what through we the fact, doing but seeing, would can think do. in are we how -- expected we'll to what tell have disconnect you, we exactly I

only outside also the we're This thing seeing to add that is U.S. would I'd The Caroline. be of the performance

and outside which we're while So X/X. [ we our of U.S., that in the tenders gained have early of the have north in shipping ] shares participated, we launch XX% we're

looking to our and So later continue next to with to year. ability augmenting VXXX forward we're very drive confident offering VAXNEUVANCE very much in our

Yes, I would just add...

it's I clarify me think on reflecting let question. I just was Steve, just your because important. X thing

Just my year. not our it's XX% to is exit overall the share, clarify comment, of

exit grow an we're today. business that's as share the seeing So

setting in of own, potential but as we'll VXXX. out right on medicine with trying and advance VXXX. to and the Yes. that to work giving the group just in the ACIP strategy right relationship said make we FDA to serotypes cut what to to VAXNEUVANCE wanted mindset the medicine precision age to is drive mindset right what to as a It's we of Caroline And is think VXXX, about the time. important vaccine do believe that vaccine, right about And VAXNEUVANCE VAXNEUVANCE we're well the a a with to to essentially about to the just at to precision this to set its for as we from I relationship speak in VAXNEUVANCE, of concept not pneumococcal us have have approval vaccination. comment

Our next BMO from Capital with question comes Evan Seigerman Markets.

to MK-XXXX. want touch I on

to the the So given an with both [ in multiple assets? clearly into prioritizing and this injectable given importance Phase seen advancement the long-acting oral dynamics the me about trials. of other PCSKX Maybe the ] antibodies market talk we've III

and pathway an we're if that can will Helen to relationship oral is X. desperately that's We're or intercity Study. Jonathan the or globally, potent provide. medicine, important of what that patient I will that population, That need that cholesterol and Cohen to the in showing Southwestern ] democratize really they're such Dallas this. rural to trying And I And LDL-lowering you data whether get people, population PCSKX. was patient look UT Hobbs to at [ my in Heart that Okay. take at homage give trying

LDL to level the used below to very to refractory populations. hard XX want in to taking point, important. statins. want chain It atherosclerotic drive code you And hospital increasingly, you're is support so to the known I That that talk experience statin-resistant to We population requirement move. available with to patient and and to which data have countries, and that about readily X have is be be That's a is agent cardiovascular about is, trying to you treat, or this below treatment to or the whether no get our that LDL system or States the are such your the but a with is going no XX of forget do. And lowering it. to to patient my #X what that emphasize still disease, you're to in refractory, United resistant hopefully, killer developed disease will go would will LDL get into some other the we're just guidelines

Thanks, Evan. Maybe Julie. please, final question,

Our next from Bansal. question Mohit comes

is Fargo. with Wells open Your line

a How ] versus are HERX-ADC? AGA quite EGFR data, look [ you TROPX-ADC touch mutant at to or well just I it thinking your you data to Because about working mutations. if those upon seems patients. like among want among even [indiscernible] be AZ seems

these So how ADCs X same are indication? you thinking that about in

the question. HERX-ADC I would program advanced is just the would in data I a think that important that's emphasize to great that answer is think I reasonably also look that TROPX-ADC but at, patient I population.

-- for interested broadly relationship [ targeting, of will and statement in the these of we general important in biomarkers also will we and quickly patients of tissue best outside And to ] advancing be that both ADCs a ADCs role getting for to the we're so as some the medicines as combinations. eGFR more other think as can. I in do more relationship

field And see to moving. that how we'll have is so

essentially, in the the chemotherapy with approach. the think bring the right biomarkers is to going that, about the benefit. precision way ADCs But And give have I maximum medicine patient to trying find population with we're to to right them

Please up all soon. follow Investor all we have touch and being additional you, very you look today. And forward much. and thank attention in Relations if Mohit, questions. time Thank for to any your you Thank with you