The paragraph provides an introduction to Merck & Co., Inc.'s First Quarter 2025 Sales and Earnings Conference Call. The call is hosted by Peter Dannenbaum, Senior Vice President of Investor Relations, and includes presentations from key executives like Rob Davis, Caroline Litchfield, and Dr. Dean Li. The announcement clarifies that GAAP results include certain charges that are excluded from non-GAAP results, and a reconciliation is available. It also includes a disclaimer about forward-looking statements, which are subject to risks and uncertainties, and references SEC filings for potential risk factors. The company does not commit to updating these forward-looking statements publicly, and a slide presentation will support the remarks during the call.

The paragraph details the company's progress and performance, beginning with the announcement that presentation materials and documents have been made available on their website. Rob Davis highlights the company's focus on maximizing near-term opportunities and advancing innovations in medicine and vaccines amidst a dynamic global environment. The company is collaborating with regulators worldwide to address health challenges and expand access to their products. They have also been enhancing their supply chain strategy, investing $12 billion since 2018 in US manufacturing, with a commitment to invest an additional $9 billion by 2028. These efforts support US manufacturing and expand export opportunities. Finally, the company's first-quarter revenue reached $15.5 billion, driven by strengths in oncology, animal health, and successful product launches.

The paragraph expresses confidence in future growth, maintaining revenue and EPS guidance despite tariff costs mainly between the US, China, Canada, and Mexico. The company highlights its ability to handle potential additional US tariffs due to strong global supply chains and shifts in manufacturing to the US. For the year 2025, there is pride in advancing research, with significant phase three data for a pulmonary arterial hypertension product and progress in the HIV and oncology pipelines. The text emphasizes long-term leadership in biopharmaceutical innovation, measuring success over years rather than quarters.

Since 2021, the company has significantly expanded its late-phase development pipeline, nearly tripling it through internal innovations and strategic business transactions in areas with high unmet needs such as oncology and immunology. The expanded pipeline, which includes 20 potential new growth drivers like Wind rebar and CapVaxin, is projected to have a commercial opportunity exceeding $50 billion by the mid-2030s. With a focus on advancing scientifically advanced modalities with multi-indication potential, the company is well-prepared to navigate the KEYTRUDA patent expiration period. Continued commitment to early R&D and strategic business development aims to drive both immediate and long-term growth, reflecting ongoing demand for innovative therapies to tackle global health issues.

The paragraph discusses the company's commercial performance and strategic direction, highlighting healthy fundamentals and continued investment in research and development. The first-quarter revenues totaled $15.5 billion, a 2% decrease or a 1% increase excluding foreign exchange impacts. Sales decline in China, especially of Gardasil, affected revenue figures, but overall global growth was 8% driven by new products WinRevair and Capfaxiv, and strong performance in oncology and animal health. Keytruda's sales increased by 6% to $7.2 billion, with growth attributed to uptake in early-stage cancers and increased demand for metastatic indications.

The paragraph discusses various pharmaceutical product sales and market performance. Keytruda's growth in the U.S. was negatively impacted by wholesaler purchasing timing. Despite this, the oncology portfolio saw strong growth, particularly with Welireg, becoming the market leader for advanced renal cell carcinoma in the U.S. GARDASIL sales dropped 40% overall due to decreased demand in China but grew 16% in the rest of the world. Cafaxib sales reached $107 million, seen as successful progress in its early launch phase. Vaxnuvan grew 7%, with international market launches offsetting U.S. competition pressures. WinRefer experienced strong global sales growth and continued positive momentum, with notable prescription increases in the U.S and ongoing launch efforts internationally.

The company is pleased with the adoption of WinRever for pulmonary arterial hypertension, supported by strong clinical data. Their animal health business grew by 10%, driven by increased demand and acquired sales. They report a gross margin increase to 82.2% and a decrease in operating expenses to $6.1 billion, with disciplined investments in their pipeline. The effective tax rate was 14.2%, boosting earnings per share to $2.22. The 2025 non-GAAP revenue guidance is maintained at $64.1 to $65.6 billion, expecting 1% to 3% growth excluding foreign exchange impacts, with operating expenses estimated between $25.6 and $26.6 billion.

The paragraph outlines the financial guidance and expectations for a company, including anticipated payments related to licensing and tech transfers, projected expenses, tax rates, and shares outstanding. It notes an expected EPS range, highlighting a negative foreign exchange impact and a one-time charge affecting guidance. The company anticipates a slowdown in Gardasil sales growth following a vaccination program in Japan and expects fluctuations in Keytruda sales due to wholesaler purchasing timing in the US. Additionally, reduced list prices for Januvia products in 2025 are expected to increase net sales, and first-quarter sales benefited from favorable adjustments. The capital allocation strategy remains unchanged.

The company is focused on driving both near and long-term growth through disciplined investments and a more diversified portfolio. They plan to increase dividends over time, continue active business development, and maintain a high level of share repurchases due to their strong balance sheet. Their priorities include investing in growth drivers, their pipeline, and business development. Confident in their business outlook, they emphasize investment in innovation and execution to deliver value to patients, customers, and shareholders. Dr. Dean Li will provide updates on programs in cardiometabolic disease, HIV, vaccines, and oncology.

The paragraph discusses the effectiveness of Winrevir, a treatment for pulmonary arterial hypertension (PAH), which was first approved about a year ago. Results from the Phase III ZENITH trial show a significant 76% reduction in major morbidity and mortality events among high-risk PAH patients, leading to an early trial stoppage due to overwhelming efficacy. These results were published in the New England Journal of Medicine. The safety of Winrevir was consistent with prior studies, and the trial's success prompted the early termination of the Phase III Hyperion study, allowing participants to receive Winrevir. The drug's positive outcomes across various studies suggest it could be transformative for PAH treatment.

The paragraph outlines several developments in a clinical program focused on cardiometabolic diseases, vaccines, and HIV-related projects. It highlights ongoing studies like the Suteria extension study and phase two trials for new treatments, including an auto-injector option and a potential treatment for pulmonary hypertension. The company recently licensed an investigational drug targeting cardiovascular disease risk factors and initiated a related trial in China. Additionally, the paragraph mentions global regulatory approvals for the Cavaxib vaccine targeting invasive pneumococcal diseases and a new approval in China for GARDASIL nine, an HPV vaccine for males and females.

The paragraph discusses the results of two phase three trials for a new HIV treatment and a new cancer treatment. The HIV trials focused on a two-drug regimen using doravirine and an investigational nucleoside reverse transcriptase translocation inhibitor, showing comparable efficacy and safety to existing three-drug treatments. Applications for regulatory approval are planned. The oncology trials evaluated a six-week dosing regimen of a subcutaneous fixed-dose combination of pembrolizumab and ver hyaluronidase alpha, compared to intravenous Keytruda, demonstrating non-inferior pharmacokinetics and similar efficacy and safety. The subcutaneous administration significantly reduced administration time compared to the intravenous method.

The paragraph discusses upcoming presentations and regulatory updates for Keytruda, specifically highlighting studies on three-week and six-week dosing options. It mentions the potential approval of subcutaneous pembrolizumab and its significance for patients, especially in earlier stage settings. The FDA granted priority review for Keytruda in combination with perioperative treatment for newly diagnosed stage III or IVA head and neck squamous cell carcinoma, with important findings to be presented at an upcoming cancer research meeting. Additionally, conditional European Commission approval for Wellerig is noted based on recent trials.

The paragraph provides an overview of upcoming events, milestones, and updates related to a company's medical and pharmaceutical pipeline, focusing on oncology, cardiometabolic, RSV, and HIV treatments. Key highlights include an investor event at the 2025 ASCO Annual Meeting, anticipated PDUFA dates for several drugs, results from ongoing studies including treatments for hypercholesterolemia and pulmonary hypertension, and updates on an HIV treatment regimen. The company emphasizes its commitment to advancing its pipeline and strategy efficiently and invites questions from analysts.

The paragraph is a part of a Q&A session during a conference call. Geoff Meacham from Citibank asks Rob Davis of Merck about the company's strategies to mitigate the impact of tariffs, such as changes in supply chain or raising U.S. prices. Rob Davis responds by acknowledging the tariffs included in their earnings, amounting to $200 million, which relate to tariffs between countries like China, the U.S., Canada, and Mexico. He explains that Merck has been rebalancing its supply chain strategy since the Tax Cut and Jobs Act, aiming for regional supply chains (U.S. for the U.S., Europe for Europe, Asia for Asia). The company has invested significantly in this strategy, spending $12 billion since then and planning to spend an additional $9 billion or more. This change is part of their efforts to manage their market position effectively.

In the paragraph, the company discusses its strategy for managing inventory and manufacturing to address short-term challenges and ensure long-term stability. They are focusing on optimizing the supply chain rather than leveraging price increases or tariffs. The discussion then shifts to a question from Tim Anderson of Bank of America, who expresses concern about the future of the drug KEYTRUDA as it faces patent expiry in 2028. He notes the declining stock value and seeks clarity on Merck's long-term guidance. Rob Davis acknowledges the question and thanks Tim.

At the JPMorgan conference, the company highlighted its confidence in its long-term prospects by focusing on a strong pipeline of over 20 new potential blockbuster products expected in the next few years. This pipeline is projected to contribute to a $50 billion-plus potential by the early to mid-2030s. While the company does not currently plan to provide detailed guidance on these products, it is considering investor feedback. In response to Luisa Hector's question about changes in the FDA and HHS, Dr. Dean Li mentioned that programs with imminent PDUFA dates are on track with active dialogue ongoing, but the long-term impact of personnel changes at the FDA is uncertain.

The paragraph discusses the impact of macroeconomic volatility on business development within a company, particularly in the context of ongoing discussions and an imminent PDUFA date. Vamil Divan from Guggenheim Securities questions the willingness of companies to engage in large or significant bolt-on deals amid uncertainties like tariffs. Rob Davis responds by affirming the company's unchanged focus on pursuing science-based business development opportunities to enhance their pipeline. He acknowledges that the current macro environment adds complexity to completing deals, but their strategic approach remains consistent. Additionally, Vamil Divan inquires about the potential for international reference pricing and ties between US and international prices, to which Davis indicates there are still unknowns.

The paragraph discusses the challenges and strategies in deal-making and pricing within the pharmaceutical industry. It highlights a disconnect between sellers' expectations and market realities, which Merck aims to address while remaining aggressive in pursuing deals. Additionally, the paragraph touches on the price differential of innovative medicines between the U.S. and other countries, expressing a willingness to work with the government on reform. One suggested reform is addressing the role of pharmacy benefit managers (PBMs) to reduce prices by ensuring more of each dollar spent goes directly to patients, rather than intermediary costs.

The paragraph discusses the pharmaceutical industry's need to ensure foreign governments provide fair value for innovation and access to medicines at prices that reward risk and innovation. The speaker emphasizes the importance of protecting access and innovation in the U.S., working with the administration to find solutions, and maintaining the country's leadership in the field. The conversation then shifts to Chris Schott from JPMorgan asking about the potential for GARDASIL to move to a single dose in the U.S. and Merck's capability to adjust pricing. He also inquires about whether manufacturing and tariff mitigation efforts will focus on new products or if they'll also address legacy products like Keytruda.

In the paragraph, Dean Li addresses questions about the potential for reduced dosing of the Gardasil vaccine, mentioning that while he won't speculate on the ACIP's actions, there is confidence in Gardasil's safety and efficacy. He highlights the stringent requirements set by the FDA for any change in dosing, including efficacy against disease endpoints, data from both males and females, and long-term durability of protection. Li notes the disparity between FDA requirements and ACIP proposals, hoping for thorough public discussion on the matter. Caroline Litchfield adds that the company supports Gardasil's value in cancer prevention and aims to ensure cost-effectiveness in pricing. She also hints at discussing manufacturing and long-term considerations.

The paragraph features a discussion during a Q&A session involving Rob Davis, Chris, Peter Dannenbaum, and James Shin. Rob Davis addresses a question about the manufacturing strategy for Keytruda and new products in the United States, emphasizing their focus on maintaining inventory and securing manufacturing resources to be well-prepared through 2025 and beyond. James Shin from Deutsche Bank then asks Rob Davis about the potential for more U.S. capital expenditures and whether they depend on U.S. tax reform. He also inquires Dean about the impact of recent PD-1 VEGF datasets on resource allocation for l m two nine nine's development. Rob Davis acknowledges the question but does not provide an immediate answer within the provided text.

The paragraph discusses the company's investment strategy, highlighting a commitment to over $21 billion in investments since 2018, with expectations of further growth. The decision-making is based on firm choices rather than mere expectations, and the company is confident in managing investments and tax positions effectively. Dr. Dean Li addresses inquiry about PD-1 and VEGF treatments, referencing Harmony 2 and 6 studies and expressing optimism about advancements in the field. The company values KEYTRUDA's extensive indications and plans to make informed decisions based on evolving data, maintaining a competitive edge due to clinical expertise and a robust portfolio, especially if the PD-1 VEGF combination demonstrates overall survival benefits.

In the paragraph, Rob Davis discusses the future impact of a potential competitor in the non-small cell lung cancer market, suggesting that any effect on Merck would be minimal, particularly after the loss of exclusivity (LOE) of Keytruda. He emphasizes that Merck is focused on shifting patients to earlier-stage settings, reducing competition risks, and highlighting significant long-term opportunities for Merck. Then, Steve Scala inquires about the global slowdown of GARDASIL growth and its potential impact on future revenue targets. Caroline Litchfield responds, explaining that the expected slowdown is mainly due to the conclusion of a catch-up cohort program in Japan by March 31, which will result in reduced growth from the second quarter onwards.

The paragraph discusses Merck's expectations and strategies regarding Gardasil, their HPV vaccine. In 2023, Merck anticipates challenges in the Chinese market and may not ship additional products there, which impacts their financial guidance. However, they expect strong, double-digit growth in other markets. The company has withdrawn an $11 billion target due significantly to China's market uncertainty but remains focused on maximizing opportunities globally, including launching the vaccine for males in China. Additionally, the discussion touches on potential changes to HPV vaccination recommendations in the U.S., which could extend eligibility from age nine and may positively impact U.S. sales.

The paragraph discusses the positive view on vaccinating adolescents with Gardasil at an earlier age, specifically starting at nine years old. This timing is seen as beneficial because it is easier for families to prioritize the vaccine without the distraction of other vaccinations, potentially leading to better completion rates of the full vaccination schedule. The recommendation for vaccinating at this age is supported by the Advisory Committee on Immunization Practices (ACIP) and is already approved for this age group. The conversation then shifts to a question about the intellectual property (IP) location for a drug, KEYTRUDA subcutaneous (sub q), which the respondent declines to disclose for proprietary reasons. A subsequent question about tariffs is introduced, asking whether a 25% tariff is a reasonable expectation.

In the paragraph, Rob Davis addresses a question about the potential impact of tariffs on Merck, emphasizing that while he cannot speculate on specific tariff details, the company has prepared through inventory management and repositioning manufacturing. This preparation should help mitigate potential negative effects on earnings. The discussion then shifts to Mohit Bansal's question about Merck's business development strategy. He notes Merck's acquisition of assets from China, acknowledging their cost-effectiveness but questioning the lack of innovation compared to competitors. Dr. Dean Li then takes over to address this query.

The paragraph discusses a company's strategic approach to pharmaceuticals, highlighting their focus on acquiring and developing innovative compounds. They emphasize their ambition to lead the market with an oral PCSK9 inhibitor and their confidence in its cardiovascular benefits. The company values integrating internal and external pipelines to create innovative products and maintains a balanced strategy, aiming to be first or best in class across various opportunities, to address unmet needs and drive growth.

In the paragraph, Dean suggests that obesity could represent the next significant area of development, particularly when combined with existing treatments like PD-1 and VEGF inhibitors. He encourages thinking broadly about the entire portfolio rather than focusing narrowly on individual treatments. Peter Dannenbaum then thanks Mohit for his time and attention and invites any additional questions to be directed to Investor Relations. The operator concludes the conference call.

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