MRK - Earnings call transcript Q2 2019

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Operator

Good morning, my name is Darla and I will be your conference operator today. At this time, I would like to welcome everyone to the Merck & Company Q2 Sales and Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

to Relations call and like Loxam, to now Investor SVP, Global would turn over the Teri I Communications. Please go ahead.

Teri Loxam

Thank to Research will remarks. Merck's and Dr. Today, good Labs, Rob Davis, morning. who XXXX Executive Perlmutter, Financial and and Ken call. Officer; Chief Chairman by I'm you, conference prepared joined President Officer; read our Chief Roger our our second Darla quarter Frazier, Welcome of Merck

Frank Clyburn, addition, Q&A Chief and In also Marketing will who Mike joined portion call. the Chief our Nally, our be I'm by the for Officer, Commercial Officer; available of

turn over to I Ken, items. point I'd Before like the call few out a to

that acquisition-related results, we see in items such will charges, our and as costs GAAP items. You restructuring have other certain

these excluded from these have we our reconciliation results provide that note our should in and of release. a press non-GAAP You

We to release quarter products. our have help in table the you business provided also the in sales and units for the press a understand

some during management made would of are within of I you provision are subject that the Act uncertainties. forward-looking Private Litigation the of Safe statements risks call beliefs of the current Reform be today's significant we Such XXXX. statements meaning Securities Harbor on like Merck's considered statements and the US may the based to of remind that to make and

forth If set forward-looking the in our underlying materially assumptions prove inaccurate or statements. uncertainties differ from materialize, actual those results may

Merck factors certain projected undertakes actual morning. SEC publicly cautionary in results Our identify those statements materially XXXX that risk statements. differ any from forward-looking to forward-looking obligation in made and XA could filings, including update the to Item statements no XX-K any cause this Company's the

filings, earnings as SEC today's release well on merck.com. You can see our as

a investor of merck.com presentation posted includes the from section also some of quarter. the have We our highlights which to

call Ken. the to With turn over like to that, I'd

Kenneth Frazier

Thank thank joining Good morning you call. Teri. and for the all you,

clinical with together across strategy portfolio. with our revenue growth drove and strength of our quarter execution accelerating global science-led commercial Our another

through significantly innovation business the the show our is focus of off. outcomes of and further health momentum our continued the that that year of improved first kind demonstrate results Our paying half the on

our commercial at portfolio our strong while highlighted continue edge and significant of by R&D execution we and cutting confident we that As invest decade are drive the pipeline will over to Investor beyond. opportunities product unparalleled growth science to deliver in innovative recent supported and next Day, breakthroughs

approvals quarter, continue and we Over Two for presented programs, advance - our KEYTRUDA. acceptance others. as well filing in past trial, pipeline new diseases, regulatory on across new and the clinical regulatory data pediatrics the encouraging infectious our and to including as two many VXX data a additional approvals MK-XXXX VXXX

Our world. unwavering make clinical can to the progress at lives a bringing biomedical of products the patients regulatory commitment Merck's around forward meaningful reflects that in aimed difference research and

pipeline invest strategically to our strengthen continue we business addition, value In development enhancing in through external opportunities. to

that This quarter our Therapeutics bolster and with alone, we announced pipeline respectively. two oncology will Therapeutics acquisitions Tilos Peloton

commercial and shareholders on Design for confident years scientific and We completed and enable come. year the strategy, for We with also remain offer Antelliq us this team, patients execution on to our and and our of value acquisition leadership significant together our prospects, talent growth Immune and animal for will to focus that successfully closed drive tender health. outstanding

And of our to with turn performance. the that, quarterly I’ll call details over review to now Rob the Rob?

Robert Davis

morning, everyone. good Thanks, Ken. And

a second testament and clear mentioned, momentum the Ken our strong our potential of performance quarter in is to As the growth business.

in capital both to and allocation to the while and our investing the strategy confidence on result last ability maintaining we the several meaningful have revenue shareholders. to a returning Our continue focused growth and long-term expansion, sustained quarters operating drive business reinforce capital over margin disciplined

impact sales Health negative to will currency. exchange. XX% X% an basis. of revenues our excluding increased Animal billion, all Total excluding which quarter to our ex-exchange year-over-year of this business results. were $XX.X increase the comments was an led This XX% grew foreign be turning or pertaining from exchange. on Health Human excluding growth by company my remainder Now XX% The

Human in was In revenues first-line exceeded led well in hospital by as The sales recently of increase $X.X indications. this by Health our adoption in in vaccines oncology, the Growth products was an uptake increase as setting, driven lung billion increased key quarter, approved KEYTRUDA oncology, year-over-year. globally and businesses. XX%

drive segments across patients. for including penetrate KEYTRUDA of and demand standard firmly to continue care population, is to low and In as indications non we all the the patients first-line of established lung performance. the US, expressing strong further indicated continues in PD-LX

addition, are are we carcinoma launches our by adoption where and adjuvant by metastatic encouraged recent already melanoma cell in In we strong oncologists. seeing renal

We're also for our in and XX the head about opportunity United June. we first-line approval excited States neck in are received cancer indications which With approved currently establishing gain further grew in to KEYTRUDA continue for chemo XX% EU. driven by in as as a we sales foundational in long combo more KEYTRUDA countries the Outside treatment. the reimbursement cancer the we US,

PD-X our additional growth continue China, as are launch speaks seen we very have we in execution to And leading patients and to growth strong indications. and reach lung should more continued uptake our melanoma agents, expect launch In and the first-line the and in anti we the Japan, in given now indications. which our recent breadth of

is is the in long-term remain early and the IO way our We given the confident leadership very journey. treated established cancer the being in and we are the many approvals potential, for growth of in which our expectation KEYTRUDA KEYTRUDA around changing days world. still additional

based Lenvima, both in AstraZeneca than doubled strength Eisai further more in Europe, and with revenue cancer continued Lynparza Japan. results products the by this in United as we quarter uptake strength China in on driven reflect SOLO-X well ovarian also Lynparza States, respectively. and market collaboration in as and of results Our the

as the the KEYTRUDA. additional and XX% PARP Lynparza combination in establish United total inhibitor the in class types to in patient with of to continues lead look choice Lynparza We with PARP further States, share. inhibitor tumor nearly

than other the believe drive more the our we additional look launch Lenvima States continue portfolio an to will potential HCC in to be also United for We revenue in program. doubled development for in across indications, markets. oncology in as important and forward our and product China sales broad Lenvima the several

vaccines. to Turning

Europe our as the reflect markets, vaccines pediatric as as well purchases growth the strong business and especially continued United the GARDASIL States, cohorts well by China. Our demand sector in portfolio, public in in emerging driven strength was greater in demand as across and which adolescent

within in performance States increase United in benefited reversal growth Our reflecting hospital strong BRIDION $X as business the billion, market. which annualizing the continue from to share over XX% at is we

this X%, grew Livestock the due insulin Companion year purchases primarily X% prior in for and the volume increased in vaccines revenue to the partially BRAVECTO. quarter timing by sales the grew of to customer products Health in billion. $X.X products were animal growth as acquisition. Animal acquired the Antelliq XX% from contributions offset

to was comments quarter, Turning Adempas to P&L, adjustment quarter XXX increase our sizable basis the points margin year-over-year. second of for of the related in will rest XX.X% that a in Recall on be sales the XXXX. accrued my included Gross non-GAAP of milestone the an was basis. an catch-up

in the year-over-year, transactions reflecting during our increased X% business also drivers accelerate year-over-year. new of in large development discovery as increase quarter. investments billion grew support expenses efforts, clinical key $X.X the R&D indications. reflects the SG&A of of of development higher continued expenses in portion our a well launch to spend and growth Operating drove as and

The the net decrease well as reflected income interest on higher expense. other mark-to-market in quarter income impact of this as year-on-year unfavorable securities, equity

as increase of an share, per line operational $X.XX continued earned drive leverage. disciplined we the allocation growth demonstrates growth XX% with our we business together, in combined Taken resource exchange. top This strong excluding enabling momentum

our to Turning for year. outlook the

to and both guidance have we ranges year our revenue X% are strength to X% Given now continued billion, across $XX.X represents growth expect XXXX which the of narrowing revenues in XXXX. the key for raising driven our growth EPS and strong confidence $XX.X versus we of by We full pillars. performance our non-GAAP billion

just from a using July assumes range X percentage foreign negative exchange point of mid rates. over This impact

R&D. of versus now We by expect foreign elements driven non-GAAP provided of All We to XX% impact other guidance of April expect our to represents XX% digits, investments a range approximately in primarily expect XXXX. from EPS in be in $X.XX now $X.XX, exchange. which We negative mid-single to remain slightly growth the to OpEx by increase unchanged.

In in second position reflected summary, results as our and our of updated guidance. operating strength a we are from quarter

balancing the the in shareholders. We significant in need are we confident to while and invest revenue in a term, expect our patients to ability committed to near deliver delivering and to drive of we sustainable P&L, will leveraged and value our remain which all innovation, and strong growth long

to With like turn call that, I'd over Roger. to the

Roger Perlmutter

Rob. Thanks,

of part Laboratories one important second The meaningful Research in a very organization. quarter progress with made every for was Merck our

supplementary First, KEYTRUDA as combination the Administration, lung first-line supplementary in squamous monotherapy cell and of approval use cell for with we treatment in of third-line for and both the small of the approval and treatment Drug neck, Food from mentioned KEYTRUDA of numerous received including as head chemotherapy approvals carcinoma, US as monotherapy previously cancer.

in the supplementary example hospital-acquired This illness resistant of by by pneumonia pseudomonas treatment a when advance also treatment important represents especially received life-threatening We ZERBAXA of approval the caused ventilator-associated sensitive in for for strain. and an bacterial species. caused

therapy obtained or approval More urinary we relebactam complicated independent cilastatin, infections. RECARBRIO, for combined our tract recently of intra-abdominal

beta-lactamase, otherwise and resistant imipenem bacterial to part as of of enable to engineered the our was of species against expressing address specifically Relebactam increasing of form resistance. antimicrobial extended threat efforts the certain activity

the had patients review transcriptase exciting islatravir program and including low-viral translocation with from data from the with human nucleoside our maintenance burdens we combination for XX new the opportunity reverse virus. the also second our the week of Doravirine quarter, of immunodeficiency anti-retroviral to data During infected new inhibitor,

Society that prophylaxis City perhaps HIV of week islatravir once at permit a a Mexico meetings against subcutaneous infection. by studies might International were yearly presented the which data implant These AIDS in were long complemented last term

infectious also presented of VXXX, populations. pediatric our pneumococcal on data In space, in [ph] XX-valent new vaccine the immunogenicity the conjugate disease we

program We towards are the end available of enthusiastic comprehensive VXXX for which year. become very our about from development will X Phase data this beginning the

alone. data supervising that with rates, chemotherapy of was response announced committee pathologic dual improvement just chemotherapy with Phase Returning to that the endpoints studies compared complete space, KEYNOTE-XXX neoadjuvant study of primary one combined an monitoring and in this two our found yesterday with associated adjuvant oncology of X treatment we as KEYTRUDA the KEYTRUDA

make to two regarding points this key study. wish I

setting, occupies less provide of between which neoadjuvant an First, cancers. a outcomes. In XX% this in aggressive therapy of tumor treatment triple-negative from the resection and burden therapy increasingly long-term XX% breast surgical breast role of and in reduce in important cancer, neoadjuvant especially improvement use subset, can the represents the

often is which pathological repeatedly eliminated this event-free been aggressive improved of endpoint. Hence have complete achievement very and cells by of tumor overall the interim survival the examination a and of analysis encouraged has shows the response in with achievement specimens demonstrating quite of Second, been surgical associated malignancies. are we survival successful

continue recommended this In context, study data KEYNOTE-XXX committee that the unchanged. monitoring the

And event an upcoming meeting. data authorities meantime, forward become the to survival. to enough data assess and our to in free In we so KEYNOTE-XXX presenting mature look the with regulatory data discussing scientific the

Finally, will continue, oncology especially major I approvals that we first you pace regulatory course. forward notifications these during achieved that of look due have the of in wish jurisdictions in the risk I to year six anticipate months space. we to in sharing with notice the

questions. colleagues will your my Now, I take and

Teri Loxam

the as Thanks, And we'll their allow Q&A to maximum a if many questions as portion. to questions remind to like the everyone two keep they Darla, of can on it possible. to Roger. over call turn I'd

Operator

[Operator question Flynn Terence Instructions] Sachs. from your Goldman first with And is

Terence Flynn

an your for recent question. the of focus the little capital obviously here on more announcements. if about your you this I deals on I thoughts Thank been this very a on Ken, you Day welcome a you touched Merck's update month but allocation following just latest provide space significant strategy. would us could know there's taking Investor much. ago, in a Hi. just bit some there. Thanks at larger wondering

Kenneth Frazier

you very much Thank for the Terence. question,

We the us some in sector. of launched around the activity have

prospects confident very is companies growth the own each prospects our think those growth forward. evaluating years. over going few We feel one next in of very, I their

including given As in merger all have R&D. of we that, we that the interested we could past, in company, a be believe not particularly the disruptive said large are to

been about associated divide continue bolt-on go we for the counsel the bolt-on We cultural of disruption, supplemented deals. to the there, end look we not has R&D that because by mergers disruption, that should at grow large amount. our size think the feel don't at across $X day, look operational complexity, to our by particularly, in we the of very spectrum do deals. with ability organically We company we confident bolt-on, But terms it the

Teri Loxam

question Great. Thank you. We'll take the next please.

Operator

Guggenheim. Fernandez It's from with Seamus

Seamus Fernandez

for Thanks question. very the much

two maybe very quickly. just So

as some of help what and across one, first if the And the you GARDASIL, understand sustainability that the in happened well just just we incremental vaccines growth the more could pediatric quarter. NuvaRing of this this the saw quarter just board, that, as in with spectacular fully could particular? growth us guys you On kind on then, comment to

speaking understand collaborate the towards to XXXX. guys finding partner then is Obviously on doravirine solid quite to you how combination. And implants. And companies programs. XXXX, working exciting, with for if with But second PrEP Roger, for annual a the just question, the information dosing broadly data can impressive particularly you're than if willing those you better doravirine are just get looks wanted to the other and work and better the for

were products the those collaborating some unfortunately doesn't on look and companies there -- other out that by raised other concerns with physicians are that are front. that like great was it each That

on So much. wanted to so Thanks I front. just ask that

Teri Loxam

Great. Frank. start We'll Thanks, Seamus. with

Frank Clyburn

Seamus. Sure,

as let have couple regards start this new promote So continue me really so things. quarter. NuvaRing With done to we a we past. entry generic NuvaRing. of in vaccines, first Seamus, there, the news to with no No

year. strong with see if of we in on quarter CDC to GARDASIL me which a basis. did Let year, actually place did in see of US, were took very start We the GARDASIL. of exchange QX a had in this exclude growth purchases global you QX last XX%

would I to a them take our So, a XX%. some about Seamus, globally you year-to-date GARDASIL of But for bumpiness with sales. vaccines look basis at is ask do on up vaccine see some

in So cohorts the we're demand to talked of also lot we seeing in a the very Day XX programs our Europe in are about year XX neutral XX cohorts. strong in China, demand very expressing some XX in strong year-old out. We're Investor US the to as general seeing and particular and ex-US rolling

our in confident very growth prospects still for GARDASIL. we're So

did vaccines private some by sector the also driven strong The the quarter, was There demand was pediatric see quarter. to That very as well. this within a buoyant US.

quarter news we This pediatric in see the our growth on going do continue that believe that outbreaks the to of Measles and read we'll some for based you've vaccines forward.

Investor our of near about Day. growth vaccine just feel we for So very the durability business, as term and term good long both we mentioned on

Roger Perlmutter

performance intracellular of say, to remarkable. in would Seamus, I this especially mean, profile. quite that Roger. durability setting islatravir of note remarkable the life is regard is islatravir of islatravir right. All the impressive resistance implant and MK-XXXX, I and And to With the the very first all, half again, the long is it's important very

good. take will inhibitors, with be many used agent. islatravir, doravirine from in previous adverse the think those effective that combination very which associated its away capabilities events lot the a and to of particular, for in And is transcriptase doravirine nothing the terms market would I had of them. superior a I in Doravirine is non-nucleoside reverse of

are see you combinations the of lots said, time will other a impact have in the considering also islatravir That of and opportunity conversations. other And variety of of to over we settings. different a broader lots

on is, even The regimen, be can important offers great thing or emphasize which monthly a daily, a longer or to it duration possibilities. weekly administered

I Thanks. think in patterns for individuals. change infected in treatment HIV

Teri Loxam

take We'll please. the Thanks. next question

Operator

Andrew It's Baum Citi. from with

Andrew Baum

questions, of Thank you. Couple please.

exposure your tenant Januvia interested given to the coverage catastrophic proposal your fund on Firstly in and to thoughts others. Lynparza, Lenvima,

about order do or Thank you PrEP, than the FDA to non-inferiority with the timelines you market accept Second both think anything on, to ready question as traditional you. PrEP? the for well to that islatravir, Roger, what to in islatravir thinking bringing do think once-monthly, do as as is trials could implants the other

Kenneth Frazier

Okay.

So the proposals on comment finance let happening generally going various are package. what's Senate me things were the with and some that of about in these just that included

we Let kinds are me of in start that of relieve supportive. by saying that out-of-pocket company, patients will as a The terms their very changes costs.

that's the catastrophic. who system direction, of and get a progress right the step think catastrophic I changes through in but small number are very actually the the people

costs as we the support respect it over continue turn seniors on own so with counter legislative part and just to and with So portfolio. Frank. I'm going and not administration, impact at our catastrophic we lowering work to the to people portion to process for because at the the of the

Frank Clyburn

Yeah.

at oncology from think on front, Lynparza approximately business colleague for is, flows So just the our I AstraZeneca, heard through D. Part you Part D of our XX%

To remind everyone B. that with Part KEYTRUDA, regards is reimbursed through to

D a not Part it So is product.

oncology portfolio forward. we're So balanced Roger? though our across we as going feel

Roger Perlmutter

And Yeah. respect PrEP with Andrew regimens. to

a has active understandable. rates that I difficult very of are trials. one the will populations that's need low because The controls, very, clinical think if large execute it's do you concern that a [indiscernible] so to to very to as community comparator great event whole and

been very be FDA particularly and among aware about are of and regulatory a active sponsors could not this variety community done. There have other of this. agencies the what and discussions in patient

that we And don't we're about far, lot registration, this that more in a we really novel mind watch of have decision. would a I concerned permit trial have design ideas very thus rapid mean, space,

Teri Loxam

Thanks. the next We'll move question. to on

Operator

It's Schott JPMorgan. Chris from with

Chris Schott

Great. Thanks for very much the questions.

guess here. two bit at more elaborate this particular first the China remind driving behind of on us that that this point? your and a just can Just growth. the products dynamics China Maybe business you overall are what in size XX% I little

in we et market the uptake second with get in was - question seeming just in you're of quick a to Where just seeing My update get data, the KEYTRUDA cetera. traction far. most RCC, terms could so you're the

for it's guys. new you. important indication an Just, obviously Thank I know you

Frank Clyburn

really X.XX%, a of Frank Hi, driven being million products. and And number Chris. $XXX to China grew it is on quarter about China. It's this by

to mentioned innovation. have pivoted we we As

KEYTRUDA growth. driving the is our So Lenvima, portfolio, oncology Lynparza,

a significant uptake has GARDASIL in had China.

Januvia. also listing NRDL for have We

growth about driving XX% a in that we're portfolio we excited, it's and continue believe we Chris is With regards China. broad where are to RCC to-date. that innovative will base that very So

mentioned RCC, the note it's rolled three important to a risk axitinib groups, we As shows competition. data for which plus from KEYTRUDA out differentiates the us we benefit across when that all

all groups we survival, strong the three and risk overall based So seeing survival response uptake very are across really progression-free rates. and on it's strong

adopted the academic think into community And which from and and our very their feedback a chartered strong indicator. early strong is in this we're seeing very have of US I guidelines, hearing physicians. accounts XX% both regimen

Chris about as really I around US. that world. plan good So in also be rolling out to the know, feel we RCC you And the

So key going forward. we growth see drivers this as key for a us indication,

Teri Loxam

Great. And thought Roger, I the out question, on XXX? sorry. - I My bad, apologies. missed

Next question, please.

Operator

It's from Navin with Jacob UBS.

Navin Jacob

Hi, question. Two, public it would this. that be GARDASIL would amount quantify, that But, pattern thanks the sector how be missed for if if of quantify could possible you to buying much sorry US helpful. actually taking I the was

trials you're And to are then you where us plus we Lynparza see that just on first-line when could those And in Thank readouts from when and as hear wondering there as a corollary going be could well. lung, I'm trials there. trials KEYTRUDA those much. well. updates remind starting X you prostate we to very as a Phase to cancer, expect three KEYTRUDA could

Teri Loxam

Roger. with start We'll

Roger Perlmutter

Right, okay.

for we've cases, our and have So with and Lynparza is Investor a it's large cancer. opportunity Day, of showed this one from as prostate those combinations in discussed quite we data KEYTRUDA some

update take conduct, to that for a then to starting have chance those. study results. will they We US on we're you the obviously some enabling indicated forward we'll And we move time as to registration studies have

combination, that designation the breakthrough are we're, enthusiastic point as the but well the and be out X. indication circumstances. combination will received - just first-line should I hepatocellular the there for believe about we we of combination many Lynparza opportunity that only, not Lenvima But carcinoma the

combination with awful there in studies lot an So on both going agents. is

Frank Clyburn

CDC was I purchased on GARDASIL we purchase not a was in QX actually of mentioned, QX purchased It QX Yeah. of in in And had as which 'XX. XXXX.

you have would So basis. on in XX%, the a month the characterize US, six year-to-date which I is look when way in GARDASIL grown we

perspective. that's the a way GARDASIL think it I look at best from to

to are of the prior mark, year growing year see now CDC about purchases. half versus So think because different the right you timing going XX% the with to regards US for

Teri Loxam

Thank you, Frank.

please. question Next

Operator

Umer with Raffat Evercore. from It's

Umer Raffat

thanks Hi, if taking so had may. questions. I for my two much I

areas with a mentioned And guess complexity is if bolt-ons, say consideration let's First looking low you're can to my that market you that there the as is you being cap I complexity in for a value, at. $XX therapeutic open question also like as orphan are as tuck-in, billion long still is, or vein, and a low? company key is

see on each of Thank I curious in so pricing going in margin, two KEYTRUDA's add reform. much. very be gross if reduction of you XXXX. being also was course, on royalty But may forward. I secondly you Bristol-Myers anything around baking those. drivers big And you could numbers One,

Kenneth Frazier

with start is So necessarily for the I'll Umer Thanks, issue I the size PD questions. question. think your for don't the complexity.

to not of has it we IT integrating or and overlap are with or companies think time whether our not lot whether two do spending systems. the I a manufacturing systems

it's I if true complexity all. that true a separate drives then a business, kind both-on, at size a So don't the of add-on, the think

types, other to people. versus orphan for to most relates the it the do good most our preference As is

But are that against good well internal we right care together value to actually of orphan as having therapy, even is we to that, for said can our or create orphan with as including we the getting about are patients. What leverage science shareholders indications efforts we therapy. our kind approaches not

Robert Davis

is as we gross Good mix benefits as just question, over KEYTRUDA margin from going Rob. morning, Investor we also, gross your have to at because do to see generally business, time, negative see like remind do forward. we assumed everyone, vaccines we we products This mentioned product expect Umer. indicated and margin, price Day, while flat, for To our flowing the

with the drag obviously, and term, become had, the the step in collaborations, KEYTRUDA does The down long one they margin will XXXX on be which accretive. the or of of impact impact a near-term in that you've royalties, the

our talked you of give coming period will flat as that specific want dollar given gross product specific down what's slightly expansion, haven't We those the about how whether growth don't in guidance, see to up, operating slightly over clearly operating to those. our most to reducing determine numbers margin interplay driving sales. we relative And but we've expense from with margin or frankly,

Teri Loxam

Thanks, Rob.

question please. Next

Operator

It's Risinger Stanley. Morgan from David with

David Risinger

Yes. much. this projection guess But meeting. like previously, was a know I with, start than bit and mentioned the terms of last in negative Thanks your I at Merck's to price of going very of analyst comment some forward actually peers. I'd that first the that's different

I some what pricing, your for more provide about maybe you color you biggest peers, think forward. for of flat talk as so the some see regarding Merck price could going downward pressures on

And jumped you. then late, - And Thank addressed, the I then an second, know the durability provide update revenue just could meningitis hear on wanted also to strength. growing so you MMR-II about of PROQUAD is Merck's call don't that line on if the topic. concerns. but I this

Teri Loxam

start Great. with Rob. We'll

Robert Davis

morning, And David.

the that, price again, our are I So to forward. to can't we going focus With time pricing, we've the thanks see the what important question. speak negative think United on competitors I for thing seen the quite implying to regard recall And mix States. the some how actually is, outside

that's a United We've outside new not price So States. increases for the Historically several that price States been offset and in the headwinds United absorbing phenomenon. was by years.

no dynamics. the look the United going price those the changing in of of see because we longer obviously we As increases forward, benefit States

total, see in declining as look going do as we And to we're price so our you continue margins. look forward, believe to impacting we

Teri Loxam

vaccines. pediatric the on Frank And Thanks.

Frank Clyburn

Yeah.

private are has that the demand And of outbreak see good we sector. pediatric continuing within driven some vaccines, pediatric measles the demand clearly the expression very vaccines. to in on So the

that We do in come We did buy-in this in see of buy-in also QX. will some and anticipate out QX. that quarter QX

we vaccine before, of our durable strong as very pediatric it mentioned growth part going a I very as story. our business forward. And see we as a But business see

Teri Loxam

Thanks. please. We'll question the next take

Operator

Anderson It's with Tim from Wolfe Research.

Tim Anderson

outside Thank claiming we to look KEYTRUDA, and the community more models analyst question very even when have other or couple analysis you. published as ultimately large an XX% on A tune cancer matter. the back that really how ever I we US. US and the at No the ex-US while often of to that so, PDXs US in of sell mature more the drugs, questions. they seem surpassing and A for KEYTRUDA longer-term much one at

this And long-term tell dollars could be if US can your ex-US market assumes the potentially. I'm markets model wondering regard, kind time. eventually from billions over of blow could us what away, more you of It

top-lined part where think X which recently you Bristol program with of us are as CTLA-X you XXX a specifically remind positive, I was Can surprise. question, what are your Second combination ago? you. latest what tumor have you trials that couple a types. off this and of stage as the maybe you started of kind guess may then initiative backed I years Thank

Teri Loxam

start let's So with KEYTRUDA. Frank on

Frank Clyburn

Yeah.

there. when So US malignancies of particular for especially look significant like see actual KEYTRUDA markets we you look do long as term, at the prevalence China, the we opportunity outside in some the GI in the

to we XX%. ex-US going $X.X significant strong we grew specific are is in US but give sold this fact billion in clearly do a as the Japan and see not number, alone, seeing opportunity We uptake very well, very obviously outside quarter

KEYTRUDA we going us highlight growth opportunities. So But see I would forward. one significant for both is US the and clearly, as potential ex-US China

Teri Loxam

Roger? And

Roger Perlmutter

And that our see own done setting is KEYTRUDA study KEYTRUDA with over demonstrating CTLA-X directed MK-XXXX, has adding CTLA-X not CTLA-X with superior any our interest respect is assessing directed CTLA-X and therapy, therapy or to therapy. KEYTRUDA has and adalimumab actually in fact been we in powering to Tim, in have or the with to alone, an directed both whether impact also whether that plus

find others, clinicaltrials.gov. in going I you, are could enabling couple them which combinations, and think, registration both both a with for and with we go and studies of includes, through example, so kinds And the setting study on of the usually details on KEYNOTE-XXX

Teri Loxam

We'll on please. to question move the next

Operator

Gerberry of Bank with Jason from America. It's

Jason Gerberry

Hi, Thanks my good taking question. morning. for

Bristol going First, Yervoy the monotherapy against are just follow-up Opdivo, curious, CheckMate-XXX greater or populations? combination how on than to oncologists just a do benchmark you Merck X% either approved data already data, think PD-LX the the Roger, the KEYTRUDA in

And my importance KEYTRUDA frame is I'm what lung you listing NRDL with maybe for Thanks. without about of the And just setting? listing? of for Frank, in accessible the market and question can percent the curious the second then specifically the

Teri Loxam

We'll with start Roger.

Roger Perlmutter

pretty hard from because it. Jason. It's data seen we Well, haven't CheckMate-XXX actually to on the the comment program,

was top but success one with ratios part succeed look analysis don't like combination a We a predicated line study of part is announcement then in survival. in hazard most greater know broken because appreciate have that. and the the and We X% it a into what than and looked as like in complicated it's we know you - overall of that PD-LX down directed mutational that did subsequent the such was it study burden there parts adalimumab, tumor was the the on don't PD-LX

So seeing will hard I the to be. to available. of we're have at oncologists look think it people how meaning will what become the time, And understand want data, and the a not actually know that with data pretty will respond might

think data, KEYTRUDA of typically own strong our survival. think KEYTRUDA traditional combination overall chemotherapy the doubling I plus extremely a are of course, of of I and with the with order on

there disease. improve continue that important that optimistic survival So of that able we're be to to overall this is therapies to can be an and are we value will gained there going advance

Teri Loxam

the Thanks, Will go NRDL. Roger. Frank to on

Frank Clyburn

strong reducing well with to the survival commercially as very saying with of you regards monotherapy very pointed I our risk PD-LX KEYNOTE-XXX just a strong the with as death what Roger as lung, And additional on believe Yeah. with overall And in in half. do population we're one mentioned high to was position data.

of to playing it around XX us helped the in world, and has penetrate well new now That very patients out lung. eligible X every data is

in us here a positions feel though and we feel in lung competition, though readouts lot today we be as will - future. our data data but the So from well there'll as of

to next to year. XXX,XXX if for listing. patients NRDL, a are waiting part probably we into us that actually is indication NRDL cancer China. China is be those that expand participate and labeled It important we'll fairly of lung invited potential X population. of There to expand - our see patient is does to It invited population There an the a chance in gives are XXX,XXX significantly. in if

we keep China. good XXXX China in well, only label XXXX, NRDL expect to highlight, clearly and like process China are market important but unfolds. we our for we to is also also but and will in as going beyond be for We'd informed you to uptake self-pay us, as expand seeing the not

Teri Loxam

to on please. question the move We'll Thanks. next

Operator

Cowen. from Steve Scala with It's

Steve Scala

you. questions, A of for Roger. Thank both couple

If regulators. comments, file, I you clarify your needed data that you could PCR you but with said think KEYNOTE-XXX you would EFS the share to

implying you definitely saying are would to That absolutely is seek PCR? and first going were the you or on in approval you why you're the you EFS. potentially garner to file need place, share So

XXX Bristol's alive you. of months, wondering if XX% XX that do KEYNOTE-XXX percent secondly think Thank respond the a unlikely? then reported you extremely than just patients Merck that delivered is greater And or at would how

Roger Perlmutter

All right, Steve.

to not you respect making data to to with KEYNOTE-XXX goal is consider with that they regulatory So know the that agencies the finding ask available discussing, the sufficient for whether represents a drug patients I'm or setting. think importance of in

that's reason do to So the it.

breast repeatedly the setting. in favorable demonstrated with have associated is response particularly to that complete pathological the indicated outcome, been breast and in cancer his triple setting cancer negative impact I As

regard that with is to look On and agencies data. of totality at, hand, have the the to other the this something

where So basically -- there. that's that's we are

the like, data what what unsurprisingly actually with know was mean, obviously in to plus in to the data to subset combination I the And - the seeing nivolumab think but, beginning know interest that I there regard CheckMate-XXX, like. really, and successful. I that what I'm chemotherapy say seeing we've some about the what side hard to flip respond I of light XXX, - maybe look of is there look I was, without hypothetical with that. don't not pretty seen, of

results response for impressive overall KEYTRUDA survival, progression-free terms very rate, of gives plus X obviously part in overall chemotherapy, survival. us which In

in and and lung repeatedly demonstrated cell we've As non-squamous squamous non-small cell, cancer.

So whatever reason. these those behaving you know for differently of in these are settings

Teri Loxam

We'll you. please. to next question Thank the on move

Operator

Your from Chen Louise is next question Cantor. with

Louise Chen

my on taking My for Thanks questions. question first in is China. Hi. KEYTRUDA

provide And if price any least less disclose local on now? much that you are the will basis color. then how seeing a you expensive that can question curious will players We a Just you for at sales get with compete if there. lot,

non-small you. just upcoming in beyond will And and a for half second and the be Thank lung that RCC second some then ' question cell potential trial from competition on XX melanoma? cancer KEYTRUDA of readouts is

Teri Loxam

Frank?

Frank Clyburn

Yeah.

share actually to intend our don't KEYTRUDA we for So number sales in China.

oncology data-driven players, As penetrating the clearly price, market we a as are of entering there, a competing feel that they local far is lower with market the the though are our as players segments local some at into market.

they However, self-pay can compete growth are good we're China continuing there afford to KEYTRUDA. clearly, see market patients where we that is and the today, very in very penetration good are in

programs our have in strong presence We commercial patient have a we assistance China. very and

the really compete really, going players we'll feel local I with good able forward. be So that to

Teri Loxam

then in file. Great. the positioning peer KEYTRUDA given US the And

Frank Clyburn

Yeah.

comfortable in we be across as is, readouts What I many significant think tumors, different think say types. wall cancer now of now I have are a feel we getting lung lot of and are fact would of many many across XX we the is world types. very oncologists a we XX first about going indications those with, data strong build KEYTRUDA. real mentioned, mover a When of different advantage very in you that right community competitive it experience right using data cancer and to in in

neck, overall setting. overall we'll we us as data as the how with different first-line teams just Roger I strong now, see feel haven't unfolds right bladder, to our and have very cell carcinoma. cancer but indication renal, is competition, melanoma, now. across and important of which just data Head mentioned, even the for in survival I that about though strong adjuvant a launching right So spoken types, survival many are the the have launch

that going well as data we're in setting, on of but it's have adjuvant neoadjuvant we competitive, in feel you to know and significant our and as forward. also setting only we not heard come, Day, strategy we positioned Investor amount the very the be though going what metastatic as the at our based the So to well data

Teri Loxam

We'll take Thanks, the please. Frank. question next

Operator

with from Mara Mizuho. Goldstein It's

Mara Goldstein

Yeah. -- you Thank you, can

Teri Loxam

hear we your question. hear - your can't couldn't we Mara

that. mind, If you repeating wouldn't

Mara Goldstein

trial. Sure. just based Thank the you I'm trials expanding very And much. and I terms have patient is on two population wondering questions. expectation And the in first cell of is on what clinical Lynparza that the lung cancer. non-small KEYTRUDA plus

in thoughts your Zolgensma, the with is And Europe? regulatory wondering particular plans any incident strategy had drugs this drugs impact but understanding other oncology day heard this being and the one track. not if around before can that or yesterday second on in And Novartis' is dynamic Company potential accelerated just regulatory that the around in isolated and taken own removed the an off question I'm any we've seen then that also CHMP status accelerated Europe, for share

Roger Perlmutter

are BRCA different repair the of variety plus for that settings Mara, Right. logic are the defects. variety of whole there defects in X indication Lynparza not underlying DNA KEYTRUDA is the BRCA - included whole different behind and whole those are defects, molecular a and just a where X, variety there of

of of settings Lynparza release be representation immune being and increase of and of KEYTRUDA hypothesis Thus quite that epitopes cells different variety and with tested, broadly. beneficial. effect be The can by with that's far to could be that potentially whole recognizable constraints the combination should

encouraged We're it. that about enthusiastic extremely are we be So important. could this

things for treatment quite Lynparza would ovarian with as and maintain tolerated, the well it the the I is shown people is to example out in on it's stay years, extraordinarily has of one been As really remarkable. ability for a effect to respect setting point

promising. extremely that's So

strategy which reviews regard timeline very rapid CHMP within this to we is with this a well. understand program in are more a extremely order forward - there. well the defined EU we've really With EU to good strategy, along reviews And week. review. changed thing about The they that as EU hasn't those at now for just general moving point, EU prime we even announced, go regulatory In has a permit

for us. of all So that is going well very

Teri Loxam

get questions. we all of to were the to able Thanks, Roger. And callers'

it closing to turn comments. some I'll Ken So for over

Kenneth Frazier

Okay. again you thank I to for joining us today. want

together As a commercial, future. Merck sustained to quarter strong asset, innovative for patients ability differentiated, to see reinforce, deliver deliver in uniquely Day, we de-risked year, capabilities of with our to execute, results only And as the second portfolio can we're have shareholders still you and why this our not confident but our positions our we believe growth mentioned Investor ability we scientific and into that in well our results strong strong beyond.

So, thanks forward We the look you joining again. in to future.

Operator

concludes and QX This & call. Merck sales earnings conference the Company

may disconnect. You now

Merck & Co. (MRK) 30 Jul 192019 Q2 Earnings call transcript