Merck & Company, Inc. · NYSE:MRK
Merck & — Q2 2022 Earnings Presentation
29 slides from Merck &'s earnings presentation, Jul 28, 2022
Slide 1: Merck Q2 2022 Earnings
Merck Q2 2022 Earnings July 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., 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 Q2
Delivered on our key strategic priorities in Q2 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 2Q sales and earnings growth
Exceptional 2Q sales and earnings growth1 Worldwide Sales GUIDANCE $14.6B RANGE $48.7B $57.5B-$58.5B +17% $41.5B +28% +6% Ex-LAGEVRIO, +18% Non-GAAP EPS $1.87 +>100% 1. Results from continuing operations attributable to Merck & Co., Inc. 2. Beginning in 2022, Merck no longer excludes expenses for up
Slide 7: Advancing and providing transparency to our deep pipeline
Advancing and providing transparency to our deep pipeline Pneumococcal Oncology • Made significant progress in our population- • Hosted an investor event at ASCO to highlight specific approach to pneumococcal vaccines broad oncology portfolio and pipeline with VAXNEUVANCE and V116 • Reiterated expec
Slide 8: Significant progress over the past year in advancing Merck's position
Well positioned to deliver value to patients and shareholders Significant progress • Achieving record levels of over the past year production in manufacturing in advancing • Delivering strong revenue growth Merck’s position • Advancing our pipeline as a global biopharmaceutical • Providing increased
Slide 9: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 10: Strong Q2 sales growth across Human Health and Animal Health
Strong Q2 sales growth across Human Health and Animal Health Merck WORLDWIDE SALES1,2,3 Human Health3 Animal Health $14.6B + 28% growth $12.8B +28% growth +16% ex-LAGEVRIO4 $1.5B 0% growth +5% ex-exchange +21% ex-exchange, ex-LAGEVRIO5 +18% ex-LAGEVRIO4 +20% ex-exchange, ex-LAGEVRIO5 1. Results from
Slide 11: Oncology: KEYTRUDA is having profound impact on patients
Oncology: KEYTRUDA is having profound impact on patients • KEYTRUDA sales of $5.3B increased 30% year-over-year, driven by robust global demand and expansion into new indications – In the U.S., sales of $3.2B driven by momentum in metastatic indications as well as increased uptake in earlier-stage c
Slide 12: Oncology: Additional indications benefiting growth of key products
Oncology: Additional indications benefiting growth of key products • Lynparza sales increased 17%, with growth driven by adjuvant treatment of certain $275M patients with high-risk early-stage breast $248M cancer following U.S. OlympiA approval +17% $178M +34% – Maintaining position as market-leadin
Slide 13: Vaccines: Excellent growth driven by GARDASIL
Vaccines: Excellent growth driven by GARDASIL • GARDASIL sales of $1.7B increased 40% 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 $1.7B – U.S. sales decreased due to CDC purch
Slide 14: Hospital: Strong global demand across broad portfolio
Hospital: Strong global demand across broad portfolio • BRIDION sales of $426M increased 15% primarily due to greater share among $387M $426M neuromuscular blockage reversal agents and +67% +15% an increase in surgical procedures $224M • PREVYMIS sales grew 18%, driven by -18% continued strong globa
Slide 15: Animal Health: Solid demand driven growth
Animal Health: Solid demand driven growth • Animal Health sales increased 5% to $1.5B, reflecting growth – Livestock sales grew 6% reflecting higher demand globally for ruminants and poultry products – Companion Animal sales increased 3% due to higher global demand for the BRAVECTO $1.5B $1.5B paras
Slide 16: Q2 2022 continuing operations non-GAAP financial results summary
Q2 2022 continuing operations non-GAAP financial results summary: Delivered strong revenue and EPS growth $ in billions, except EPS amounts Change Q2 2022 Q2 2021 Change Ex-FX Sales $14.6 $11.4 +28% +31% Non-GAAP Gross 74.7% 76.5% -1.8pts -2.5pts Margin Non-GAAP Operating $5.2 $6.6 -21% -19% Expense
Slide 17: Merck updated full-year 2022 guidance
Merck updated full-year 2022 guidance Prior Guidance Updated Guidance Key Assumptions • +13% to +14% excluding LAGEVRIO and FX impact $56.9B to $58.1B $57.5B to $58.5B • Includes $5.0 to $5.5 billion of LAGEVRIO Revenue +17% to +19% (+19% to +21% ex-FX) +18% to +20% (+21% to +23% ex-FX) revenue • As
Slide 18: Key modeling considerations
Key modeling considerations COVID-19 Impact Other Revenue Pneumococcal Animal Health LAGEVRIO • Pandemic • Includes ongoing • Expect continued • Normalization of • Maintain full year unfavorably impacted supply sales to OGN impact to favorable guidance of $5.0B 1H 2021 sales by and JNJ, revenue PNEU
Slide 19: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy $ Billions1 Continue to prioritize investments in our pipeline and business to realize value of near- and long-term opportunities 1. Reflects Q2 spend 19
Slide 20: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 21: 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: • Presented data across broad oncology • Received FDA approval and ACIP unanimously portfolio at
Slide 22: Advancing population-specific pneumococcal vaccine development program
Advancing population-specific pneumococcal vaccine development program VAXNEUVANCE Adult (PCV15) V116 (PCV21) Recommended for use in sequence with Investigational candidate specifically targeting PNEUMOVAX 23 adult disease and covering serotypes that account for 85% of all invasive pneumococcal dise
Slide 23: Continuing to build on momentum in oncology
Continuing to build on momentum in oncology Earlier-stage Global highlights Prostate cancer • Broadest IO clinical development program • Four EMA approvals for KEYTRUDA • Executing on business development and licensing strategy • KN-091 for adjuvant treatment of certain ‒ KN-716: adjuvant therapy fo
Slide 24: LAGEVRIO represents an important treatment option against COVID-19
LAGEVRIO represents an important treatment option against COVID-19 for high-risk, non-hospitalized patients • Pandemic continues to evolve with regional surges • Emerging evidence of the threat of resistance to antibody therapies with new variants • LAGEVRIO is well-positioned to play a role for app
Slide 25: 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 26: Appendix
Appendix 26
Slide 27: Q2 2022 continuing operations GAAP financial results summary
Q2 2022 continuing operations GAAP financial results summary $ in billions, except EPS amounts Change Q2 2022 Q2 2021 Change Ex-FX Sales $14.6 $11.4 +28% +31% Operating Expenses $5.3 $6.6 -20% -18% Tax Rate 12.0% 29.3% -17.3pts N/A GAAP EPS $1.55 $0.48 +>100% +>100% 27
Slide 28: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Well positioned balance sheet with capacity to fund additional value-enhancing business development opportunities Capital investments 2022 to 2026 ~ 16B $ Over 5 years, including expanding manufacturing capacity for Oncology, Vaccines, and Animal Health. In
Slide 29: 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-5890 LENVIMA (MK-7902) TUKYSA (MK-7119) KEYTRUDA (MK-3475) LENVIMA (MK-7902) KEYTRUDA (MK-3475) NSCLC Neoplasm Malignant NSCLC Biliary Advanced