Merck & Company, Inc. · NYSE:MRK
Merck & — Q4 2023 Earnings Presentation
32 slides from Merck &'s earnings presentation, Feb 1, 2024
Slide 1: Merck Q4 2023 Earnings
Merck Q4 2023 Earnings February 1, 2024
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 and Business Update
Strategy and Business Update Rob Davis Chairman and Chief Executive Officer
Slide 5: Committed to saving and improving lives around the world
Committed to saving and improving lives around the world More than 500 million people reached with our medicines in 2023 5
Slide 6: Delivered on our key strategic priorities in 2023
Delivered on our key strategic priorities in 2023 Advanced the pipeline to meet patient unmet need Executed on strategic business development to augment pipeline Achieved strong commercial and financial performance Created long-term value for patients and shareholders 6
Slide 7: Strong 2023 underlying performance and 2024 initial guidance
Strong 2023 underlying performance1 and 2024 initial guidance Q4 Worldwide Sales Full Year Sales 70,000 GUIDANCE RANGE 60,000 $59.3B $60.1B $14.6B $62.7B - $64.2B 50,000 $5.37 $48.7B +22% +1% +4% - +7% 40,000 +17% 30,000 20,000 +6% 2 10,000 0 +13% ex-Exchange, ex-LAGEVRIO 2021 2022 2023 2024 Q4 Non-
Slide 8: Maximizing potential impact for patients with our expansive pipeline
Maximizing potential impact for patients with our expansive pipeline Cardiometabolic Vaccines Oncology Sotatercept V116 Diverse Portfolio Seeking to transform Pursuing approval for & Pipeline treatment paradigm for the first pneumococcal Broadening reach to more patients with pulmonary conjugate vac
Slide 9: Expanding robust pipeline with opportunity for patient impact and value creation
Expanding robust pipeline with opportunity for patient impact and value creation well into the next decade Prior Outlook Current Outlook Oncology >$10B >$20B Includes TROP-21, ROR-1, CYP11A1i2, LSD-1i, Now includes HER3, B7H3 and CDH6 ADCs3 (excludes innovation from marketed products) KRASi, BTKi an
Slide 10: Business/Financial Results and Outlook
Business/Financial Results and Outlook Caroline Litchfield Chief Financial Officer
Slide 11: Strong underlying Q4 and 2023 worldwide sales growth
Strong underlying Q4 and 2023 worldwide sales growth 4Q 2023 WORLDWIDE SALES1 $14.6B Merck +6% growth +11% ex-LAGEVRIO3 +13% ex-exchange, ex-LAGEVRIO3 FULL YEAR WORLDWIDE SALES1 $60.1B +1% growth Human Health $13.1B Animal Health $1.3B +9% ex-LAGEVRIO2 +8% growth +4% growth +12% ex-exchange, LAGEVRI
Slide 12: Oncology: KEYTRUDA continues to benefit patients globally
Oncology: KEYTRUDA continues to benefit patients globally • KEYTRUDA sales of $6.6B increased 22% driven by global uptake in earlier stage cancers, including TNBC and RCC, and strong global demand from metastatic indications $5.3B $6.6B +30% • Encouraging signs in treating certain +22% patients with
Slide 13: Oncology: Solid performance across broad portfolio
Oncology: Solid performance across broad portfolio $292M $315M $268M +14% +8% • Lynparza1 sales grew 8% driven primarily by +33% pricing in the U.S. and higher demand in international markets 4Q21 4Q22 4Q23 • Lenvima2 sales grew 5% driven by higher demand in the U.S., partially offset by $226M $206M
Slide 14: Vaccines: Robust growth driven by GARDASIL
Vaccines: Robust growth driven by GARDASIL • GARDASIL sales of $1.9B increased 27% year-over-year driven by strong global demand, particularly in China – In the U.S., sales benefited from CDC purchasing patterns $1.9B $1.7B +27% • VAXNEUVANCE growth driven by $1.5B $1.5B +40% launches in Europe and
Slide 15: Hospital: Continued patient impact across portfolio
Hospital: Continued patient impact across portfolio • BRIDION sales declined 3% as increased market share among neuromuscular $436M $441M $429M blockade reversal agents in the U.S. was +24% +7% -3% more than offset by the impact of generic entrants in international markets, particularly in Europe 4Q
Slide 16: Animal Health: Solid growth driven by companion animal
Animal Health: Solid growth driven by companion animal • Animal Health sales increased 4% to $1.3B – Companion Animal sales increased 12% driven by BRAVECTO line of products due to strong underlying demand and shipment timing – Livestock sales were flat reflecting favorable price actions offset by t
Slide 17: Q4 2023 non-GAAP financial results summary
Q4 2023 non-GAAP financial results summary1 $ in billions, except EPS amounts Change Q4 2023 Q4 2022 Change Ex-FX Sales $14.6 $13.8 +6% +7% Non-GAAP Gross Margin 77.2% 75.7% +1.5pts +2.5pts Non-GAAP Operating Expenses $11.6 $5.7 >100% >100% Non-GAAP Tax Rate 114.2% 15.6% >100% N/A Non-GAAP EPS2,3 $0
Slide 18: Initial 2024 financial outlook implies strong growth
Initial 2024 financial outlook implies strong growth Guidance Key Assumptions • Implies growth of +4% to +7% (+6% to +9% ex-FX) Revenue $62.7B to $64.2B • Assumes ~2 ppt FX headwind Non-GAAP • Includes the benefit from reduced royalties paid on KEYTRUDA and Gross Margin Rate ~80.5% GARDASIL2 Non-GAA
Slide 19: Remain committed to balanced capital allocation strategy
Remain committed to balanced capital allocation strategy Q4 Spend ($ in billions): Capital allocation order of priority Augmenting our pipeline with value enhancing business development while $5.6 continuing to invest in our pipeline and business $2.8 $1.9 $1.0 $0.4 After-Tax R&D 1 CapEx Dividends B
Slide 20: Research Update
Research Update Dr. Dean Li President, Merck Research Laboratories
Slide 21: Diversifying our oncology program and executing on our strategy
Diversifying our oncology program and executing on our strategy Immuno-oncology Precision Molecular Targeting Tissue Targeting Boost anti-tumor immune Impact pathways that can drive Increase cancer cell sensitivity responses cancer growth with ADCs and immune-engagers 2 3 MK-28705 MK-10227 TROP2 ADC
Slide 22: Ongoing commitment to harnessing the power of immuno-oncology
Ongoing commitment to harnessing the power of immuno-oncology Recent Approvals Earlier Stage Data • KEYNOTE-859: FDA and EC approved KEYTRUDA in • KEYNOTE-671: Demonstrated statistically significant combination with chemotherapy for first-line treatment of improvement in OS as perioperative treatmen
Slide 23: Important progress in precision and tissue targeting
Important progress in precision and tissue targeting Precision Molecular Targeting Tissue Targeting • LITESPARK-005: Received FDA approval for WELIREG for • KEYNOTE-A391: Received FDA approval for KEYTRUDA in treatment of adult patients with advanced RCC following a combination with enfortumab vedot
Slide 24: Notable progress across our vaccines and cardiometabolic programs
Notable progress across our vaccines and cardiometabolic programs V116 Sotatercept • Granted priority review for prevention of invasive • Under priority review for treatment of PAH (PDUFA March 26th) pneumococcal disease and pneumococcal pneumonia in adults (PDUFA June 17th) • Ongoing Phase 3 ZENITH
Slide 25: Significant progress across our broad pipeline in 2023
Significant progress across our broad pipeline in 2023 Regulatory approvals >25 in major markets Planning to initiate an even greater number of Phase 3 >20 Phase 3 studies initiated across trials in 2024 multiple new asset classes 25
Slide 26: 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 27: Appendix
Appendix 27
Slide 28: Q4 2023 GAAP financial results summary
Q4 2023 GAAP financial results summary $ in billions, LPS/EPS amounts Q4 2023 Q4 2022 Change Change Ex-FX Sales $14.6 $13.8 +6% +7% Operating Expenses $12.4 $6.5 +92% +92% Tax Rate 40.1% 14.1% >100% N/A GAAP (Loss) / ($0.48) $1.18 >100% >100% Earnings per Share 28
Slide 29: 2023 GAAP financial results summary
2023 GAAP financial results summary $ in billions, EPS amounts 2023 2022 Change Change Ex-FX Sales $60.1 $59.3 +1% +4% Operating Expenses $41.0 $23.6 +74% +75% Tax Rate 80.0% 11.7% >100% N/A GAAP $0.14 $5.71 -98% -95% Earnings per Share 29
Slide 30: Capital allocation: Trailing twelve months
Capital allocation: Trailing twelve months Over the past 12 months Order of priority $21 $18 Well positioned balance sheet $15 $18.5 with capacity to fund Billions $12 additional value-enhancing $9 $6 $10.4 business development $3 $3.9 $7.4 $1.3 opportunities $0 After-Tax R&D 2 CapEx Dividends Paid
Slide 31: 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.: • Presented results from Phase 3 STRIDE-3 study evaluating V116, an investigational 21- o Appr
Slide 32: Broad and innovative pipeline to address significant unmet medical needs
Broad and innovative pipeline to address significant unmet medical needs Phase 2 Phase 3 Under regulatory review Oncology Oncology Oncology MK-1308 (quavonlimab) KEYTRUDA (MK-3475) MK-4830 MK-7684A LYNPARZA (MK-7339) MK-1022 (patritumab MK-4280A (favezelimab KEYTRUDA (MK-3475) NSCLC CRC Advanced Sol