Merck & Company, Inc. · NYSE:MRK
Merck & — Q1 2024 Earnings Presentation
33 slides from Merck &'s earnings presentation, Apr 25, 2024
Slide 1: Merck Q1 2024 Earnings
Merck Q1 2024 Earnings April 25, 2024
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 and Business Update
Strategy and Business Update Rob Davis Chairman and Chief Executive Officer
Slide 5: Delivered on our key strategic priorities in Q1 2024
Delivered on our key strategic priorities in Q1 2024 Advanced the pipeline to meet patient unmet need Executed on strategic business development to augment pipeline Achieved strong commercial and financial performance Created long-term value for patients and shareholders 5
Slide 6: Strong Q1 sales and earnings growth
Strong Q1 sales1 and earnings growth Q1 Worldwide Sales Full Year Sales 70,000 GUIDANCE RANGE 60,000 $15.8B $59.3B $60.1B $63.1B - $64.3B $5.37 +22% +1% +5% - +7% 50,000 40,000 +9% 30,000 20,000 +12% ex-Exchange 2022 2023 2024 Q1 Non-GAAP EPS3 Full Year Non-GAAP EPS2 $2.07 $7.48 GUIDANCE RANGE $8.53
Slide 7: Maximizing potential impact for patients with cutting-edge science
Maximizing potential impact for patients with cutting-edge science Vaccines Infectious Disease Oncology HPV & HIV Diverse Portfolio & Pneumococcal Progressing our clinical Pipeline programs focused on the Seeking to protect broad Expanding our impact to treatment and prevention populations globally
Slide 8: Positioned to deliver the next wave of important innovations
Positioned to deliver the next wave of important innovations “ Creating a sustainable innovation engine that, with continued clinical success, will lead to a more diversified portfolio of growth drivers over the next decade and beyond ” 8
Slide 9: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 10: Strong Q1 worldwide sales growth
Strong Q1 worldwide sales growth Merck WORLDWIDE SALES1,2 Human Health Animal Health $15.8B +9% growth $14.0B +10% growth +13% ex-exchange3 $1.5B +1% growth +4% ex-exchange3 +12% ex-exchange3 1. Results attributable to Merck & Co., Inc. 2. Worldwide Sales includes Other Revenue. 10 3. ~2% of the neg
Slide 11: Oncology: KEYTRUDA continues to drive excellent growth
Oncology: KEYTRUDA continues to drive excellent growth • KEYTRUDA sales of $6.9B increased 24%1 year-over-year, driven by uptake in earlier stage cancers and continued strong demand from metastatic indications – In the U.S., increase largely attributable to $5.3B indications in earlier stage NSCLC f
Slide 12: Oncology: Strong performance across broad portfolio
Oncology: Strong performance across broad portfolio $266M $275M $292M +20% +8% +7% • Lynparza1 sales grew 7%, driven primarily by higher demand in certain international markets 1Q22 1Q23 1Q24 • Lenvima2 sales grew 10%, driven primarily by higher demand in the U.S. $232M $255M $227M +5% +10% +77% • W
Slide 13: Vaccines: Robust growth driven by GARDASIL
Vaccines: Robust growth driven by GARDASIL • GARDASIL sales of $2.2B increased 17% year-over-year driven by global demand – Sales benefited from timing of shipments in China and CDC purchasing patterns in the U.S. $2.2B $1.9B $2.0B +17% $1.7B +27% • VAXNEUVANCE grew to $219M, driven $1.5B +43% $1.5B
Slide 14: Animal Health: Growth across livestock and companion animal
Animal Health: Growth across livestock and companion animal • Animal Health sales increased 4%1 to $1.5B – Livestock sales growth was driven by price actions, as well as demand for swine and poultry products, partially offset by lower demand for ruminants products $1.5B $1.5B $1.5B – Companion Anima
Slide 15: Q1 2024 non-GAAP financial results summary
Q1 2024 non-GAAP financial results summary1 $ in billions, except EPS amounts Change Q1 2024 Q1 2023 Change Ex-FX Sales $15.8 $14.5 +9% +12% Non-GAAP Gross Margin 81.2% 76.9% +4.3pts +3.8pts Non-GAAP Operating Expenses $6.4 $6.7 -4% -3% Non-GAAP Tax Rate 16.1% 20.4% -4.3pts N/A Non-GAAP EPS2,3 $2.07
Slide 16: Updated 2024 financial outlook
Updated 2024 financial outlook Prior Guidance Updated Guidance Key Assumptions • Assumes ~3% FX headwind (previously ~2%) Revenue $62.7B to $64.2B $63.1B to $64.3B • Implies growth of 5% to 7% (previously 4% to 7%) Non-GAAP • Includes the benefit from reduced royalties paid on Gross Margin Rate ~80.
Slide 17: Key modeling considerations
Key modeling considerations KEYTRUDA • Increased sales guidance reflects continued growth from additional indications and patient demand GARDASIL • Expect more evenly distributed quarterly shipments to China this year, which will adversely impact Q2 2024 ex-U.S. growth LAGEVRIO • Sales in Q1 2024 we
Slide 18: WINREVAIR: novel treatment option for adult patients with PAH
WINREVAIR: Excited to bring a novel treatment option to adult patients with PAH • Confident in successful launch of WINREVAIR, consistent with prior expectations • Encouraged by high interest from patient groups and a range of relevant prescribers • Several payers have already established coverage p
Slide 19: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy Q1 Spend ($ in billions) Capital allocation order of priority Continue to invest in the pipeline and business while augmenting the pipeline $2.8 with value-enhancing $2.0 business development $1.1 $0.9 $0.1 1 After-Tax R&D CapEx Dividends Busi
Slide 20: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 21: Expanding the treatment landscape for Pulmonary Arterial Hypertension
Expanding the treatment landscape for patients with Pulmonary Arterial Hypertension WINREVAIR (sotatercept-csrk) • Received FDA approval for WINREVAIR for treatment of adults with PAH • Currently under review by EMA with decision expected in 2H 2024 • Phase 3 ZENITH and HYPERION studies ongoing, as
Slide 22: Progress across our HIV clinical program
Progress across our HIV clinical program Recent Data at CROI1 • In collaboration with Gilead, presented positive safety and efficacy findings from Phase 2 study evaluating a once-weekly oral combination of islatravir and lenacapavir for treatment of adults living with HIV • Presented safety and tole
Slide 23: Important updates across our vaccines programs
Important updates across our vaccines programs V116 HPV Vaccines • Presented positive data from multiple Phase 3 • Announced new clinical program to identify a trials at ISPPD1 in March novel multi-valent HPV vaccine candidate • Potential to be first approved pneumococcal • Plan to initiate clinical
Slide 24: Diversifying our oncology program and executing on our strategy
Diversifying our oncology program and executing on our strategy Immuno-oncology Precision Molecular Tissue Targeting Targeting Boost anti-tumor immune Impact pathways that can drive Increase cancer cell sensitivity responses cancer growth with ADCs and immune- engagers 24
Slide 25: Committed to harnessing the power of immuno-oncology
Committed to harnessing the power of immuno-oncology Immuno-oncology • KEYNOTE-A18: Met primary endpoint of OS for treatment of newly diagnosed patients with high-risk locally advanced cervical cancer • KEYNOTE-868: FDA granted priority review for 1L treatment of patients with primary advanced or re
Slide 26: Substantial progress across precision and tissue targeting
Substantial progress across precision and tissue targeting Precision Molecular Targeting Tissue Targeting • Initiated Phase 3 trial for MK-1084, an • Initiated Phase 2 / 3 REJOICE-Ovarian01 trial investigational KRAS G12C inhibitor, in evaluating MK-59091 for treatment of patients with combination w
Slide 27: Key upcoming dates
Key upcoming dates Upcoming U.S. Regulatory Action Dates: Save the Date: June 17th ASCO Investor Event in Chicago V116 for prevention of invasive pneumococcal disease and pneumococcal pneumonia in adults June 21st KEYTRUDA for primary advanced or recurrent endometrial carcinoma (KEYNOTE-868) June 26
Slide 28: Q&A
Q&A Rob Davis Chairman & Chief Executive Officer Caroline Litchfield Chief Financial Officer Dr. Dean Li President, Merck Research Laboratories Peter Dannenbaum Senior Vice President, Investor Relations
Slide 29: Appendix
Appendix 29
Slide 30: Q1 2024 GAAP financial results summary
Q1 2024 GAAP financial results summary $ in billions, EPS amounts Q1 2024 Q1 2023 Change Change Ex-FX Sales $15.8 $14.5 +9% +12% Operating Expenses $6.5 $6.8 -4% -3% Tax Rate 15.9% 22.6% -6.7pts N/A GAAP EPS $1.87 $1.11 +68% +76% 30
Slide 31: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months Order of priority $21 $18 Well-positioned balance sheet $15 $17.7 with capacity to fund Billions $12 additional value-enhancing $9 $6 $11.0 business development $3 $3.7 $7.5 $1.3 opportunities $0 After-Tax R&D 1 CapEx Dividends Paid
Slide 32: Driving value by progressing our pipeline
Driving value for patients and shareholders by progressing our pipeline Key regulatory milestones since Key data & clinical advancements since the last earnings call: the last earnings call: • In the U.S.: • Presented positive data from multiple Phase 3 studies evaluating V116, an investigational o
Slide 33: Broad and innovative pipeline to address significant unmet medical needs
Broad and innovative pipeline to address significant unmet medical needs Phase 2 Phase 3 Under regulatory review Oncology Oncology Oncology MK-1022 (patritumab MK-2870 (sacituzumab MK-4280A LYNPARZA (MK-7339)8 MK-7684A MK-1022 (patritumab MK-3475A (pembrolizumab KEYTRUDA (MK-3475) deruxtecan)6 tirum