Merck & Company, Inc. · NYSE:MRK
Merck & — Q1 2023 Earnings Presentation
30 slides from Merck &'s earnings presentation, Apr 27, 2023
Slide 1: Merck Q1 2023 Earnings
Merck Q1 2023 Earnings April 27, 2023
Slide 2: Agenda
Agenda Strategy and Business/Financial Research Question & Answer Business Update Results and Outlook Update Session Rob Davis Caroline Litchfield Dr. Dean Li Chairman and Chief Chief Financial Officer President, Merck Executive Officer Research Laboratories 2
Slide 3: Forward-looking statement of Merck & Co., Inc.
Forward-looking statement of Merck & Co., Inc., Rahway, N.J., USA This presentation of Merck & Co., Inc., Rahway, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These state
Slide 4: Strategy & Business Update
Strategy & Business Update Rob Davis Chairman and Chief Executive Officer
Slide 5: Delivered on our key strategic priorities in 1Q 2023
Delivered on our key strategic priorities in 1Q 2023 Advanced the pipeline to meet patient unmet need Executed on strategic business development to enhance pipeline Achieved strong commercial and financial performance Created long-term value for patients and shareholders 5
Slide 6: Advancing science-led strategy through acquisition of Prometheus Biosciences
Merck continues to advance science-led strategy through acquisition of Prometheus Biosciences Potentially transformational, first-in-class, late-stage candidate, in a disease area with significant unmet medical need Opportunity to potentially transform standard of care for certain patients suffering
Slide 7: Very significant 1Q sales and underlying earnings growth
Very significant 1Q sales and underlying earnings growth1 1Q Worldwide Sales Full Year Sales $59.3B GUIDANCE GUIDANCE $14.5B +22% RANGE RANGE $48.7B $57.5B-$58.5B $57.7B - $58.9B $48.7B +17% $41.5B -9% +17% +6% +15% ex-Exchange, ex-LAGEVRIO 2021 2022 2023 1Q Non-GAAP EPS2,3 Full Year Non-GAAP EPS2 $
Slide 8: Advancing and augmenting deep pipeline in 1Q
Advancing and augmenting deep pipeline in 1Q Cardiovascular • Presented positive Phase 3 data from the STELLAR trial evaluating sotatercept at ACC.23/WCC • Presented positive Phase 2 data for MK-0616 at ACC.23/WCC • Hosted investor event to discuss data and provide overview of broader research effor
Slide 9: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 10: Strong underlying Q1 sales growth across Human Health and Animal Health
Strong underlying Q1 sales growth across Human Health and Animal Health Merck WORLDWIDE SALES1,2 Human Health Animal Health $14.5B -9% growth $12.7B -10% growth +14% ex-LAGEVRIO3 +18% ex-exchange, ex-LAGEVRIO4 $1.5B +1% growth +5% ex-exchange +11% ex-LAGEVRIO3 +15% ex-exchange, ex-LAGEVRIO4 1. Resul
Slide 11: Oncology: KEYTRUDA drives strong growth
Oncology: KEYTRUDA drives strong growth • KEYTRUDA sales of $5.8B increased 24% year-over-year, driven by strong global demand in metastatic cancers and increased uptake from earlier-stage indications $5.3B $5.8B – In the U.S., growth of 25% reflects strong +30% uptake across in earlier-stage cancer
Slide 12: Oncology: Solid performance across broad portfolio
Oncology: Solid performance across broad portfolio • Lynparza1 sales grew 8% driven primarily by increased demand in key European markets $266M $275M $228M $248M +17% +8% in certain patients with ovarian cancer +20% $178M +51% +34% +62% • Lenvima2 sales grew 5% due to increased uptake in advanced RC
Slide 13: Vaccines: GARDASIL growth driven by strong international demand
Vaccines: GARDASIL growth driven by strong international demand • GARDASIL sales of $2.0B increased 43% year-over-year primarily driven by strong underlying demand outside the U.S., particularly China, as well as increased supply – China growth also benefitted from an $2.0B $1.7B acceleration of shi
Slide 14: Hospital: Strong global demand across key products
Hospital: Strong global demand across key products • BRIDION sales of $487M increased 27% primarily due to greater share among $487M neuromuscular blockade reversal agents $395M +27% $340M +20% • PREVYMIS sales grew 44% driven by +11% continued strong global demand 1Q21 1Q22 1Q23 $387M $426M +67% +1
Slide 15: Animal Health: Solid growth driven by livestock
Animal Health: Solid growth driven by livestock • Animal Health sales increased 5% to $1.5B, reflecting strong demand across livestock portfolio, as well as strategic price actions – Livestock growth of 8% due to strong performance in ruminants and poultry products $1.5B $1.5B $1.4B +9% +5% – Compan
Slide 16: Q1 2023 continuing operations non-GAAP financial results summary
Q1 2023 continuing operations non-GAAP financial results summary1 $ in billions, except EPS amounts Change Q1 2023 Q1 2022 Change Ex-FX Sales $14.5 $15.9 -9% -5% Non-GAAP Gross 76.9% 70.7% +6.1pts +5.9pts Margin Non-GAAP Operating $6.7 $4.8 +40% +42% Expenses2 Non-GAAP Tax Rate 20.4% 14.0% +6.4pts N
Slide 17: Merck updated full-year 2023 guidance
Merck updated full-year 2023 guidance Prior Guidance Updated Guidance Key Assumptions • Includes approximately $1B of LAGEVRIO revenue $57.2B to $58.7B $57.7B to $58.9B Revenue • Ex-LAGEVRIO, growth of 6% to 8% (8 to 10% ex-FX) -4% to -1% (-2% to +1% ex-FX) -3% to -1% (-1% to +1% ex-FX) • Assumes ~2
Slide 18: Key modeling considerations
Key modeling considerations KEYTRUDA GARDASIL & GARDASIL 9 • In the U.S., exceptional growth in prior quarters is expected to • Expect strong growth driven by robust global demand, moderate as strong uptake from recently launched indications, particularly in ex-U.S. markets particularly in earlier-s
Slide 19: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy $ Billions1 Capital allocation order of priority Continue to prioritize investments in our pipeline and business to realize value $3.4 of near- and long-term opportunities $1.9 $1.9 $1.0 $0.1 After-Tax R&D CapEx Dividends Business Share Repurc
Slide 20: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 21: Driving value by progressing our pipeline
Driving value for patients and shareholders by progressing our pipeline Key regulatory milestones Key data & clinical advancements since the last earnings call: since the last earnings call: • In the U.S., the FDA: • Presented results of the Phase 3 STELLAR trial evaluating sotatercept, a novel o Co
Slide 22: Making tangible advancements in our cardiovascular pipeline
Making tangible advancements in our cardiovascular pipeline Sotatercept MK-0616 • Presented Phase 3 results from the STELLAR trial • Presented Phase 2b results • Substantial improvement of 40.8 meters in 6MWD at • Reduction of LDL-cholesterol levels from 41.2 up to 60.9 % Week 24 vs placebo, across
Slide 23: Developing treatments for earlier stages of cancer
Developing treatments for earlier stages of cancer remains a key area of focus and execution Making progress in the treatment of earlier stage At AACR, in collaboration with Moderna, announced NSCLC through multiple clinical trials detailed results from Phase 2b KEYNOTE-942 investigating the combina
Slide 24: Advancing our broader oncology portfolio
Advancing our broader oncology portfolio Antibody Drug Conjugates Adenocarcinoma Women’s Cancers Prostate • KEYNOTE-869: Announced • KEYNOTE-859: FDA accepted • NRG-GY018: Announced positive • Remain committed to accelerated approval of application for KEYTRUDA in data for KEYTRUDA in addressing thi
Slide 25: Expanding our broader pipeline and portfolio
Expanding our broader pipeline and portfolio Infectious Disease Immunology • HIV • Proposed acquisition of Prometheus Biosciences augments and accelerates ongoing research efforts in immunology – Enrolling multiple new Phase 3 studies for once-daily islatravir in combination with doravirine • PRA023
Slide 26: Q&A
Q&A Rob Davis Chairman & Chief Executive Officer Caroline Litchfield Chief Financial Officer Dr. Dean Li President, Merck Research Laboratories Peter Dannenbaum Vice President, Investor Relations
Slide 27: Appendix
Appendix 27
Slide 28: Q1 2023 GAAP financial results summary
Q1 2023 GAAP financial results summary $ in billions, except EPS amounts Change Q1 2023 Q1 2022 Change Ex-FX Sales $14.5 $15.9 -9% -5% Operating Expenses $6.8 $4.9 +38% +40% Tax Rate 22.6% 11.4% +11.2pts N/A GAAP EPS $1.11 $1.70 -35% -30% 28
Slide 29: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months Order of priority Well positioned balance sheet $12 $11.4 $9 with capacity to fund Billions $6 $7.1 additional value-enhancing business development $4.4 opportunities $3 $3.5 $0.1 $0 After-Tax R&D CapEx Dividends Paid Business Share
Slide 30: Broad and innovative pipeline to solve significant unmet medical needs
Broad and innovative pipeline to solve significant unmet medical needs Phase 2 Phase 3 Under regulatory review Oncology Oncology Oncology MK-0482 MK-2870 MK-4830 WELIREG (MK-6482) MK-7684A KEYTRUDA (MK-3475) LENVIMA (MK-7902) KEYTRUDA (MK-3475) NSCLC Neoplasm Malignant CRC Biliary (vibostolimab Bili