Merck & Company, Inc. · NYSE:MRK
Merck & — Q2 2023 Earnings Presentation
29 slides from Merck &'s earnings presentation, Aug 1, 2023
Slide 1: Merck Q2 2023 Earnings
Merck Q2 2023 Earnings August 1, 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.
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 Q2 2023
Delivered on our key strategic priorities in Q2 2023 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: Strong underlying Q2 performance
Strong underlying Q2 performance1 Q2 Worldwide Sales Full Year Sales $59.3B GUIDANCE RANGE $15.0B +22% $58.6B - $59.6B $5.37 $48.7B +17% +3% 2 +14% ex-Exchange, ex-LAGEVRIO 2021 2022 2023 Q2 Non-GAAP LPS3 Full Year Non-GAAP EPS5 ($2.06) $7.48 $5.37 GUIDANCE RANGE N/M 4 $2.95 - $3.05 Includes one-tim
Slide 7: Advancing and augmenting our deep pipeline
Advancing and augmenting our deep pipeline Oncology Vaccines and Infectious Disease General Medicine • Highlighted important data at ASCO: • Announced positive topline results Cardiometabolic for V116, our pneumococcal ‒ KEYNOTE-671 for neoadjuvant and conjugate vaccine candidate • Completed FDA sub
Slide 8: Putting the patient at the center of everything we do
Putting the patient at the center of everything we do 2022/2023 Impact Report1 forthcoming Guided by our purpose to $5.3B $5.8B continue advancing +30% +24% innovative science and broadening access to $4.8B $4.2B +27% patients around the world +20% $3.9B $3.4B +16% +31% 1. Formerly called the ESG re
Slide 9: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 10: Strong underlying Q2 worldwide sales growth
Strong underlying Q2 worldwide sales growth Merck WORLDWIDE SALES1,2 Human Health Animal Health $15.0B +3% growth $13.5B +6% growth +14% ex-LAGEVRIO3 +17% ex-exchange, ex-LAGEVRIO3 $1.5B -1% growth +2% ex-exchange +11% ex-LAGEVRIO3 +14% ex-exchange, ex-LAGEVRIO3 1. Results attributable to Merck & Co
Slide 11: Oncology: KEYTRUDA continues to drive strong growth
Oncology: KEYTRUDA continues to drive strong growth • KEYTRUDA sales of $6.3B increased 21% year-over-year, driven by uptake in earlier stage cancers and continued strong global demand from metastatic indications – In the U.S., growth of 21% reflects strong $5.3B utilization across earlier stage can
Slide 12: Oncology: Solid performance across broad portfolio
Oncology: Solid performance across broad portfolio • Lynparza1 sales grew 15% driven primarily by $310M increased demand in certain international $275M $275M $248M $248M +15% markets +17% +17% +34% $178M +34% +62% • Lenvima2 sales grew 6% due to demand in advanced RCC and endometrial cancer in the U
Slide 13: Vaccines: Exceptional growth driven by GARDASIL
Vaccines: Exceptional growth driven by GARDASIL • GARDASIL sales of $2.5B increased 53% year-over-year primarily driven by strong global demand, particularly in China – China growth is benefitting from the $2.5B expanded indication of GARDASIL 9 to +53% females ages 9 to 45 $1.7B • Strong ongoing pe
Slide 14: Hospital: Strong demand across key products
Hospital: Strong demand across key products • BRIDION sales of $502M increased 19% primarily due to greater share among $502M neuromuscular blockade reversal agents $426M $387M +19% in the U.S. +15% +67% • PREVYMIS sales grew 42% driven by continued strong global demand 2Q21 2Q22 2Q23 $387M $426M $1
Slide 15: Animal Health: Growth driven by livestock and companion animal
Animal Health: Growth driven by livestock and companion animal • Animal Health sales increased 2% to $1.5B – Livestock growth of 2% reflects price actions and increased demand for swine and poultry products, partially offset by lower demand for ruminant products due in part to reduced herd sizes $1.
Slide 16: Q2 2023 non-GAAP financial results summary
Q2 2023 non-GAAP financial results summary1 $ in billions, except LPS/EPS amounts Change Q2 2023 Q2 2022 Change Ex-FX Sales $15.0 $14.6 +3% +7% Non-GAAP Gross Margin 76.6% 74.7% +1.9pts +2.7pts Non-GAAP Operating Expenses2 $15.9 $5.2 N/M N/M Non-GAAP Tax Rate3 -18.4% 13.8% -32.2pts N/A Non-GAAP Earn
Slide 17: Merck updated full-year 2023 guidance
Merck updated full-year 2023 guidance Prior Guidance Updated Guidance Key Assumptions • Includes approximately $1B of LAGEVRIO revenue $57.7B to $58.9B $58.6B to $59.6B Revenue • Ex-LAGEVRIO, growth of 8% to 9% (10 to 11% ex-FX) -3% to -1% (-1% to +1% ex-FX) -1% to +1% (+1% to +3% ex-FX) • Assumes 2
Slide 18: Key modeling considerations
Key modeling considerations KEYTRUDA • Anticipate strong year-over-year growth, but not quite at the levels experienced in recent quarters • Continue to expect strong volume growth to be partially offset by pricing headwinds, particularly in key European markets • In the second quarter, there was a
Slide 19: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy $ Billions1 Capital allocation order of priority Continue to invest in our pipeline and business while augmenting our pipeline $10.9 with value enhancing business development $2.6 $1.9 $1.0 $0.3 After-Tax R&D CapEx Dividends Business Share Rep
Slide 20: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 21: Driving value 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., the FDA: • Presented data across broad oncology portfolio at ASCO, including for o Granted app
Slide 22: Continuing to advance our broader oncology program
Continuing to advance our broader oncology program Clinical progress Regulatory updates • KEYNOTE-756: Phase 3 trial met one of its dual primary endpoints of pCR • PROpel: received FDA approval for Lynparza3 in combination with for treatment of patients with high-risk early-stage ER+/HER2- breast ab
Slide 23: Progressing our broader pipeline
Progressing our broader pipeline Vaccines and Infectious Disease General Medicine • V116, our investigational pneumococcal conjugate • Completed FDA submission of sotatercept for the CARDIOMETABOLIC vaccine specifically designed for adults: treatment of adults with PAH based on the Phase 3 ‒protects
Slide 24: Accelerating our presence in immunology
Accelerating our presence in immunology • Deep expertise in clinical • Focused expertise in trial design and execution immunology + • Global clinical trial scale • Deep genetic and biological insights from Prometheus • Proven track record of 360 Data Science Platform developing and implementing prec
Slide 25: 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 26: Appendix
Appendix 26
Slide 27: Q2 2023 GAAP financial results summary
Q2 2023 GAAP financial results summary $ in billions, except LPS/EPS amounts Q2 20231 Q2 2022 Change Change Ex-FX Sales $15.0 $14.6 +3% +7% Operating Expenses $16.0 $5.3 N/M N/M Tax Rate -11.9% 12.0% -23.9pts N/A GAAP Earnings / ($2.35) $1.55 N/M N/M (Loss) per Share 1. 2Q23 GAAP results include $10
Slide 28: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months Order of priority $15 Well positioned balance sheet $12 $13.8 with capacity to fund Billions $9 $10.4 additional value-enhancing $6 $7.2 business development $3 $4.2 $0.5 opportunities $0 After-Tax R&D CapEx Dividends Paid Business S
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-4830 WELIREG (MK-6482) MK-7684A KEYTRUDA (MK-3475) LENVIMA (MK-7902) KEYTRUDA (MK-3475) NSCLC Neoplasm Malignant CRC Biliary (vibostolimab CSCC