Merck & Company, Inc. · NYSE:MRK
Merck & — Q3 2022 Earnings Presentation
31 slides from Merck &'s earnings presentation, Oct 27, 2022
Slide 1: Merck Q3 2022 Earnings
Merck Q3 2022 Earnings October 27, 2022
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 President & Chief Chief Financial Officer President, Merck Executive Officer Research Laboratories 2
Slide 3: Forward-looking statement of Merck & Co., Inc., Rahway, N.J., USA
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 President & Chief Executive Officer
Slide 5: Delivered on our key strategic priorities in Q3
Delivered on our key strategic priorities in Q3 Achieved strong commercial and financial performance Advanced the pipeline to meet patient unmet need Executed on strategic business development to enhance pipeline Created long-term value for patients and shareholders 5
Slide 6: Exceptional Q3 sales and underlying earnings growth
Exceptional Q3 sales and underlying earnings growth1 Worldwide Sales Full Year Revenue GUIDANCE GUIDANCE $15.0B RANGE RANGE $48.7B $48.7B $58.5B-$59.0B $57.5B-$58.5B +17% +17% $41.5B $41.5B +14% +6% +6% Ex-LAGEVRIO, +10% 2020 2021 2022 Non-GAAP EPS2,3 Full Year Non-GAAP EPS2 GUIDANCE $1.85 RANGE $5.
Slide 7: Advancing deep pipeline across multiple therapeutic areas
Advancing deep pipeline across multiple therapeutic areas Cardiovascular Oncology Vaccines HIV • Announced positive • Presented encouraging • Advanced population- • Announced path results for the Phase 3 results at ESMO across specific approach to forward for islatravir STELLAR trial our broad portf
Slide 8: Making progress on our commitment to deliver value to society
Making progress on our commitment to deliver value to society, which will in turn, create value for shareholders Published ESG Progress Report • Highlighted key initiatives including: Access to – Providing 91.5 million doses of HPV health Employees vaccines in Gavi-supported countries – Advancing ou
Slide 9: Appreciation for Ken Frazier as he retires from Merck's Board
Appreciation for Ken Frazier as he retires from Merck’s Board For decades, Ken has embodied Merck’s core principles and values, anchored by a singular focus on creating meaningful value for our patients, employees, communities and shareholders. Ken is a once-in-a-generation leader, and his positive
Slide 10: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 11: Excellent Q3 performance led by Human Health
Excellent Q3 performance led by Human Health Merck WORLDWIDE SALES1,2 Human Health3 Animal Health $15.0B +14% growth $13.0B +13% growth +9% ex-LAGEVRIO3 $1.4B -3% decrease +4% ex-exchange +15% ex-exchange, ex-LAGEVRIO4 +10% ex-LAGEVRIO3 +14% ex-exchange, ex-LAGEVRIO4 1. Results from continuing opera
Slide 12: Oncology: KEYTRUDA momentum driving strong global growth
Oncology: KEYTRUDA momentum driving strong global growth • KEYTRUDA sales of $5.4B increased 26% year-over-year, driven by strong global demand and uptake in new indications – In the U.S., growth of 29% reflects strong momentum in metastatic indications as well as $5.3B increased uptake in earlier-s
Slide 13: Oncology: Sustained momentum from key products
Oncology: Sustained momentum from key products • Lynparza1 sales increased 23%, with growth driven by continued demand for the adjuvant $275M $284M $246M $248M +17% +23% treatment of certain patients with gBRCAm, $196M $178M +25% +34% HER2-negative high-risk early-stage breast +58% +62% cancer based
Slide 14: Vaccines: GARDASIL growth remains very strong
Vaccines: GARDASIL growth remains very strong • GARDASIL sales of $2.3B increased 20% year- over-year primarily driven by strong underlying demand outside the U.S. and increased supply $2.3B – Ex-U.S., reflects demand driven growth, +20% particularly in China, and increased supply $2.0B $1.7B – U.S.
Slide 15: Hospital: Robust global demand across key products
Hospital: Robust global demand across key products • BRIDION sales of $423M increased 22% primarily due to greater share among $423M neuromuscular blockage reversal agents $369M +22% $320M +15% and increase in surgical procedures +13% • PREVYMIS sales grew 29%, driven by continued strong global dema
Slide 16: Animal Health: Solid Livestock and Companion Animal performance
Animal Health: Solid Livestock and Companion Animal performance • Animal Health sales increased 4% to $1.4B – Livestock sales grew 4% due to poultry products and ruminant technology solutions – Companion Animal sales increased 4%, driven by BRAVECTO parasiticide line of products, $1.4B partially off
Slide 17: Q3 2022 continuing operations non-GAAP financial results summary
Q3 2022 continuing operations non-GAAP financial results summary1: Delivered strong revenue and EPS growth $ in billions, except EPS amounts Change Q3 2022 Q3 2021 Change Ex-FX Sales $15.0 $13.2 +14% +18% Non-GAAP Gross 77.0% 76.8% +0.2pts -0.4pts Margin Non-GAAP Operating $6.0 $4.7 +28% +32% Expens
Slide 18: Merck updated full-year 2022 guidance
Merck updated full-year 2022 guidance Prior Guidance Updated Guidance Key Assumptions • ~16% growth excluding LAGEVRIO and FX impact $57.5B to $58.5B $58.5B to $59.0B • Includes $5.2 to $5.4B of LAGEVRIO revenue Revenue +18% to +20% (+21% to +23% ex-FX) +20% to +21% (+24% to +25% ex-FX) • Assumes ~4
Slide 19: Key modeling considerations
Key modeling considerations FX • FX continues to be a headwind, particularly for products with a larger portion of ex-US sales, such as in Animal Health Other Revenue • Includes ongoing supply sales to Organon, effects from revenue hedging program and out-license receipts Pneumococcal • Expect conti
Slide 20: 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 $3.0 pipeline and business to realize value of near- and long-term $1.7 opportunities $1.1 $0.8 $0.0 After-Tax R&D CapEx Dividends Business Share Repurc
Slide 21: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 22: Driving value for patients and shareholders 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 US: • Announced positive top-line results from pivotal o The FDA accepted submission of New Drug Pha
Slide 23: Potential to transform the treatment of adult patients with pulmonary arterial hypertension
Potential to transform the treatment of adult patients with pulmonary arterial hypertension • Positive topline results from Phase 3 STELLAR trial evaluating sotatercept added to currently approved background therapy in Pulmonary Arterial Hypertension – Profound effect on primary efficacy outcome mea
Slide 24: Real-world evidence supports the role of LAGEVRIO
Real-world evidence (RWE) supports the role of LAGEVRIO as an important option in treating adults at high risk for severe COVID-19 • Approximately 2.5 million people globally have received LAGEVRIO for the treatment of COVID-19 • Data from recent RWE studies conducted across different geographies pr
Slide 25: Significant advancements across our broader pipeline and portfolio
Significant advancements across our broader pipeline and portfolio HIV Vaccines RNA Technologies • Initiated new Phase 3 clinical program • In China, received broadened • Executing on business development evaluating a once-daily oral approval based on age from the and licensing strategy combination
Slide 26: Continuing to build on strong momentum in oncology
Continuing to build on strong momentum in oncology Quarterly highlights Global highlights Personalized Cancer Vaccines • Important data at ESMO: • Four approvals in Japan for • Exercised option to jointly develop KEYTRUDA in neoadjuvant / mRNA-4157 / V940 with Moderna in ‒ Showcased long-term surviv
Slide 27: Q&A
Q&A Rob Davis President & Chief Executive Officer Caroline Litchfield Chief Financial Officer Dr. Dean Li President, Merck Research Laboratories Peter Dannenbaum Vice President, Investor Relations
Slide 28: Appendix
Appendix 28
Slide 29: Q3 2022 continuing operations GAAP financial results summary
Q3 2022 continuing operations GAAP financial results summary $ in billions, except EPS amounts Change Q3 2022 Q3 2021 Change Ex-FX Sales $15.0 $13.2 +14% +18% Operating Expenses $6.9 $4.8 +45% +49% Tax Rate 9.2% 13.2% -4.0pts N/A GAAP EPS $1.28 $1.80 -29% -25% 29
Slide 30: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months $15 Order of priority $12 $13.7 Well positioned balance sheet with capacity to fund Billions $9 $10.1 $6 additional value-enhancing $3 $4.5 $6.9 business development $0 $0.0 opportunities After-Tax R&D CapEx Dividends Paid Business S
Slide 31: 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-5684 WELIREG (MK-6482) MK-7684A KEYTRUDA (MK-3475) LENVIMA (MK-7902) KEYTRUDA (MK-3475) NSCLC Neoplasm Malignant Prostate Rare Cancers (vibosto