The paragraph is the introduction to Merck & Company's Q4 Sales and Earnings Conference Call. The operator welcomes participants and introduces Peter Dannenbaum, Senior Vice President of Investor Relations, who explains the structure of the call. He mentions the speakers, including the CEO, CFO, and President of Merck Research Labs, and informs that certain items have been excluded from non-GAAP results. Dannenbaum also issues a caution about forward-looking statements, noting that actual results may vary due to risks and uncertainties detailed in Merck's SEC filings. The call includes a slide presentation to accompany the remarks.

The paragraph discusses Merck's achievements and strategic focus in 2024, highlighting the company's commitment to developing transformative medicines and vaccines to save and improve lives globally. Merck reached nearly half a billion people with its products, including through donations, and emphasized its focus on breakthrough science and innovation for sustainable long-term value. The company is advancing its pipeline, launching important new products like WINREVAIR, and maintaining strong performance, particularly with KEYTRUDA and its Animal Health business. However, Merck faces challenging market dynamics for GARDASIL in China as it transitioned into 2025.

The company is experiencing increased pressure on consumer spending, affecting demand for GARDASIL, particularly in China, where inventory levels are high. In response, they are temporarily pausing shipments to China to reduce inventory and support their commercialization partner, Zhifei. Despite this, they view China as a significant long-term opportunity. Outside China, demand for GARDASIL remains strong, and the company expects growth in the second half of the year and beyond, particularly due to their robust pipeline and upcoming product launches. They are confident in navigating future challenges, like the KEYTRUDA LOE period, due to their ongoing research efforts and innovations in their late-phase pipeline.

In the fourth quarter, the company announced FDA acceptance for clesrovimab, a monoclonal antibody for RSV in infants, and positive results from multiple programs, including subcutaneous pembrolizumab and an HIV treatment combining islatravir and doravirine. The company also engaged in strategic business development by acquiring assets in oncology and cardiometabolic diseases. With a growing and diverse pipeline, they anticipate numerous data readouts and potential product launches, aiming to deliver innovation to patients. Among the 20 potential growth drivers are WINREVAIR and the adult pneumococcal vaccine, CAPVAXIVE. Over the past three years, they've significantly expanded their late-phase development assets, envisioning over $50 billion in potential revenue. Their strategic focus includes long-term leadership in oncology and growth in cardiometabolic areas with key Phase 3 readouts upcoming.

The paragraph highlights the company's strong growth and optimistic outlook in various sectors like immunology, HIV, ophthalmology, infectious diseases, and vaccines. It acknowledges challenges in the Chinese market for GARDASIL but emphasizes robust performance in oncology, animal health, and new product launches that have offset these issues. The company remains confident in its long-term future, focusing on innovation and continued value delivery. Fourth-quarter revenues increased by 7% overall and 9% excluding foreign exchange impacts, showcasing the effectiveness of their commercial and operational strategies.

The Human Health business experienced an 8% sales increase, largely driven by oncology, while the Animal Health business saw a 13% rise in sales. KEYTRUDA sales in oncology grew by 21% to $7.8 billion, fueled by global demand, particularly in the U.S., and increased use in earlier-stage cancers. WELIREG's sales more than doubled to $160 million, mainly due to uptake in the U.S. for advanced renal cell carcinoma. GARDASIL vaccine sales dropped by 18% due to lower demand in China but saw growth in the U.S. and Japan. The pneumococcal vaccine, CAPVAXIVE, achieved $50 million in sales, driven by retail pharmacy demand. Inflation-related price increases in Argentina also contributed to growth.

The paragraph discusses the company's progress and performance across various sectors. It highlights a decrease in VAXNEUVANCE sales by 9% due to competitive pressures in the U.S., while international growth continues. The cardiovascular drug WINREVAIR is experiencing steady growth, contributing $200 million in sales, mainly in the U.S., despite seasonal impacts on prescription volumes. Approximately 5,200 new U.S. patients have been prescribed WINREVAIR, with strong access leading to 80% receiving the product. International launches of WINREVAIR are also progressing well. The company is optimistic about growth prospects for treating pulmonary arterial hypertension. The Animal Health division saw a 13% sales increase, boosted by livestock and companion animal demand, and contributions from a recently acquired aqua portfolio. Financially, the company reports an increase in gross margin due to lower royalty rates and favorable product mix, with a $7.4 billion decrease in operating expenses.

The article discusses the financial outlook for a company, highlighting lower charges of $700 million related to agreements with LaNova and Hansoh Pharma compared to a $5.5 billion charge from a previous collaboration with Daiichi Sankyo. Excluding these charges, operating expenses grew by 10% due to strategic investments. Earnings per share (EPS) for this quarter were $1.72. Looking ahead to 2025, the company anticipates revenues of $64.1 to $65.6 billion, with growth of 2% to 4% excluding foreign exchange impacts, and 7% to 9% excluding sales of GARDASIL in China and foreign exchange effects. Gross margin is projected at 82.5%, with operating expenses between $25.4 and $26.4 billion. Other expenses are estimated at $300 to $400 million, with an expected tax rate of 16.0% to 17.0% and EPS of $8.88 to $9.03. The guidance assumes 2.53 billion shares outstanding and no significant new business development deals.

In 2025, Merck anticipates a diverse commercial portfolio with strong performance in Oncology and Animal Health, alongside new product launches. While the first half of the year may see flat revenues due to challenges in China, the second half is expected to experience significant growth. The company has withdrawn its $11 billion target for GARDASIL due to economic uncertainties in China but maintains growth expectations elsewhere. KEYTRUDA's U.S. sales will be impacted by wholesaler inventory adjustments and Medicare Part D redesign, affecting some oncology products. The JANUVIA family has been repriced to align with net prices, leading to expected increased net sales. Merck continues to focus on strategic capital allocation, investments in growth, maintaining and increasing dividends, and pursuing valuable business development opportunities.

The company has increased its share repurchase authorization to $12 billion, intending to maintain modest repurchases while investing in business development and innovation. They are confident in their 2025 outlook, driven by high demand for their medicines and vaccines, and a strong pipeline. Dr. Dean Li reports progress in therapeutic areas, notably highlighting the Phase 3 ZENITH trial for WINREVAIR, which showed significant efficacy in reducing morbidity or mortality in patients with pulmonary arterial hypertension, leading to the trial's early conclusion. Detailed results will be shared at an upcoming conference.

Merck's WINREVAIR program, particularly the ZENITH and STELLAR trials, demonstrated strong clinical benefits, prompting early termination of the Phase 3 HYPERION study due to lack of clinical equipoise. Participants can now opt for WINREVAIR in the open-label SOTERIA extension study. WINREVAIR, an activin signaling inhibitor for PAH, is approved in over 35 countries, with pending approval in Japan, indicating potential significant impact on medical practice. Additionally, Merck has partnered with Hansoh Pharma to develop MK-4082, an oral GLP-1 receptor agonist for cardiometabolic diseases. The FDA is reviewing clesrovimab, a long-acting antibody for infants, with a decision expected by June 10th.

The paragraph highlights several medical advancements and studies in different areas. It mentions the potential approval of clesrovimab, which would be the first single-dose passive immunization for infants against RSV, offering protection for the entire season. It also discusses the promising results from Phase 3 trials of a once-daily oral HIV treatment combining doravirine and islatravir and other ongoing studies involving islatravir and lenacapavir for HIV treatment. Additionally, MK-8527 is being investigated as a potential once-monthly oral option for HIV pre-exposure prophylaxis. The National Medical Products Administration of China has approved GARDASIL for preventing certain HPV-related diseases in males aged 9 to 26. Finally, new data on GARDASIL 9 supports HPV vaccination for adults up to age 45 and highlights increasing cervical cancer rates in women aged 30 to 44.

The paragraph discusses advancements and approvals in medical treatments and oncology research. It highlights the European Medicines Agency's recommendation for CAPVAXIVE to prevent disease caused by Streptococcus pneumoniae. A Phase 3 trial for a subcutaneous cancer treatment regimen involving pembrolizumab showed promising results. Over twenty studies on hematologic malignancies were presented at a medical meeting, including early findings of a Phase 2 study on zilovertamab vedotin for lymphoma. In China, KEYTRUDA regimens received approvals for multiple cancer treatments, and WELIREG was approved for renal cell carcinoma associated with VHL.

The paragraph highlights recent advancements and strategic developments in the medical field. In Japan, two KEYTRUDA-based treatments for cervical and endometrial cancer were approved, while in the U.S., sac-TMT received Breakthrough Therapy Designation for treating advanced non-small cell lung cancer. Additionally, a global license agreement for MK-2010, a novel PD-1/VEGF bispecific antibody, was completed. The year 2024 saw over 20 Phase 3 studies initiated across various medical areas and more than 25 regulatory approvals obtained, demonstrating significant pipeline progress. Acquisitions and license agreements enhanced the company's portfolio in oncology, ophthalmology, immunology, and cardiometabolic disease.

The paragraph discusses upcoming milestones and expectations in the pharmaceutical industry for 2025. It highlights anticipated presentations of results from trials involving HIV treatments, oncology medications, and a PCSK9 inhibitor for hypercholesterolemia. Additionally, it mentions the Phase 2 CADENCE study for WINREVAIR in pulmonary hypertension due to left heart disease. During a call, Umer Raffat from Evercore ISI asks about the growth prospects of WINREVAIR, noting some skepticism due to earlier clinical data. Rob Davis responds, expressing confidence in WINREVAIR's potential for treating pulmonary arterial hypertension (PAH) and its role in the company's growth.

In the paragraph, the speaker discusses the future role of GARDASIL sales in the company's growth strategy, emphasizing that they never relied on GARDASIL as a long-term growth driver due to expected plateauing. They maintain confidence in the post-LOE period outlook and highlight a continued focus on business development to enhance their pipeline. The company's strategy involves pursuing deals in the zero to $15 billion range, prioritizing science and value, and being open to both new and commercialized assets that align with their goals.

In the paragraph, Luisa Hector from Berenberg asks about the development plans for an oral PCSK9 inhibitor, specifically regarding cholesterol-lowering targets and potential combination therapies. Dr. Dean Li responds, mentioning that three Phase 3 trials are underway, with results expected between April and August 2025. He hopes to present these findings at a prominent conference later that year. The goal is to achieve a similar cholesterol-lowering profile as existing PCSK9 antibodies in an oral form, addressing the unmet need for better treatment as 70% of patients on statins are not meeting their goals. He also discusses the potential for the oral PCSK9 inhibitor to be used in combination with other cardiometabolic treatments to enhance cardiovascular outcomes, with further data to be provided after the Phase 3 trials.

In the paragraph, Rob Davis is addressing Mohit Bansal's question about the inventory situation of GARDASIL with Zhifei in China. He mentions that they have not specified the exact inventory levels, as that's for Zhifei to disclose. The plan is to halt shipments potentially from February until midyear to let existing inventory meet underlying demand, which should help normalize the market and support Zhifei's financial position. GARDASIL's revenue from China currently makes up about 1% of Merck's total. The strategy aims to improve growth and profitability in future years, where any positive developments in China's GARDASIL market would be beneficial.

The paragraph discusses the development and aspirations of WINREVAIR, a first-in-class active-in-signaling inhibitor aimed at transforming medical practice by targeting fundamental genetic bases. Dr. Dean Li mentions that while STELLAR has already received FDA and global approval for improving exercise capacity and reducing clinical worsening, the ZENITH trial is notable for being the first PAH trial focused on hard outcomes and for being stopped early due to overwhelming efficacy. HYPERION involves a similar patient population as STELLAR, focusing on the earlier use of WINREVAIR, and was also stopped early.

The paragraph discusses ongoing clinical research and updates related to a treatment for pulmonary arterial hypertension (PAH). The data from the studies remain blinded, with expectations of further information and presentations at the American College of Cardiology (ACC) conference. Despite gathering safety data from Phase 3 trials and rollover patients into the SOTERIA study, the treatment generally aligns with safety benchmarks, showing a 3% difference compared to placebo. The discussion then shifts to a question from Geoff Meacham regarding the pharmaceutical company's inventory and distribution of GARDASIL in China. Rob Davis refrains from committing to a specific inventory level but stresses the need for a significant reduction in current inventory levels before resuming shipments. Additionally, there is a brief mention of the company's priorities concerning vaccine development in light of the political climate.

The paragraph discusses a company's strategy and outlook, highlighting that recent actions, such as halting certain shipments due to weak consumer demand, are seen as temporary and not central to their growth story. The company is focused on driving growth in areas like oncology, animal health, and new product launches, with China being considered a potential upside. While vaccines are not a major focus of their business development strategy due to limited opportunities, they are committed to advancing R&D in this space. They mention specific vaccine initiatives, including CAPVAXIVE and palivizumab for RSV, and ongoing development projects like a dengue vaccine. The paragraph concludes with the transition to a question for Chris Schott from JPMorgan.

In the paragraph, Rob Davis addresses concerns about withdrawing the $11 billion target for the Chinese market due to uncertainties in recovery timing and extent. Despite these uncertainties, the growth potential in China remains due to a large unvaccinated population and the exclusive male indication for their product. The company is adjusting to inventory and economic dynamics in the near term, leading to the decision to pull back on the target. However, their outlook for markets outside of China remains positive, with strong double-digit growth observed for GARDASIL globally, excluding China.

The article discusses Merck's strong growth with GARDASIL outside of China and emphasizes the need to address challenges in the Chinese market to better understand growth opportunities there. The speaker wants to shift focus away from China's issues to highlight the overall strength of Merck's pipeline and business growth. Tim Anderson from Bank of America raises questions about KEYTRUDA, noting that concerns have impacted Merck's stock due to its patent expiration in 2028 and competition from upcoming trials. He asks when Merck will provide detailed long-term guidance and seeks insights on potential competitive threats to KEYTRUDA. Rob Davis acknowledges the focus on their strategy following KEYTRUDA's loss of exclusivity.

The paragraph discusses the confidence of JPMorgan in their growth trajectory and potential, particularly in their oncology pipeline excluding KEYTRUDA. It highlights advancements in small molecules, neoantigen therapy, ADC portfolio, ophthalmology, HIV, and cardiometabolic areas. Although there's no plan to give long-term guidance yet, they aim to provide proof points to instill confidence, such as with CapEx, WINREVAIR, and enlicitide data. Dr. Dean Li mentions their comfort with the Daiichi Sankyo TROP2-ADC program, noting numerous ongoing Phase 3 trials, and discusses the extensive study of the PD-1 and VEGF combination.

The paragraph discusses the progress and strategies in cancer treatment by Merck. It highlights Merck's efforts to translate progression-free survival benefits from treatments like VEGF and PD-1/PD-L1 inhibitors into overall survival (OS) benefits. The text also mentions Merck's infrastructure, with 41 indications in 18 tumor types, enabling rapid innovation delivery to patients. Additionally, Akash Tewari from Jefferies asks about Merck's increased oncology product guidance from $20 billion to $25 billion, despite recent setbacks in TIGIT and LAG3. Rob Davis responds that the $25 billion estimate is based on antibody-drug conjugate programs with Kelun and Daiichi Sankyo, as well as small molecule and individualized neoantigen therapy programs in partnership with Moderna. The IO-IO combinations were not included in this figure.

The paragraph discusses the increased confidence in the company's cancer treatment programs. Key factors include the addition of a T cell engager from Harpoon, which shows promise for treating small cell lung cancer, and the TROP2 program, which is expected to be more successful than initially anticipated. The company remains confident about its subcutaneous version of KEYTRUDA, with data readouts and a potential launch this year. However, this is not included in the projected $25 billion revenue from oncology. Dr. Dean Li emphasizes the importance of recognizing differences among molecules like TROP2 or HER2 ADCs and selecting the right target population for treatments like Sac-TMT. The overall focus is on optimizing the impact of cancer therapies by targeting the appropriate patient groups.

In the paragraph, there is a discussion about Daiichi Sankyo's interest in using specific molecules like patritumab for breast cancer, B7-H3 for small cell lung cancer, and CDH6 for ovarian cancer. They are also interested in combining these with T cell engagers and designing molecules from Kelun and Daiichi Sankyo to target specific patient populations using immune-oncology strategies like T cell engagers or PD-1s for differentiated patient profiles. Additionally, a question from Trung Huynh of UBS addresses concerns about tariffs affecting Merck’s manufacturing footprint in China, Mexico, and Canada, with Caroline Litchfield responding that the impact would be minimal due to their global supply chain. There is also mention of unrelated positive news regarding WINREVAIR, ZENITH, and HYPERION.

The paragraph discusses the potential impact and expectations for WINREVAIR, a treatment for pulmonary hypertension, specifically in patients with pulmonary arterial hypertension (PAH). Dr. Dean Li expresses high confidence in WINREVAIR's ability to potentially reshape the standard of care for PAH due to its design targeting the genetic cause of the disease. He mentions the exploration of its effects on other conditions, such as heart failure, and expresses anticipation for future results. Caroline Litchfield notes that there have been no unusual fluctuations in WINREVAIR's inventory levels, although adjustments were made due to changes in Medicare Part D. Additionally, Courtney Breen asks a follow-up question regarding GARDASIL, indicating ongoing discussions about the vaccine.

The paragraph discusses concerns regarding inventory and pricing impacts for Merck, specifically related to GARDASIL and WINREVAIR. Caroline Litchfield responds to questions about the risk of inventory write-off, indicating that the risk is low because the inventory is owned by their partner Zhifei and shipments are being forced to utilize it. She explains that the effects of the Part D redesign are mainly due to pricing impacts, particularly affecting WINREVAIR and oral oncology agents, although there might be some volume benefits as patients continue therapy. The majority of the financial impact is attributed to pricing. Later, James Shin asks about upcoming expectations for a February 2025 ACIP meeting concerning GARDASIL dosing following last October's discussions, and he inquires if the U.S. market influenced the change or withdrawal of long-term guidance for GARDASIL. Rob Davis is noted but does not answer within the provided text.

The paragraph discusses the company's confidence in the current two- and three-dose regimens of GARDASIL, highlighting no expected changes in their long-term outlook for its use outside China. It covers discussions with the FDA and CDC regarding dosing schedules, noting the FDA's stringent requirements for altering the dosing schedule due to its high standards for proof of efficacy and safety. Dr. Dean Li emphasizes the rigorous vetting by the FDA and ongoing discussions about potential randomized controlled trials for changing schedules. Despite uncertainty about future changes, they stress the importance of FDA's expertise and the potential influence on CDC decisions.

In the closing remarks of a conference call, Rob Davis expresses confidence in the company's long-term growth despite challenges related to the GARDA situation in China. He emphasizes their decision to address short-term inventory issues and highlights expected strong growth in the latter half of the year, extending into 2026 and 2027. Rob also underscores the strength and diversity of their pipeline, which is crucial for future growth and patient service. He concludes by reaffirming their commitment to advancing the pipeline and thanks the participants before the call ends.

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