Q1 2024 Earnings Summary
- Merck's strong confidence in sustained growth beyond KEYTRUDA's patent expiry, with CEO Robert Davis expressing that the company is well-positioned with a more diversified set of growth drivers due to their expansive and diverse pipeline, reducing reliance on a single product.
- Successful early launch of WINREVAIR, Merck’s first-in-class treatment for pulmonary arterial hypertension, showing increasing prescriptions, positive payer coverage, and broad prescriber interest, indicating potential strong revenue growth from this new product.
- Advancement in Merck's cardiometabolic pipeline, including promising programs in NASH and potential opportunities in obesity treatment, targeting large addressable markets and signaling significant future growth drivers.
- Upcoming Loss of Exclusivity for KEYTRUDA Starting in 2028 May Significantly Impact Merck's Revenues, Presenting a Challenge for Sustaining Growth Despite Management's Confidence.
- Potential Challenges in the Launch and Uptake of WINREVAIR Due to Access and Reimbursement Issues, With Merck Not Providing Specific Details on Patient Assistance Programs or Proportion of Patients Receiving Free Product, Which Could Limit Sales Growth.
- Key Pipeline Products in Areas Like Neuroscience and Immunology Are in Early Development Stages, With Significant Results Not Expected for 1-2 Years, Raising Concerns About Merck's Ability to Offset Future Revenue Losses From Patent Expirations.
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Business Development and KEYTRUDA LOE
Q: How is Merck addressing KEYTRUDA's 2028 patent expiry?
A: CEO Robert Davis expressed confidence in Merck's diversified growth drivers beyond KEYTRUDA's U.S. loss of exclusivity in 2028. He noted that the expiration is staggered globally—2031 in China and 2032 in Europe and Japan. Davis sees it more as a "hill than a cliff" and emphasized their strong pipeline and business development efforts to sustain growth. -
WINREVAIR Launch and Guidance
Q: Can you provide color on WINREVAIR's contribution to guidance?
A: While Merck does not provide product-level guidance, CEO Robert Davis stated they are "very excited" about WINREVAIR's launch for PAH, and it's going well. Prescriptions are increasing, including repeat prescriptions, and coverage policies have been established with several payers. They anticipate European action in the second half of 2024. -
KEYTRUDA Subcutaneous Version
Q: What is the outlook for KEYTRUDA's subcutaneous formulation?
A: Merck expects to share data on the subcutaneous form of KEYTRUDA by early 2025. Dean Li emphasized its potential to increase access, especially in early-stage cancers, and to be more convenient for patients. By 2028, the addressable market could be about 50% of the KEYTRUDA patient population. -
Personalized Cancer Vaccine with Moderna
Q: Can you update on filing plans for the Moderna cancer vaccine?
A: Dean Li highlighted their excitement about the personalized cancer vaccine with Moderna. They have a randomized, early-stage trial showing clear clinical benefit and are moving into Phase III in adjuvant melanoma and non-small cell lung cancer. The FDA's decision on early filing would be their own. -
RSV Antibody Market Opportunity
Q: How is Merck approaching the RSV antibody market?
A: Merck is excited about clesrovimab, a monoclonal antibody offering passive immunity to infants with a single fixed dose covering the RSV season. They aim to move aggressively to market, seeing it as an important contributor given competitors' supply constraints. -
GARDASIL Growth and Single Dose Impact
Q: What is the GARDASIL growth outlook and impact of single-dose regimen?
A: Merck expects continued growth for GARDASIL in 2024, confident in their ability to drive growth as manufacturing scales up. Regarding a potential single-dose regimen, they are conducting comprehensive studies, and any impact would depend on study outcomes and pricing based on benefits provided. -
KRAS G12C Program in Lung Cancer
Q: How does Merck's KRAS G12C asset differentiate in a crowded space?
A: Dean Li emphasized their potent compound with a 71% ORR in combination therapy for non-small cell lung cancer. Their focus is on moving it into first-line treatment and advancing to Phase III, aiming for a potent compound without dose modifications when combined with KEYTRUDA. -
Pneumococcal Vaccine V116 and V117
Q: What are the prospects for V116 and V117 vaccines?
A: CEO Robert Davis noted V116 covers 83% of serotypes causing adult disease, 30% higher than PCV20, making it compelling. They are optimistic about broad ACIP recommendations possibly extending to adults aged 50 or older. V117 follows a similar strategy for pediatric patients. -
Immunology and CNS Pipeline
Q: Can you update on the immunology and CNS pipeline?
A: Dean Li reported that their TL1A program is in Phase III for ulcerative colitis and soon for Crohn's disease. In CNS, they anticipate readouts for MK-8189 and have other advancing programs, with significant investments in neuroscience. -
Next-Gen HPV Vaccine
Q: How should we view the next-gen HPV vaccine's potential?
A: Dean Li indicated they are focusing on developing a G9+ vaccine that works well. If successful, it could serve patient populations well and potentially change cancer screening recommendations. Caroline Litchfield added that they aim to vaccinate as many people as possible, pricing based on the benefit provided. -
ASCO Updates
Q: Any specific readouts at ASCO you're excited about?
A: Dean Li mentioned a stream of data across several KEYNOTE studies in gastric, hepatocellular, biliary, bladder, and non-small cell lung cancer. They will discuss various programs, including bomedemstat, the KRAS program, ADCs, and more. -
Opportunity in Obesity and Cardiometabolic
Q: What is Merck's view on obesity opportunities?
A: Dean Li discussed their cardiometabolic build-out, including the sotatercept launch and developments in GLP for NASH. He noted that different outcomes may require different molecules and sees potential in obesity for accessible, tolerable orals and combinations. -
WINREVAIR Access and Assistance
Q: Can you expand on WINREVAIR's free assistance program?
A: Robert Davis stated they are focused on ensuring patient access to WINREVAIR. They have an access program independent of commercial operations, but specifics were not disclosed.