Merck & Company, Inc. · NYSE:MRK
Merck & — Q1 2022 Earnings Presentation
31 slides from Merck &'s earnings presentation, Apr 28, 2022
Slide 1: Merck Q1 2022 Earnings
Merck Q1 2022 Earnings April 28, 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.
Forward-looking statement of Merck & Co., Inc., Kenilworth, N.J., USA This presentation of Merck & Co., Inc., Kenilworth, 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. The
Slide 4: Strategy & Business Update
Strategy & Business Update Rob Davis President & Chief Executive Officer
Slide 5: Delivered on our key strategic priorities Q1
Delivered on our key strategic priorities Q1 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: Merck achieved excellent Q1 financial performance
Merck achieved excellent Q1 financial performance1 WORLDWIDE SALES1 NON-GAAP EPS $15.9B $2.14 +50% growth Ex-LAGEVRIO, +19% growth Merck +84% growth 1. Results from continuing operations attributable to Merck & Co., Inc. 6
Slide 7: Expect continued strong growth in revenues and earnings
Expect continued strong growth in revenues and earnings Revenue Longer term… GUIDANCE RANGE $48.7B $56.9B-$58.1B Revenue growth +17% $41.5B Delivering visible de-risked +6% revenue growth through 2025 2020 2021 2022 Operating margin expansion Non-GAAP EPS1 Commitment to drive leverage in GUIDANCE th
Slide 8: Multiple levers to navigate the KEYTRUDA LOE
Multiple levers to navigate the KEYTRUDA LOE Minimize • Leverage leadership in oncology the LOE gap • Enhance durable growth drivers Revenue • Deploy cash flow from key assets Shorten period to business development to return to strong growth • Advance pipeline across key therapeutic areas Time Chart
Slide 9: Increasing transparency into our business
Increasing transparency into our business Cardiovascular event ESG event • Highlighted broad and growing cardiovascular • Highlighted our ESG priority areas and outlined our pipeline and portfolio long-term strategy • Eight potential approvals across cardiovascular • ESG approach grounded in Merck’s
Slide 10: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 11: Strong Q1 sales growth across Human Health and Animal Health
Strong Q1 sales growth across Human Health and Animal Health Merck WORLDWIDE SALES1,2,3 Human Health3 Animal Health $15.9B + 50% growth $14.1B +53% growth +18% ex-LAGEVRIO4 $1.5B +4% growth +9% ex-exchange +21% ex-exchange, ex-LAGEVRIO5 +19% ex-LAGEVRIO4 +21% ex-exchange, ex-LAGEVRIO5 1. Results fro
Slide 12: Oncology: KEYTRUDA drives continued momentum
Oncology: KEYTRUDA drives continued momentum • KEYTRUDA sales of $4.8B increased 27% year-over-year, driven by momentum across key tumor types and recent launches – In the U.S., sales of $2.8B driven by growth across key tumor types, including continued leadership in lung, as well as recent earlier-
Slide 13: Oncology: Strong growth across broad portfolio
Oncology: Strong growth across broad portfolio • Lynparza sales increased 20%, with growth driven by continued uptake in metastatic $266M breast cancer $228M +20% – Opportunity in early-stage breast following +51% $145M OlympiA approval +86% – Potential to expand further in metastatic castration-res
Slide 14: Vaccines: GARDASIL growth reflects robust demand and improved supply
Vaccines: GARDASIL growth reflects robust demand and improved supply • GARDASIL sales of $1.5B increased 60% year- over-year driven by strong demand outside the U.S. and increased supply – Ex-U.S., growth was driven by robust demand, particularly in China, and increased supply – U.S. sales increased
Slide 15: Hospital: Strong global demand across products
Hospital: Strong global demand across products • BRIDION sales of $395M increased 20% $395M primarily due to the ongoing recovery in $340M surgical procedures $299M +20% +11% +19% • PREVYMIS sales grew 20%, driven by continued strong global demand 1Q20 1Q21 1Q22 • ZERBAXA continued restocking and up
Slide 16: Animal Health: durable growth across portfolio
Animal Health: durable growth across portfolio • Animal Health sales increased 9% to $1.5B, reflecting growth across geographies and segments – Companion Animal sales grew 13%, driven by the $1.5B BRAVECTO parasiticide line of products and $1.4B vaccines +9% +15% – Livestock sales increased 7% refle
Slide 17: Q1 2022 continuing operations non-GAAP financial results summary
Q1 2022 continuing operations non-GAAP financial results summary: Delivered strong revenue and EPS growth $ in billions, except EPS amounts Change Q1 2022 Q1 2021 Change Ex-FX Sales $15.9 $10.6 +50% +52% Non-GAAP Gross 70.7% 76.6% -5.9pts -5.7pts Margin Non-GAAP Operating $4.8 $4.6 +5% +7% Expenses
Slide 18: Merck updated full-year 2022 guidance
Merck updated full-year 2022 guidance Prior Guidance Updated Guidance Key Assumptions • +11% to +12% excluding LAGEVRIO and the impact from foreign exchange $56.1B to $57.6B $56.9B to $58.1B Revenue • Includes $5-5.5 billion of LAGEVRIO revenue +15% to +18% (+17% to +20% ex-FX) +17% to +19% (+19% to
Slide 19: Key modeling assumptions & outlook
Key modeling assumptions & outlook LAGEVRIO GARDASIL Other Revenue Financial Reporting • Updated full year • Expect very strong • Reflects ongoing supply • Non-GAAP results will guidance of $5.0B to growth in 2022, sales to Organon as well no longer exclude $5.5B particularly ex-U.S., as to Johnson
Slide 20: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy $ Billions1 Capital allocation order of priority Well positioned balance sheet with capacity to fund additional value-enhancing $2.2 business development $1.7 opportunities $1.0 $0.8 $0.0 After-Tax R&D CapEx Dividends Business Share Repurchase
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 U.S., received FDA approval for • Presented data at ESMO Virtual Plenary for KN- Lynparza for adjuva
Slide 23: Continuing to expand, deepen and extend in oncology
Continuing to expand, deepen and extend in oncology Earlier-stage Women’s cancers Prostate cancer Global highlights • Broadest IO clinical • Expansive program • Robust Phase 3 program • Positive CHMP opinions: development program across multiple tumors ‒ PROpel: Lynparza ‒ Cervical cancer based • Si
Slide 24: Cardiovascular portfolio well positioned for growth
Cardiovascular portfolio well positioned for growth Eight potential approvals • Completed enrollment for the STELLAR trial, across cardiovascular MK-2060 evaluating sotatercept in pipeline expected by 2030 Thrombosis ESRD PAH, ahead of schedule MK-0616 Hyper- cholesterolemia • Verquvo included in th
Slide 25: LAGEVRIO represents an important treatment option against COVID-19
LAGEVRIO represents an important treatment option against COVID-19 in high-risk, non-hospitalized patients • Pandemic continues to evolve with regional surges • Recent variants appear to be resistant to specific monoclonal antibody regimens and able to evade vaccine protection • Accessible therapeut
Slide 26: Pipeline updates and progress
Pipeline updates and progress Population-specific pneumococcal vaccine development program VAXNEUVANCE VAXNEUVANCE V116 V117 adults pediatrics adults pediatrics • Sequence of • Under review by the • Received Breakthrough • Targeted approach to VAXNEUVANCE and FDA [PDUFA: July 1] Therapy Designation
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: Q1 2022 continuing operations GAAP financial results summary
Q1 2022 continuing operations GAAP financial results summary $ in billions, except EPS amounts Change Q1 2022 Q1 2021 Change Ex-FX Sales $15.9 $10.6 +50% +52% Operating Expenses $4.9 $4.6 +7% +8% Tax Rate 11.4% 8.0% +3.4pts N/A GAAP EPS $1.70 $1.08 +57% +62% 29
Slide 30: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months $15 Order of priority $12 $14.5 Well positioned balance sheet with capacity to fund Billions $9 $9.1 additional value-enhancing business development $6 $6.7 $3 $4.3 $0.8 opportunities $0 After-Tax R&D CapEx Dividends Paid Business Sh
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 KEYTRUDA (MK-3475) MK-4280 V937 MK-1308A MK-2140 KEYTRUDA (MK-3475) LENVIMA (MK-7902) KEYTRUDA (MK-3475) Advanced Solid Tumors (favezelimab) Melanoma (quavonlimab