Merck & Company, Inc. · NYSE:MRK
Merck & — Q2 2024 Earnings Presentation
31 slides from Merck &'s earnings presentation, Jul 30, 2024
Slide 1: Merck Q2 2024 Earnings
Merck Q2 2024 Earnings July 30, 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 Q2 2024
Delivered on our key strategic priorities in Q2 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: Significant progress over the past three years
Significant progress over the past three years Expanded and evolved our pipeline to drive future innovations for patients Reached more people globally with our medicines and vaccines Drove innovation and productivity through integration of data, digital and analytics 6
Slide 7: Strong Q2 sales and earnings performance
Strong Q2 sales1 and earnings performance Q2 Worldwide Sales Full Year Sales 70,000 GUIDANCE RANGE 60,000 $16.1B $59.3B $60.1B $63.4B - $64.4B $5.37 +22% +1% +5% - +7% 50,000 40,000 +7% 30,000 20,000 +11% ex-Exchange 2022 2023 2024 Q2 Non-GAAP EPS3 Full Year Non-GAAP EPS2 $2.28 $7.48 $1.51 GUIDANCE
Slide 8: Advancing our broad pipeline
Advancing our broad pipeline Cardiometabolic Vaccines Oncology Diverse Portfolio & Pipeline Successful initial Recent FDA approval Presented data for launch following U.S. and unanimous ACIP multiple novel approval, and received recommendation in candidates at ASCO positive CHMP opinion certain adul
Slide 9: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 10: Strong Q2 worldwide sales growth
Strong Q2 worldwide sales growth Merck WORLDWIDE SALES1,2 Human Health Animal Health $16.1B +7% growth $14.4B +7% growth +11% ex-exchange3 $1.5B +2% growth +6% ex-exchange3 +11% ex-exchange3 1. Results attributable to Merck & Co., Inc. 2. Worldwide Sales includes Other Revenue. 3. ~2 percentage poin
Slide 11: Oncology: KEYTRUDA continues to drive excellent growth
Oncology: KEYTRUDA continues to drive excellent growth • KEYTRUDA sales of $7.3B increased 21%1 year-over-year, driven by uptake in earlier stage cancers and continued strong global demand from metastatic indications – In the U.S., increase reflects uptake from KN-671 $5.3B and KN-091 in NSCLC, as w
Slide 12: Oncology: Strong performance across broad portfolio
Oncology: Strong performance across broad portfolio $310M $317M $275M +4% +15% • Lynparza1 sales grew 4%, driven primarily by +17% higher demand in the U.S. and certain international markets 2Q22 2Q23 2Q24 • Lenvima2 sales grew 4%, driven primarily by higher demand in the U.S. $231M $242M $249M +33%
Slide 13: Vaccines: Growth driven by GARDASIL and VAXNEUVANCE
Vaccines: Growth driven by GARDASIL and VAXNEUVANCE $1.7B • GARDASIL sales of $2.5B increased 4% +40% year-over-year $2.5B $2.5B +53% +4% – In the U.S., sales benefitted from price, demand and favorable CDC purchasing $1.7B patterns +40% – Ex-U.S., sales were driven by higher demand across several m
Slide 14: Cardiovascular: Successful initial launch of WINREVAIR
Cardiovascular: Successful initial launch of WINREVAIR • >2,000 patients prescribed in the quarter Patients • Across all prescriptions, ~75-80% of patients receive commercial product • >1,000 patients started treatment in the quarter, largely reflecting prescriptions written in April and May • Takes
Slide 15: Animal Health: Growth driven by livestock
Animal Health: Growth driven by livestock • Animal Health sales increased 6%1 to $1.5B – Livestock sales grew 11%, driven by higher demand for poultry and ruminant products, as well as price – Companion Animal growth reflects price, $1.5B $1.5B $1.5B partially offset by reduction in distributor +5%
Slide 16: Q2 2024 non-GAAP financial results summary
Q2 2024 non-GAAP financial results summary1 $ in billions, except EPS amounts Change Q2 2024 Q2 2023 Change Ex-FX Sales $16.1 $15.0 +7% +11% Non-GAAP Gross Margin 80.9% 76.6% +4.3pts +4.3pts Non-GAAP Operating Expenses $6.2 $15.9 -61% -61% Non-GAAP Tax Rate 14.1% -18.4% +32.5pts N/A Non-GAAP Earning
Slide 17: Updated 2024 financial outlook
Updated 2024 financial outlook Prior Guidance Updated Guidance Key Assumptions • Assumes ~3 percentage point FX headwind Revenue $63.1B to $64.3B $63.4B to $64.4B • Implies growth of 5% to 7% Non-GAAP Gross Margin Rate ~81.0% ~81.0% • Includes incremental $1.5B of charges related to EyeBio Non-GAAP
Slide 18: Key modeling considerations
Key modeling considerations CAPVAXIVE • Received FDA approval and ACIP recommendation • Commercial uptake will be enabled by milestones such as MMWR publication, which typically lags ACIP recommendation by a few months, as well as payor coverage and customer contracting GARDASIL • Benefitted from ex
Slide 19: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy Q2 Spend ($ in billions) Capital allocation order of priority Continue to invest in the pipeline and business while augmenting the pipeline $3.0 with value-enhancing business development $2.0 $0.7 $0.2 $0.3 After-Tax R&D 2 CapEx Dividends Busi
Slide 20: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 21: Important progress across our immunization programs
Important progress across our immunization programs Pneumococcal RSV • Received FDA approval for CAPVAXIVE, a 21-valent • Announced positive topline results from Phase 2b/3 pneumococcal conjugate vaccine for adults, as well as trial evaluating clesrovimab, an investigational RSV unanimous ACIP recom
Slide 22: Executing upon our oncology development strategy
Executing upon our oncology development 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 22
Slide 23: Continuing to harness the power of immuno-oncology
Continuing to harness the power of immuno-oncology Recent KEYTRUDA Updates • KEYNOTE-868: FDA approved KEYTRUDA in combination with chemotherapy for treatment of primary advanced or recurrent endometrial cancer regardless of mismatch repair status • KEYNOTE-522: Announced study demonstrated OS Earli
Slide 24: Updates across precision and tissue targeting
Updates across precision and tissue targeting Precision Molecular Targeting Tissue Targeting • Exercised option to advance opevesostat1, an oral • Received positive CHMP opinion for KEYTRUDA nonsteroidal CYP11A1 inhibitor in combination with Padcev for 1L treatment of patients with unresectable or m
Slide 25: Important developments across our diverse pipeline
Important developments across our diverse pipeline Cardiometabolic Ophthalmology • Received positive CHMP opinion for WINREVAIR • Completed acquisition of EyeBio for treatment of PAH • Restoret™/MK-3000 is an investigational, • Anticipate European Commission decision on potentially first-in-class te
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 Senior Vice President, Investor Relations
Slide 27: Appendix
Appendix 27
Slide 28: Q2 2024 GAAP financial results summary
Q2 2024 GAAP financial results summary $ in billions, EPS amounts Q2 2024 Q2 2023 Change Change Ex-FX Sales $16.1 $15.0 +7% +11% Operating Expenses1 $6.2 $16.0 -61% -60% Tax Rate 9.1% -11.9% -21.0pts N/A GAAP Earnings / $2.14 ($2.35) N/M N/M (Loss) per Share1 28 1. 2Q23 GAAP results include $10.2 bi
Slide 29: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months Order of priority $12 Well-positioned balance sheet $11.4 $9 with capacity to fund Billions $6 $7.6 $7.0 additional value-enhancing business development opportunities $3 $3.5 $1.2 $0 After-Tax R&D 1 CapEx Dividends Paid Business Shar
Slide 30: Driving value for patients and shareholders by progressing our pipeline
Driving value for patients and shareholders by progressing our pipeline Key regulatory milestones since the last earnings call: Key data & clinical advancements since the last earnings call: • In the U.S.: • Presented data across broad oncology portfolio at ASCO, o FDA accepted for priority review t
Slide 31: 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 WELIREG (MK-6482) MK-1022 (patritumab deruxtecan)6 MK-3475A (pembrolizumab KEYTRUDA (MK-3475) deruxtecan)6 tir