The paragraph introduces the Merck & Company Q3 Sales and Earnings Conference Call. It outlines the participants, particularly highlighting Rob Davis, Caroline Litchfield, and Dr. Dean Li as key speakers. Peter Dannenbaum, the Senior Vice President of Investor Relations, notes the exclusion of certain items from their non-GAAP results and emphasizes that some statements may be forward-looking and subject to risks and uncertainties. He refers to SEC filings for more information on these risks and mentions that the company has no obligation to update forward-looking statements. A slide presentation will accompany the prepared remarks.

The paragraph discusses Merck's strategic focus on addressing unmet medical needs through innovative science and differentiated solutions. CEO Rob Davis highlights the company's progress in launching new products with significant commercial potential and advancing a diverse pipeline of clinical programs. Merck is expanding its research and development efforts through strategic business development, leading to a more diversified portfolio with many promising assets in Phase 3 trials. This positions the company for substantial new medicine and vaccine launches over the next five years, with most having blockbuster potential. The paragraph emphasizes Merck's commitment to science-driven, patient-focused approaches and strong commercial execution to achieve near-term growth and long-term success. The company is on track for strong full-year growth, supported by its robust portfolio.

In the quarter, Merck's revenues grew by 4% or 7% on a constant currency basis, driven by increased usage of KEYTRUDA, new product launches like WINREVAIR, and a strong Animal Health business. The launch of WINREVAIR met high expectations, while GARDASIL sales declined year-over-year but experienced strong growth outside China. Despite lower shipments to China's partner Zhifei, efforts to improve promotional resources and patient education are ongoing, aiming to enhance patient activation and demand. GARDASIL plays a key role in preventing HPV-related cancers, with significant global growth opportunities, particularly in China and with potential male vaccination approval next year.

The company is focusing on expanding global awareness and uptake of the HPV vaccine with a target of over $11 billion in sales by 2030. It reported significant clinical and business advancements, including positive Phase 2b/3 results for clesrovimab, a monoclonal antibody for RSV prevention in infants, with plans for U.S. availability by the 2025-2026 season. The ACIP's expanded recommendations for the pneumococcal vaccine CAPVAXIVE now include adults aged 50 to 64, highlighting its commercial potential. In oncology, the company continues to enhance its pipeline, celebrating KEYTRUDA's decade of use and presenting promising data for potential treatments. Additionally, Phase 2 data from a collaboration with Gilead shows progress in HIV treatment efforts, evidencing the company's broad development initiatives.

The paragraph discusses Merck's recent achievements and strategic direction in immunology and business development. It highlights the positive Phase 2 data for their TL1A candidate, tulisokibart, in treating ulcerative colitis and Crohn's disease, alongside efforts in HIV and immunology to address significant unmet patient needs. Merck emphasizes its commitment to innovation and pipeline expansion, evidenced by acquiring a bispecific T-cell engager from Curon and the acquisitions of EyeBio and Elanco's aqua business. The company remains focused on commercial execution and strategic investments, with confidence in future growth and value delivery to patients and stakeholders. The paragraph concludes with a transition to Caroline Litchfield, emphasizing strong quarterly performance.

The paragraph highlights a company's strong financial performance and growth strategy, emphasizing confidence in delivering short-term results while investing in science for long-term value. The company's third-quarter revenues reached $16.7 billion, marking a 7% increase without foreign exchange effects. The human health segment saw an 8% sales increase, mainly due to oncology, and the Animal Health sector grew by 11%. Key products like KEYTRUDA experienced significant sales growth, driven by increased adoption in earlier-stage cancers and continued demand in metastatic settings, particularly in the U.S. and abroad. Additionally, oncology alliances like Lynparza also showed growth due to rising global demand.

The paragraph discusses the pharmaceutical company's performance regarding different products. Lenvima revenue declined 4% due to shipment timing issues. WELIREG sales more than doubled to $139 million, driven by increased uptake for certain advanced renal cell carcinoma patients in the U.S. GARDASIL vaccine sales decreased by 10% because of a decline in China, despite strong demand and favorable CDC purchasing in the U.S. VAXNEUVANCE sales increased by 13% due to international market launches. The new CAPVAXIVE launch shows promise. Cardiovascular product WINREVAIR is gaining momentum, with 1,700 new patient prescriptions added in the quarter, totaling over 3,700 since launch. Around 80% of patients start on commercial products within a month, with over 2,600 new commercial patients treated. About 800 physicians have prescribed WINREVAIR, focusing on critically ill patients. Access has improved, with coverage now at 60%, almost double from the previous quarter.

The paragraph outlines the company's recent performance and strategic developments. In the healthcare sector, the company has achieved positive feedback for WINREVAIR, a treatment for pulmonary arterial hypertension, following its EU approval, with the first prescriptions issued in Germany. Efforts to secure reimbursement across Europe and expand internationally are noted. The Animal Health division reported strong growth, with an 11% increase in sales, driven by new product launches and increased demand for poultry and swine products. The company's gross margin improved to 80.5%, partly due to reduced royalty rates and a favorable product mix. Operating expenses rose to $8.5 billion, influenced by acquisition charges and investments in its pipeline. An income from a collaboration with Daiichi Sankyo is mentioned, and an overall earnings per share of $1.57 is reported. Finally, guidance for 2024 is introduced.

The company has revised its full-year revenue guidance to between $63.6 billion and $64.1 billion, reflecting anticipated growth of 6% to 7% despite a negative foreign exchange impact. The gross margin is expected to remain around 81%, with operating expenses projected between $27.8 billion and $28.3 billion, including a $750 million onetime charge from an asset acquisition. The other expense is projected at $100 million, aided by a $170 million payment from Daiichi. The tax rate is estimated at 16% to 17%, factoring in the asset acquisition impact. With approximately 2.54 billion shares outstanding, the anticipated EPS is between $7.72 and $7.77, taking into account a negative $0.30 effect from foreign exchange. The midpoint of the EPS guidance remains unchanged from prior projections. The company plans to continue prioritizing investments to drive growth and target unmet medical needs.

The company reaffirms its commitment to increasing its dividend and prioritizing business development to enhance value, including modest share repurchases. They express confidence in their business momentum due to strong global demand for their innovative medicines and vaccines. Their focus on leveraging science for patient benefit has strengthened their financial and operational position, aiming to deliver value to patients, customers, and shareholders. Dean Li highlights their strategic diversification in oncology, expansion into new therapeutic areas, and investment in novel technologies, mentioning important clinical and regulatory milestones, such as the ACIP's updated pneumococcal vaccination guidelines recommending CAPVAXIVE for adults 50 and older.

The article highlights the promising results of a pivotal Phase 2b/3 clinical trial of clesrovimab, a monoclonal antibody aimed at preventing respiratory syncytial virus (RSV) in infants. Administered as a single dose, clesrovimab met all trial endpoints, significantly reducing RSV incidence, hospitalizations, and lower respiratory infections without notable adverse effects. It demonstrated over 84% reduction in RSV hospitalizations and more than 90% reduction in lower respiratory infections over 5 months. If approved, it would be the first immunization providing direct protection throughout the six-month RSV season with a single dose. Additionally, interim results from a Phase 3 study comparing clesrovimab with Palivizumab for high-risk infants and children were also positive. Separately, positive data from a Phase 2 study of a once-weekly oral HIV treatment combining islatravir and lenacapavir, showed promising results at 48 weeks.

The paragraph highlights the advancements of KEYTRUDA in cancer treatment, particularly in earlier-stage settings. It details its FDA approvals for nine indications and its demonstrated survival benefits in four cancer types. It also mentions recent successful trial results for a new application in treating head and neck cancer, potentially marking a tenth early-stage cancer indication. Additionally, KEYTRUDA received FDA approval for use with chemotherapy in treating mesothelioma, bringing its total approved indications to 41.

The European Commission and the Japanese Ministry of Health have approved several KEYTRUDA-based regimens for different cancer treatments. These include combinations for urothelial carcinoma, endometrial carcinoma, cervical cancer, and non-small cell lung cancer, based on various KEYNOTE studies. Additionally, at the European Society for Medical Oncology Congress, significant findings related to KEYTRUDA, including overall survival data for different cancers, were presented. The development of new combination regimens to improve patient outcomes in oncology is ongoing.

The paragraph details recent advancements in clinical collaborations and trials by a company. They announced a partnership with Exelixis to evaluate Zanzalintinib in combination with KEYTRUDA and WELIREG for head and neck squamous cell carcinoma and renal cell carcinoma, respectively. They also initiated a Phase 3 trial with Daiichi Sankyo for Ifinatamab, Deruxtecan to treat small cell lung cancer and expanded a collaboration on IDXD and MK-6070. Regulatory approval for WINREVAIR was received for pulmonary arterial hypertension in Europe. In immunology, promising 50-week data was presented for tulisokibart in treating ulcerative colitis and Crohn's disease, with ongoing Phase 3 trials. Lastly, post-acquisition of EyeBio, the Phase 2b/3 BRUNELLO trial for MK-3000 in diabetic macular edema was launched in ophthalmology.

The article discusses a company's recent acquisition of CN201, a T-cell engager now named MK-1045, aimed at treating B-cell malignancies and autoimmune diseases. The company plans to advance its clinical development efficiently following successful pipeline advancements and regulatory milestones. Moving into 2025, they anticipate further progress across various therapeutic areas. During a Q&A session, Trung Huynh from UBS inquires about GARDASIL's demand and inventory levels, particularly in China, and seeks clarity on future growth dynamics following increased promotional activities and inventory reductions. Rob Davis responds, emphasizing GARDASIL's significant impact on combating HPV-related cancers globally.

The company acknowledges a decline in shipments to China and anticipates this trend will continue into 2025. However, they highlight strong double-digit growth in nearly every other global region, emphasizing ongoing confidence in long-term potential. They project China as a $2 to $3 billion opportunity by 2025, anticipating future growth driven by the male market once approvals are secured. The company is focused on driving demand and achieving solid growth based on their portfolio, although recognizing it will take time.

The paragraph discusses the safety and usage patterns of the drug WINREVIR since its commercial rollout. Dean Li mentions that no significant safety issues have been observed among patients using the drug. Rob Davis notes that 80% of the patients using WINREVIR are the sickest ones, often on triple therapy, and predominantly using single vials when starting treatment. Over time, about two-thirds of patients are expected to remain on single vials and one-third on double vials, with current usage slightly skewed towards single vials. Despite being in the early stages, safety appears to be strong, with fewer discontinuations than expected, suggesting positive real-world adherence and safety outcomes.

The paragraph contains a Q&A segment with Louise Chen from Cantor, who inquires about the company's outlook for 2025. Caroline Litchfield responds, indicating that formal guidance will be given with the fourth quarter earnings report. She highlights the anticipated growth due to KEYTRUDA's impact in treating various cancers, including non-small cell lung, breast, endometrial, and cervical cancers, along with bladder cancer. The company has upcoming launches such as WINREVAIR, CAPVAXIVE, and clesrovimab for RSV, which are expected to drive growth. However, there are challenges like the expiration of an agreement with J&J for REMICADE and SIMPONI and a projected decline in GARDASIL sales in China for 2025. Additionally, Animal Health is expected to continue contributing to growth.

The paragraph involves a discussion about the company's strategy for future growth and capital allocation. They are optimistic about driving business growth in 2025 by heavily investing in their pipeline and commercial activities, aiming to improve operating margins. Chris Shibutani from Goldman Sachs inquires about their strategy regarding capital allocation and the potential vulnerability related to GARDASIL. Rob Davis responds by expressing confidence in their current business development and mentioning plans to continue expanding their Phase 3 assets across various therapeutic areas to address uncertainties and leverage growth opportunities, including interests in obesity treatments.

The paragraph outlines Merck's strategic approach to innovation, emphasizing a focus on scientifically driven opportunities that address unmet needs, particularly in obesity through second and third generation solutions with a preference for oral treatments that go beyond weight loss to include broader medical outcomes. The company maintains a disciplined approach, only pursuing opportunities that align with its strategic and value perspective, and intends to continue exploring areas like oncology, immunology, and cardio-metabolic. It also asserts its capacity for investments in the $1 billion to $15 billion range. The paragraph transitions to a discussion on the pneumococcal vaccine market, with Daina Graybosch from Leerink Partners inquiring about the potential market size expansion due to age adjustments and the influence of MMWR recommendations on Merck's CAPVAXIVE share compared to competitors.

The paragraph discusses the advantages and market opportunity of a 21-valent pneumococcal vaccine with 85% adult protection compared to a competitor's 20-valent vaccine with 54% protection. The stronger vaccine data influenced a decision by the ACIP to recommend vaccination for people aged 50 to 64, addressing health equity concerns. Caroline Litchfield outlines the commercial opportunity given that there are 120 million Americans over 50, with a substantial portion aged 50 to 64, now eligible for vaccination. The company is prepared to supply and protect as many individuals as possible. The paragraph concludes with an operator indicating the next question in a discussion possibly related to further vaccine or pharmaceutical product inquiries.

In the paragraph, Rob Davis discusses Merck's GARDASIL sales performance, particularly in China. He mentions that GARDASIL generated approximately $500 million in the third quarter and is expected to generate a similar amount in the fourth quarter. Looking ahead to 2025, Davis anticipates that GARDASIL will contribute $2 billion to $3 billion annually from China, which supports Merck's target of reaching $11 billion by 2030. This growth is expected to be driven by increased opportunities, including the potential for sales to males in China and broader global expansion. Terence Flynn from Morgan Stanley seeks clarification on whether the $2 billion to $3 billion projection includes male sales and also remarks on Merck's focus on the next-generation immuno-oncology (IO) efforts.

The paragraph discusses Merck's interest in PD-1, PD-L1, and VEGF bispecifics, noting emerging data from China. Rob Davis confirms that financial projections include opportunities in this area. Dean Li highlights the significance of the vascular endothelial growth factor (VEGF) pathway, mentioning Merck's partnerships with Eisai and Exelixis focusing on PD-1 and VEGF RTK inhibitors. Other companies have explored PD-L1 with Avastin. He emphasizes the importance of converting progression-free survival (PFS) into overall survival (OS). Differences in healthcare systems and patient responses between China and the U.S. are noted, and Li mentions that a specific experimental comparison conducted in China wouldn't be feasible in the U.S. due to different regulatory standards regarding comparator treatments.

The paragraph covers a discussion during a Q&A session, where Carter Gould from Barclays asks about the impact of stocking on WINREVAIR's quarterly performance and the progress in treating patients with severe health conditions. Caroline Litchfield responds by stating that over 80% of WINREVAIR's revenue in the quarter supports demand, with minimal inventory buildup expected to grow as the product expands. She mentions that approximately 80% of patients use WINREVAIR alongside existing therapies or prostacyclin, showing good progress in that segment. She also notes many doctors now prescribe WINREVAIR to patients not on a prostacyclin background, indicating potential growth in dual therapy patients. The overall sentiment is confident in the product's potential to benefit patients and provide commercial gains.

Umer Raffat from Evercore ISI asked about GARDASIL sales in China and referenced the significant sales figures for the third and fourth quarters, suggesting a potential inventory surplus. Rob Davis responded by explaining that overall inventory levels in China, specifically for GARDASIL, have decreased. Although inventory at Zhifei remains high, reductions in CDCs and vaccination points have led to a net decrease. Davis indicated that the company is currently shipping below demand to help manage inventory levels. He also mentioned that they are working closely with Zhifei to address both current product distribution and strategies for reducing inventory levels in the future, including considerations for potential local competition in 2025.

The paragraph discusses the considerations and expectations surrounding the growth of GARDASIL, particularly in China. It mentions the potential for a launch targeting females and an approval for males, which could influence future sales. The $2 billion to $3 billion guidance for GARDASIL in China reflects their baseline expectations, with hopes to exceed this through strategic efforts. The company is working with Zhifei to build demand and drive long-term market growth, acknowledging it will take time and won't be resolved by the next quarter. They recognize significant potential demand, with millions of females and males as prospective customers, but refrain from providing specific product line guidance for 2025 at this stage.

The paragraph reports on a conversation during a conference call, primarily focusing on Merck's progress in developing a lung cancer treatment, V940, in partnership with Moderna. Dean Li explains that Merck is advancing to a Phase 3 trial, leveraging prior approvals and overall survival data to potentially improve patient outcomes in lung cancer treatment. The study in question is linked to KEYNOTE-671, noted for its approved overall survival benefit, and aims to address patients who do not achieve a pathological complete response post-surgery by offering additional treatment combinations. The session concludes with an offer for further follow-up discussions.

The operator concluded the conference, thanked the participants, and informed them they could disconnect.

This summary was generated with AI and may contain some inaccuracies.