Merck & Company, Inc. · NYSE:MRK
Merck & — Q4 2022 Earnings Presentation
36 slides from Merck &'s earnings presentation, Feb 2, 2023
Slide 1: Merck Q4 2022 Earnings
Merck Q4 2022 Earnings February 2, 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., 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 Chairman and Chief Executive Officer
Slide 5: Delivered on our key strategic priorities in 2022
Delivered on our key strategic priorities in 2022 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: Exceptional 2022 sales and underlying earnings growth
Exceptional 2022 sales and underlying earnings growth1 4Q Worldwide Sales Full Year Revenue $59.3B GUIDANCE $13.8B +22% RANGE $48.7B $48.7B $57.5B-$58.5B +17% +17% $41.5B $41.5B +2% +6% +6% 2020 2021 2022 4Q Non-GAAP EPS2,3 Full Year Non-GAAP EPS2 $7.48 $1.62 $5.37 $2.97 -10% 2020 2021 2022 1. Resul
Slide 7: Advancing and augmenting pipeline across multiple therapeutic areas in Q4
Advancing and augmenting pipeline across multiple therapeutic areas in Q4 Oncology Cardiovascular Vaccines Business Development • Announced positive top line • Merck to present data for • Merck collaborator • Augmented pipeline with results for the Phase 2 trial sotatercept and MK-0616, Instituto Bu
Slide 8: Building a sustainable engine to drive success into the next decade
Building a sustainable engine to drive success into the next decade Enhance durable Deploy cash flow to Leverage leadership Advance pipeline across growth drivers value-enhancing BD in oncology key therapeutic areas Pursuing the New combinations and Cardiometabolic best external science coformulatio
Slide 9: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 10: Merck achieved exceptional 2022 financial performance
Merck achieved exceptional 2022 financial performance1 WORLDWIDE SALES2 NON-GAAP EPS33,5 $59.3B $7.48 +22% growth +26% ex-exchange Merck +39% growth +43% ex-exchange +15% ex-exchange, LAGEVRIO4 1. Results from continuing operations attributable to Merck & Co., Inc. 2. Worldwide Sales includes Other
Slide 11: Strong Q4 performance across Human Health and Animal Health
Strong Q4 performance across Human Health and Animal Health Merck WORLDWIDE SALES1,2 Human Health Animal Health $13.8B + 2% growth $12.2B +1% growth +9% ex-exchange $1.2B -2% growth +6% ex-exchange +8% ex-exchange 1. Results from continuing operations attributable to Merck & Co., Inc. 2. Worldwide S
Slide 12: Oncology: KEYTRUDA drives continued growth
Oncology: KEYTRUDA drives continued growth • KEYTRUDA sales of $5.5B increased 26% year-over-year, driven by strong global demand and expansion into new indications – In the U.S., growth of 27% reflects strong growth across all key tumor types, especially in $5.3B earlier-stage cancers such as high-
Slide 13: Oncology: Robust performance across broad portfolio
Oncology: Robust performance across broad portfolio • Lynparza1 sales increased 14%, with growth $292M driven by continued demand in adjuvant $268M $275M $248M +14% +17% treatment of certain patients with $206M +33% $178M +34% gBRCAm, HER2-negative high-risk early- +53% stage breast cancer +62% • Le
Slide 14: Vaccines: Gardasil growth driven by strong global demand
Vaccines: Gardasil growth driven by strong global demand • GARDASIL sales of $1.5B increased 6% year-over-year primarily driven by strong underlying demand outside the U.S. – Ex-U.S., reflects demand driven growth, particularly in China – U.S. sales declined primarily due to CDC $1.7B purchasing pat
Slide 15: Hospital: Strong global demand across key products
Hospital: Strong global demand across key products • BRIDION sales of $441M increased 7% primarily due to greater share among $436M $441M neuromuscular blockade reversal agents $355M +24% +7% and increase in surgical procedures +13% • PREVYMIS sales grew 28%, driven by continued strong global demand
Slide 16: Animal Health: Solid growth driven by livestock
Animal Health: Solid growth driven by livestock • Animal Health sales increased 6% to $1.2B, reflecting strategic price actions and volume growth – Livestock sales grew 12% due to increased demand in ruminants and poultry products – Companion Animal sales decreased 5% due to $1.5B $1.5B supply chall
Slide 17: Q4 2022 continuing operations non-GAAP financial results summary
Q4 2022 continuing operations non-GAAP financial results summary1 $ in billions, except EPS amounts Change Q4 2022 Q4 2021 Change Ex-FX Sales $13.8 $13.5 +2% +8% Non-GAAP Gross 75.7% 74.8% +0.9pts +0.3pts Margin Non-GAAP Operating $5.7 $5.3 +8% +12% Expenses2 Non-GAAP Tax Rate 15.6% 4.3% +11.3pts N/
Slide 18: Merck provides full-year 2023 guidance
Merck provides full-year 2023 guidance Guidance Key Assumptions • Includes approximately $1B of LAGEVRIO revenue $57.2B to $58.7B Revenue • Ex-LAGEVRIO, growth of 5% to 8% (7 to 10% ex-FX) -4% to -1% (-2% to +1% ex-FX) • Assumes ~2% FX headwind Non-GAAP ~77.0% Gross Margin Rate1 • Includes $1.4B of
Slide 19: Key modeling considerations for 2023
Key modeling considerations for 2023 GARDASIL Other Revenue Other (Income) / Expense and Tax Rate • Expect strong growth driven by • Expect significant decline, resulting • Other Income assumes no pension robust global demand, particularly in from smaller planned benefit from settlement cost; expect
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 pipeline and business $2.6 to realize value of near- and long-term $1.7 opportunities $1.1 $0.3 $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: Working to help transform the landscape of cancer treatment by focusing on earlier stages
Working to help transform the landscape of cancer treatment by focusing on earlier stages of disease Making progress in the treatment of earlier stage Advancing our collaboration with Moderna to leverage non-small cell lung cancer through various clinical trials mRNA technology with KEYTRUDA to targ
Slide 23: Advancing our broader oncology portfolio
Advancing our broader oncology portfolio Positive Data Readouts Hematology Ex-U.S. Approvals Tissue Targeting Therapies • KEYNOTE-966: Announced • Announced acquisition of • In Europe: • Padcev2: FDA accepted sBLA positive Phase III results Imago Biosciences: – Received approval for for Keytruda to
Slide 24: Focusing on important unmet medical needs through vaccine development programs
Focusing on important unmet medical needs through vaccine development programs Dengue Invasive Pneumococcal Disease • Collaborating with Instituto Butantan (IB) to conduct a • Receiving positive feedback from physicians following detailed analysis of IB’s positive Phase 3 data in order to launch of
Slide 25: Recent data published on cancer incidence
Recent data published on cancer incidence Cervical Cancer • We, along with others in the industry, are making a Among women ages 20 real impact in our goal to help reduce cancer incidence to 24, cervical cancer • American Cancer Society published its annual report on cancer facts and trends incidenc
Slide 26: Significant advancements across our broader pipeline and portfolio
Significant advancements across our broader pipeline and portfolio COVID-19 Cardiovascular • Granted conditional marketing authorization for At ACC.23/WCC on March 6th, Merck to: LAGEVRIO by China's National Medical Products Administration • Present results from Phase 3 STELLAR study evaluating sota
Slide 27: Strong progress across our pipeline throughout 2022
Strong progress across our pipeline throughout 2022 Oncology Cardiometabolic Vaccines Infectious Disease • KEYTRUDA: • Sotatercept: Announced positive • VAXNEUVANCE: Received • Islatravir: Reinitiated topline results for Phase 3 approval in the pediatric setting development program in the HIV – Rece
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 Vice President, Investor Relations
Slide 29: Appendix
Appendix 29
Slide 30: Sustained strong full-year performance across key growth pillars
Sustained strong full-year performance across key growth pillars +27% YOY +18% $20,937 YOY +28% $17,186 YOY $1,116 $14,380 $989 $876 $11,084 $725 $704 $580 $444 $404 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 +27% YOY +6% YOY $6,897 +16% $5,568 $5,550 $5,673 YOY $4,703 $4,393 $3,737
Slide 31: Q4 2022 continuing operations GAAP financial results summary
Q4 2022 continuing operations GAAP financial results summary $ in billions, except EPS amounts Change Q4 2022 Q4 2021 Change Ex-FX Sales $13.8 $13.5 +2% +8% Operating Expenses $6.5 $5.9 +10% +13% Tax Rate 14.1% 2.2% +11.9pts N/A GAAP EPS $1.18 $1.51 -22% -17% 31
Slide 32: 2022 continuing operations GAAP financial results summary
2022 continuing operations GAAP financial results summary: $ in billions, except EPS amounts Change 2022 2021 Change Ex-FX Sales $59.3 $48.7 +22% +26% Operating Expenses $23.6 $21.9 +8% +11% Tax Rate 11.7% 11.0% +0.7pts N/A GAAP EPS $5.71 $4.86 +17% +21% 32
Slide 33: 2022 continuing operations non-GAAP financial results summary
2022 continuing operations non-GAAP financial results summary: Delivered strong revenue and EPS growth $ in billions, except EPS amounts Change 2022 2021 Change Ex-FX Sales $59.3 $48.7 +22% +26% Non-GAAP Gross 74.4% 76.1% -1.7pts -2.1pts Margin1 Operating Expenses $21.6 $21.0 +3% +6% Tax Rate 14.2%
Slide 34: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months $15 Order of priority $12 Well positioned balance sheet with capacity to fund Billions $9 $10.2 $6 additional value-enhancing $3 $7.0 business development $4.4 $2.4 $0.0 opportunities $0 After-Tax R&D CapEx Dividends Paid Business Sh
Slide 35: 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.: o The FDA granted approval of KEYTRUDA following • Announced with partner Moderna, positive to
Slide 36: 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 CRC Neoplasm Malignant Biliary (vibostolimab Bili