Merck & Company, Inc. · NYSE:MRK
Merck & — Q3 2021 Earnings Presentation
38 slides from Merck &'s earnings presentation, Oct 28, 2021
Slide 1: Merck Q3 2021 Earnings
Merck Q3 2021 Earnings October 28, 2021
Slide 2: Agenda
Agenda Strategy and Human Health Animal Health and Research Question & Answer Business Update Results Financial Results Update Session Rob Davis Frank Clyburn Caroline Litchfield Dr. Dean Li Chief Executive Officer President, Merck Chief Financial Officer President, Merck Human Health Research Labor
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 Chief Executive Officer
Slide 5: Delivered on our key strategic priorities in 3Q 2021
Delivered on our key strategic priorities in 3Q 2021 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's investigational antiviral treatment has potential to have meaningful impact on COVID-19
Merck’s investigational antiviral treatment has potential to have meaningful impact on the COVID-19 pandemic • Demonstrated a 50% reduction in risk of hospitalization or death in phase 3 MOVe-OUT trial in at risk, non-hospitalized adults with mild-to- moderate COVID-19 • Submitted EUA and engaging w
Slide 7: Acceleron acquisition adds strong external science and potential long-term growth driver in sotatercept
Acceleron acquisition adds strong external science and potential long-term growth driver in sotatercept • Transaction aligns well with innovation-driven business development strategy • Sotatercept is a first-in-class, late-stage asset with potential to be foundational pulmonary hypertension add-on t
Slide 8: Exceptional Q3 2021 sales and earnings growth
Exceptional Q3 2021 sales and earnings growth Worldwide Sales Revenue GUIDANCE $13.2B RANGE $47.4B–$47.9B $41.5B +13% to +14% +8% +19% $39.1B* 2019 2020 2021 Non-GAAP EPS EPS GUIDANCE $1.75 RANGE $5.65 - $5.70 $4.53 +23% to +24% +25% +26% $3.73* 2019 2020 2021 Growth rates exclude the impact of fore
Slide 9: ESG priority areas grounded in the core values that guide Merck's mission
ESG priority areas grounded in the core values that guide Merck’s mission • Access to medicine • Employee health and safety • Product quality and safety Access to • Employee engagement Employees health and diversity • Public health risks • Climate change • Business ethics Environmental Ethics • Ethi
Slide 10: Human Health Results
Human Health Results Frank Clyburn President, Merck Human Health
Slide 11: Human health delivered continued strong performance in Q3
Human health delivered continued strong performance in Q3 • Sustained business momentum driven by strong underlying demand Total Human Health and commercial execution $11.5B, +17% • Continue to invest in patient activation programs • Lingering effects from the pandemic remain a modest headwind Growt
Slide 12: Oncology: KEYTRUDA drives continued momentum
Oncology: KEYTRUDA drives continued momentum • KEYTRUDA sales of $4.5B increased 21% year-over-year, driven by momentum across key tumor types and recent launches – In the U.S., sales of $2.6B driven by growth across all key tumor types, including continued $4.5B leadership in lung, as well as RCC,
Slide 13: Oncology: Additional current and future growth drivers
Oncology: Additional current and future growth drivers • Lynparza sales increased 25%, with growth driven by breast and continued uptake in other approved indications, including ovarian and $246M prostate $196M +25% $123M +58% • Lenvima sales grew 30%; growth in the U.S. +>100% driven by RCC and EC;
Slide 14: Vaccines: GARDASIL robust global demand
Vaccines: GARDASIL robust global demand • GARDASIL sales of $2.0B, increased 63% year-over-year, driven by strong global demand and increased supply – U.S. growth benefited from timing of CDC purchases and underlying demand $2.0B – Ex-U.S., growth was driven by robust demand, +63% increased supply a
Slide 15: Hospital: BRIDION strong performance
Hospital: BRIDION strong performance • BRIDION sales of $369M increased 15% year-over-year, driven by increased share of the growing neuromuscular blockade reversal market • Continued uptake in PREVYMIS, driven by $369M ongoing launches +15% $320M $284M +13% • ZERBAXA expected to return to market +3
Slide 16: Trends to watch: GARDASIL and Oncology
Trends to watch: GARDASIL and Oncology GARDASIL Oncology • Sustained robust underlying demand, particularly • KEYTRUDA maintains very strong IO class in ex-US markets such as China leadership • Normal business seasonality will make Q3 the • KEYTRUDA growth from new indication largest quarter of sale
Slide 17: Trends to watch: Molnupiravir commercial considerations
Trends to watch: Molnupiravir commercial considerations Key Considerations Enabling Broad Global Access • Potential first oral treatment option authorized for mild or moderate COVID-19 • Enable greater access by entering into agreements with voluntary license manufacturers and Medicines Patent Pool
Slide 18: Trends to watch: Pneumococcal vaccine franchise
Trends to watch: Pneumococcal vaccine franchise CDC’s ACIP votes to provisionally recommend the regimen of VAXNEUVANCE + PNEUMOVAX 23 as an option for appropriate adults at increased risk of invasive pneumococcal disease* (IPD) Robust immune response Broad serotype coverage to Burden of disease Stro
Slide 19: Financial Results
Financial Results Caroline Litchfield Chief Financial Officer
Slide 20: Strong Q3 2021 sales growth
Strong Q3 2021 sales growth Merck WORLDWIDE SALES1 Human Health Animal Health $13.2B +20% growth $11.5B +18% growth +17% ex-exchange $1.4B +16% growth +14% ex-exchange +19% ex-exchange 1. Worldwide Sales includes Other Revenue. 20
Slide 21: Animal Health: durable growth across portfolio
Animal Health: durable growth across portfolio • Animal Health sales increased 14% to $1.4B, reflecting growth across geographies and species – Companion Animal sales increased 18%, driven by the BRAVECTO parasiticide line of products and vaccines $1.4B – Livestock sales increased 12%, reflecting hi
Slide 22: Q3 2021 non-GAAP financial results summary
Q3 2021 non-GAAP financial results summary: Delivered strong revenue and EPS growth $ in billions, except EPS amounts Change Q3 2021 Q3 2020 Change Ex-FX Sales $13.2 $10.9 +20% +19% Non-GAAP Gross 76.8% 76.5% +0.3pts +0.3pts Margin1 Operating Expenses $4.7 $4.2 +12% +11% Tax Rate 13.0% 14.4% -1.4pts
Slide 23: Updated full-year 2021 guidance
Updated full-year 2021 guidance1 Prior Guidance Updated Guidance Key Assumptions • Now assumes 1.5% positive FX impact $46.4 to $47.4B $47.4 to $47.9B Revenue • Assumes ~3% negative impact due to COVID-19, +12% to +14% (+10% to +12% ex-FX) +14% to +15% (+13% to +14% ex-FX) particularly during the fi
Slide 24: Modeling assumptions & outlook
Modeling assumptions & outlook Molnupiravir GARDASIL Animal Health Operating Margin • Potential sales or • Expect robust growth • Exceptional quarterly • 3Q operating margin earnings for for GARDASIL in the 4th growth in 2021 driven in benefitted from strong molnupiravir not quarter and full year pa
Slide 25: Balanced approach to capital allocation in Q3
Balanced approach to capital allocation in Q3 $ Billions Order of priority $2.2 Well positioned balance $1.6 sheet with capacity to fund additional $1.2 value-enhancing business development opportunities $0.6 $0.1 After-Tax R&D CapEx Dividends Business Share Repurchase Paid Development (ex-divestitu
Slide 26: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 27: 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 presentations since the last earnings call: since the last earnings call: • In the U.S., received approval for KEYTRUDA • Announced data from broad oncology portfolio in cervical cancer based o
Slide 28: Molnupiravir MOVe-OUT trial
Molnupiravir MOVe-OUT trial • Global study with planned interim analysis that Patients with mild-to-moderate COVID-19 evaluated 775 patients with at least one risk factor who experienced hospitalization or death: for severe disease • Reduced the risk of hospitalization or death by ~50% compared to p
Slide 29: Sotatercept strengthens our cardiovascular portfolio and pipeline
Sotatercept is highly complementary to and strengthens our existing cardiovascular portfolio and pipeline Heart Failure Pulmonary Hypertension Anti-thrombotic Atherosclerosis sotatercept MK-5475 MK-2060 MK-0616 Approved; Status additional studies Approved Phase 3 Phase 2/3 Phase 2 Phase 1 planned Ac
Slide 30: HIV and Vaccines highlights
HIV and Vaccines highlights HIV Pneumococcal Disease • Doravirine and islatravir demonstrated • Positive CHMP opinion for VAXNEUVANCE continued maintenance of viral suppression in Phase 2 study through week 144 • ACIP unanimously voted to provisionally recommend VAXNUEVANCE in series with • Positive
Slide 31: Oncology highlights
Oncology highlights Women’s Cancers Prostate Cancer • Approval of KEYTRUDA + chemotherapy in • Positive top-line results in metastatic castration- recurrent or metastatic cervical cancer [KN-826] resistant prostate cancer for Lynparza + abiraterone in front line setting [PROpel] • Presented signific
Slide 32: Broad based program in renal cell carcinoma
Broad based program in renal cell carcinoma WELIREG Future growth opportunities in renal cell carcinoma • APPROVED as first-in-class HIF-2α inhibitor therapy targeting a gene transcription factor • 3 pivotal clinical trials in progress assessing and more … efficacy alone and in combination with TKI
Slide 33: Potential foundational early-stage disease program across many tumor types
Potential foundational early-stage disease program across many tumor types Head & neck Esophageal KN-412 KN-975 KN-689 Lung Breast KN-091 KN-867 KN-522 KN-242 KN-671 KL-012 OLYMPIA KN-756 Liver Gastric KN-937 KN-585 LEAP012 Skin Renal KN-054 KN-564 KN-716 KN-630 Bladder Women’s cancers KN-057 KN-905
Slide 34: Q&A
Q&A Rob Davis Chief Executive Officer Frank Clyburn President, Merck Human Health Caroline Litchfield Chief Financial Officer Dr. Dean Li President, Merck Research Laboratories Peter Dannenbaum Vice President, Investor Relations
Slide 35: Appendix
Appendix 35
Slide 36: Q3 2021 GAAP financial results summary
Q3 2021 GAAP financial results summary: $ in billions, except EPS amounts Change Q3 2021 Q3 2020 Change Ex-FX Sales $13.2 $10.9 +20% +19% Operating Expenses $4.8 $5.4 -12% -12% Tax Rate 13.2% 14.0% -0.8pts N/A GAAP EPS from $1.80 $0.92 +96% +93% continuing operations 36
Slide 37: 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 NSCLC Melanoma (quavonlimab/ Breast
Slide 38: Capital allocation: TTM
Capital allocation: TTM Over the past 12 months $10 Order of priority Well positioned balance sheet with capacity to fund $8 $8.6 Billions $7.3 additional value-enhancing $6 $7.1 $4 $2 $4.7 business development $0 opportunities After-Tax R&D CapEx Dividend Business & Share Development Repurchase (ex