Q4 2021 Merck & Co Inc Earnings Call

Good morning, My name is Grace Blackrock and I'll be your conference operator today at this time I would like to welcome everyone to the American Coke you for sales and earnings conference call. All lines have been placed on mute to prevent any background mice. After the speakers' remarks, there'll be a question and answer session if you'd like to ask a question.

Grace Lacroix: Good morning. My name is Grace Lacroix, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Merck & Co. Q4 Sales & Earnings conference call. All lines have been placed on mute to prevent any background noise.

Grace Lacroix: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star and then the number one on your telephone keypad. To withdraw a question, press the pound key.

Grace Lacroix: Thank you. I would now like to turn the call over to Peter Dannenbaum, Vice President of Investor Relations. Please go ahead, sir.

During this time simply press Star then the number one telephone keypad until we drive question press. The pound key. Thank you I would now like to turn the call over to Peter Danon Baum Vice President of Investor Relations. Please go ahead Sir.

Okay.

Thank you Grace and good morning, welcome to Merck's fourth quarter 2021 conference call speaking on today's call will be Rob Davis, President and Chief Executive Officer, Caroline Litchfield, Chief Financial Officer, and Dr. Geely President of Merck Research Labs before we get started I'd like to point out a few items you will see that we have items in our GAAP res.

Peter Dannenbaum: Thank you, Grace. And good morning. Welcome to Merck's fourth quarter 2021 conference call. Speaking on today's call will be Rob Davis, President and Chief Executive Officer, Caroline Litchfield, Chief Financial Officer, and Dr. Dean Lee, President of Merck Research Labs. Before we get started, I'd like to point out a few things. You will see that we have items in our GAAP results, such as acquisition-related charges, restructuring costs, and certain other items. You should note that we've excluded these from our non-GAAP results and provided a reconciliation in our press release.

All such as acquisition related charges restructuring costs and certain other items you should note that we've excluded these from our non-GAAP results and provide a reconciliation in our press release I would like to remind you that some of the statements that we make today may be considered forward looking statements within the meaning of the safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1990 thought, especially.

Peter Dannenbaum: I would like to remind you that some of the statements that we make today may be considered forward-looking statements within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995.

Peter Dannenbaum: Such statements are made based on the current beliefs of Merck's management and are subject to significant risks and uncertainties. If our underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statement. RSEC filings, including Item 1A in the 2020-10K, identified certain risk factors and cautionary statements that could cause the company's actual results to differ materially from those projected in any of our forward-looking statements made this morning. Merck undertakes no obligation to publicly update any forward-looking statements.

And this are made based on the current beliefs of Merck's management and are subject to significant risks and uncertainties, if our underlying assumptions prove inaccurate or uncertainties materialize actual results may differ materially from those set forth in the forward looking statements, our SEC filings, including item one a in the 2020 10-K identify certain risk factors and cautionary statements that could cause.

The company's actual results could differ materially from those projected in any of our forward looking statements made this morning, Merck undertakes no obligation to publicly update any forward looking statements.

Peter Dannenbaum: During today's call, a slide presentation will accompany our speakers' prepared remarks. The presentation, today's earnings release, as well as our SEC filings are all posted in the Investor Relations section of Merck's website. With that, I'd like to turn the call over to Rob.

Today's call a slide presentation will accompany our speaker's prepared remarks, the presentation today's earnings release as well as our SEC filings are all posted to the Investor Relations section of Merck's website with that I'd like to turn the call over to Rob.

Thanks, Peter Good morning, everyone and thank you for joining today's call.

Rob Davis: Thanks, Peter. Good morning, everyone. And thank you for joining today's call. 2021 has been a year of significant achievement and meaningful progress for Merck in the face of what has been a challenging environment for all of us. We delivered on our strategic priorities and took important steps to set a foundation for success in 2022 and beyond. We achieved strong operational performance, accelerated our broad pipeline, including one that appears here, completed the spin-off of Organon and acted on a key strategic business development activity. We enter 20.2 with strong momentum and are pleased to reflect this in our initial revenue in EPS Guide.

2021 it's been a year of significant achievement and meaningful progress for Merck in the face of what has been a challenging environment for all of us.

We delivered on our strategic priorities and took important steps to set a foundation for success in 2022 and beyond.

Strong operational performance accelerated our broad pipeline, including while the peer group completed the spinoff of organ on enacted on key strategic business development activities.

We enter 2022 with strong momentum and are pleased to reflect this in our initial revenue and EPS guidance.

Rob Davis: We continue to evolve as a more focused, more efficient, and faster growing company with an increased urgency to bring forward innovations to address critical unmet needs. This remains the core of our strategy to benefit the patients we serve and, in turn, create long-term value for all stakeholders, including our shareholders. Our business achieved strong revenue and earnings growth. Total revenues increased 24% in the quarter and 17% for the full year.

We continue to evolve as a more focused.

More efficient and faster growing company with an increased urgency to bring forward innovations to address critical unmet needs.

This remains the core of our strategy to benefit the patients we serve and in turn create long term value for all stakeholders, including our shareholders.

Our business achieved strong revenue and earnings growth.

Total revenues increased 24% in the quarter and 17% for the full year.

Rob Davis: Commercially, we have executed extremely well across all of our key performance drivers, including Katruda, Stardustville, and Animal Health. We delivered initial manipulator shipments to customers around the world and, following the FDA emergency use authorization that was granted in late December, made meaningful progress towards our commitment to the U.S. government. Our dedicated teams work diligently, including through the holiday season, to deliver 1.4 million courses of therapy to the United States, United Kingdom, and other countries by year-end.

Commercially we have executed extremely well across all of our key performance drivers, including Keytruda Gardasil and animal health.

We delivered initial multi pillar of our shipments to customers around the world and following the FDA emergency use authorization that was granted in late December .

Made meaningful progress towards our commitment to the U S government.

Our dedicated teams worked diligently including through the holiday season to deliver $1 4 million courses of therapy to the United States, United Kingdom, and other countries by year end.

Rob Davis: Throughout 2021, we invested in the discovery, development, production, and commercialization of medicines and vaccines, furthering the long-term sustainability of our business, all while delivering meaningful operating leverage and strong EPS growth. In total, 2021 was a year of strong execution of our strategic priorities across all fronts, operationally, commercially, clinically, and financially. As we look at 2022 and out to 2025 and beyond,

Throughout 2021, we invested in the discovery development production and commercialization of medicines and vaccines further in the long term sustainability of our business.

All while delivering meaningful operating leverage and strong EPS growth.

In total 2021 was a year of strong execution of our strategic priorities across all fronts operationally commercially clinically and financially.

As we look at 2020 to announce a 2025 and beyond.

Rob Davis: We expect to achieve continued strong growth. Our Pharmacology portfolio will benefit from the uptake of numerous recent approvals and the expected launch of many additional indications, including in earlier lines of therapy. Underlying global demand for Gardasil remains robust, and further growth will be realized through the investments we are making to increase manufacturing capacity. And our animal health business remains very well positioned to grow faster than the market well into the future. Overall, we expect another year of strong revenue growth in 2022.

We expect to achieve continued strong growth.

Our oncology portfolio will benefit from the uptake of numerous recent approvals and the expected launch of many additional indications including in earlier lines of therapy.

Underlying global demand for Gardasil remains robust and further growth will be realized through the investments we are making to increase manufacturing capacity.

And our animal health business remains very well positioned to grow faster than the market well into the future.

Overall, we expect another year of strong revenue growth in 2022.

Rob Davis: While we will continue to make investments in our pipeline, we are confident that we can achieve a leveraged P&L and significant long-term operating margin expansion. In the longer term, we are intensely focused on successfully navigating the headwind created by likely biosimilar competition for Kikuta at the end of the decade. We aspire to grow through and beyond this period, but at the very least, we will look to minimize the headwinds and shorten the time it takes to return to strong growth.

While we will continue to make investments in our pipeline. We are confident that we can achieve a leveraged P&L and significant long term operating margin expansion.

One of our term we are intensely focused on successfully navigating the headwind created by likely Biosimilar competition to keytruda at the end of the decade.

We aspire to grow beyond this period, but at the very least we will look to minimize the headwind and shorten the time it takes to return to strong growth.

Rob Davis: We have multiple levers to achieve this task, trying to sustain growth well into the next decade. First, we intend to strengthen our leadership in oncology broadly and leverage that position for sustained long-term success. We've done an excellent job of establishing Keytruda as a foundational therapy, and we intend to maximize this opportunity for patient impact. In addition, we have an expanding portfolio of commercial and developmental oncology assets beyond Katrina, which offer meaningful growth opportunities beyond 2028.

We have multiple levers to achieve this task driving sustained growth well into the next decade.

First we intend to strengthen our leadership in oncology broadly.

And leverage that positioned for sustained long term success.

We've done an excellent job of establishing keytruda as a foundational therapy, and we intend to maximize this opportunity and patient impact.

In addition, we have an expanding portfolio of commercial and developmental oncology assets beyond keytruda, which offer meaningful growth opportunities beyond 2028.

Second we have many important franchises beyond oncology.

Rob Davis: Second, we have many important franchises beyond oncology that we expect can drive durable growth into the next decade, including Gardasil, which we believe can potentially double by 2030, as well as our pneumococcal portfolio and our animal health business, to name a few. Third, we expect to generate very strong cash flow, which we intend to deploy into value-enhancing business development to augment our pipeline and bring additional drivers of longer-term growth. Fourth, we will advance our internal pipeline and the opportunities we see in vaccines, cardiometabolic, neuroscience, and other disease areas.

We expect to drive durable growth into the next decade, including Gardasil, which we believe can potentially double by 2030 as well as our pneumococcal portfolio and our animal health business to name a few.

Third we expect to generate very strong cash flow, which we intend to deploy into value enhancing business development to augment our pipeline and bring additional drivers of longer term growth.

Four.

We will advance our internal pipeline and the opportunities we see in vaccines.

Metabolic neuroscience and other disease areas.

Rob Davis: We are making extensive investments in discovery research as well, which we believe will be the source of longer-term innovation. As part of our commitment to provide more transparency into these efforts, we will host an investor event focused on our cardiovascular portfolio and pipeline in the spring. In addition to accelerating our internal pipeline, as I noted, a key part of our strategy will be to deploy our cash flow towards value-enhancing business development.

We are making extensive investments in discovery research as well, which we believe will be the source of longer term innovation.

As part of our commitment to provide more transparency into these efforts.

We will host an investor event focused on our cardiovascular portfolio and pipeline in the spring.

Yeah.

In addition to accelerating our internal pipeline as I noted.

A key part of our strategy will be to deploy our cash flow towards value enhancing business development.

Rob Davis: We will continue to be appropriately aggressive in pursuing compelling external innovation, and we will supplement our pipeline with an approach that is science-led but portfolio-informed. Last year's acquisitions of Pantheon and Acceleron are good examples of this approach.

We will continue to be appropriately aggressive in pursuing compelling external innovation.

And we will supplement our pipeline with an approach that is clients led the portfolio informed.

Last year's acquisitions of <unk> and <unk> are good examples of our approach.

We are taking calculated risks and we'll continue to focus on creating value in areas of unmet need we have the operational capabilities financial capacity scientific prowess and sufficient runway before the end of the decade for business development to play an important role in our goal of achieving long term sustainable.

Rob Davis: We are taking calculated risks and will continue to focus on creating value in areas of unmet need. We have the operational capabilities, financial capacity, scientific prowess, and sufficient runway before the end of the decade for business development to play an important role in our goal of achieving long-term sustainable growth. While we have a strong track record of business development, we know we need to do more. Finally, we've taken further steps to integrate important environmental, social, and governance goals into the core of our business. In December, we completed the inaugural issuance of a $1 billion sustainability bond.

Growth.

Well, we have a strong track record of business development, we know we need to do more.

Yeah.

Finally, we've taken further steps to integrate important environmental social and governance goals into the core of our business.

In December we completed the inaugural issuance of a $1 billion sustainability bond.

We intend to use the net proceeds to support projects and partnerships in the company's priority ESG areas and to contribute to the advancement of the United Nations' sustainability development goals.

Rob Davis: We intend to use the net proceeds to support projects and partnerships in the company's priority ESG areas and to contribute to the advancement of the United Nations Sustainability Development Goals. We have also acted to accelerate global access to Omnipyravir through our groundbreaking access strategy, including a recent agreement with UNICEF for up to three million courses of therapy to supplement supply available for distribution in low and middle-income countries. In addition, this morning, we announced plans to host our initial ESG investor event on February 23rd.

We've also acted to accelerate global access for most of the peer group through our groundbreaking access strategy, including our recent agreement with UNICEF for up to 3 million courses of therapy to supplement supply available for distribution in low and middle income countries.

In addition, this morning, we announced plans to host our initial ESG investor event on February 23.

Rob Davis: We believe that strong performance across key ESG metrics aligns well with Merck's core values and mission, and we look forward to providing insights into our commitment to this space. Now, before I turn the call over to Caroline, I want to take a moment to recognize Frank Weiber.

We believe that strong performance across key ESG metrics aligns well with <unk> core values and mission and we look forward to providing insights into our commitment to this space.

Now before I turn the call over to Carolyn I want to take a moment to recognize shrink library.

Rob Davis: Following 14 years of significant contributions, Frank will be leaving Merck to become CEO of IFF. I want to thank Frank for the strategic vision and operational excellence he's provided in helping establish Merck as a global leader in oncology and for his strong leadership of our human health system. We wish Frank and his family all the best as he embarks on his new endeavor. Frank will be missed.

Paul in 14 years of significant contributions Frank will be leaving Merck to become CEO of Viasat.

I want to thank Frank for the strategic vision and operational excellence these providers and helping establish Merck.

Global leader in oncology and for his strong leadership of our human health business.

We wish Frank and his family all the best as he embarks on his new endeavor.

Well Frank will be missed.

Rob Davis: We are well positioned to continue our strong momentum with the deep and talented team we have in place, and we expect to announce new leaders shortly. With that, I'll pass it over to Caroline to provide details on the performance of our business, as well as our financial results and outlook.

We are well positioned to continue our strong momentum with a deep and talented team we have in place and we expect to announce new leader shortly.

With that I'll pass it over to Caroline to provide details into the performance of our business as well as our financial results and outlook Caroline.

Thank you Rob good morning, 2021 with a year of exceptional performance for our business, we drive top line growth of 17% and bottom line questions.

Caroline Litchfield: Thank you, Rob. Good morning. 2021 was the year of exceptional performance for our company. We drove robust top-line growth of 17% and bottom-line growth of 33%. Our teams performed with agility and executed with excellence despite challenges from the ongoing pandemic. We are also very proud of the significant efforts Spring Money TeraFibs has made to help patients worldwide. These results reinforce the confidence we have in our science-led strategy and in our outlook for strong growth. We will continue to invest in our portfolio and pipeline, as well as in business development.

Perfect.

Our teams performed with agility and executing with excellence.

How do we get from the ongoing pandemic.

We are also very proud of the significant.

Terrific patients worldwide.

These results reinforce the confidence we have science led strategy and outlook.

Yes.

We will continue to invest in our portfolio and pipeline as well as in fitness.

It meant to maximize growth.

Caroline Litchfield: To maximize growth over the near and long term and create value for patients and shareholders. Now turning to our fourth quarter results, total company revenues were $13.5 billion, an increase of 24% or 23% excluding the impact of foreign exchange.

And long term and create value for patients and shareholders.

Yes.

Now turning to our fourth quarter results.

Total company revenues were $13 $5 million, an increase of 24% or 23%, excluding the impact of foreign exchange.

My parents, they have contributed 952 million in revenue or nine percentage points of growth.

Caroline Litchfield: MoneyPirafit contributed $952 million in revenue, or 9 percentage points of growth. The remainder of my comment will be on an exit-straight base. Our human health business continues its strong momentum, growing 23%, driven by our key pillars and the contributions from our new peer review. Our Animal Health Business also delivered robust performance, with sales increasing 8% driven by companion animal products. Now turning to the fourth-quarter performance of our key brass.

The remainder of my comments will be on an ex exchange basis.

Our human health business continues its momentum growing 23%.

And by our key pillars and the contribution from monetary event.

Our animal health business both sides right.

With Goldman with sales, increasing 8% driven by companion animal products.

Now turning to the fourth quarter performance of our key brands.

Caroline Litchfield: In oncology, Keytruda grew 16% to $4.6 billion, reflecting continued robust global demand. In the U.S., Keytruda continues to demonstrate durable momentum across all key tumors and is benefiting from recent launches in neoadjuvant and adjuvant triple negative breast cancer, renal cell carcinoma, and cervical cancer. Thank you for watching, and Mike Convertisio. Outside the U.S., Keytruda's growth continues to be driven by lung cancer and the ongoing launches in Head & Neck and RCC, while we continue to expand our reach into earlier lines.

In oncology Keytruda.

16% to four 6 billion.

That can continue to robust global demand.

In the U S. Keytruda continues to demonstrate durable momentum.

Keith.

And is benefiting from the recent launches.

Stepan and triple negative breast cancer renal cell carcinoma and <unk>.

So at the Coke FEMSA.

Keytruda continued pretending.

<unk> leadership and maintain its position in non small cell lung cancer, capturing eight out of 10 eligible mutation.

Competition.

Outside the U S. Keytruda plus continues to be driven by lung cancer and the ongoing launches in head and neck and RCC.

We continue to expand our reach into earlier lines. We were very pleased to receive two additional adjuvant to proof a fifth quarter in RCC and in melanoma.

Caroline Litchfield: We were very pleased to receive two additional adjuvant approvals this quarter in RCC and in melanoma. With these approvals, Keytruda has now received five indications in earlier stage cancers. If approved, we also look forward to expanding into adjuvant lung cancer, following the encouraging top-line results from the Keynote 91 trial. We are confident that, along with strong clinical data, Keytruda's reputation and familiarity among physicians will be a benefit as we move into early stage disease.

With faith approved both Keytruda has now received five indication in early stage cancers.

If approved we also look forward to expanding into adjuvant lung cancer. Following the encouraging top line results from the keynote <unk> trial we.

We are confident that along with strong clinical data keytruda reputation and familiarity amongst physicians will be a benefit as we move into early stage disease.

And then possibly remains the market, leading inhibits that gross especially 3% was driven by our breast cancer indication and continued uptake of the most recent indications including prostate.

Caroline Litchfield: Lymparza remains the market-leading PrOS inhibitor; growth of 33% was driven by our breast cancer indication and continued uptake of the most recent indications, including prostate. Our expected launch in a broader cross-state population, based on the Propel trial, represents a significant opportunity. Lembema cells grew 31%, driven by RCC and endometrial cancer in the U.S. We have seen very encouraging early trends in new patient shares following the launch of Keynote 581 in Firstline RTC.

Alright, Thank Pete launched in a broad prostate population based on the propel trial represents a significant opportunity.

Lindsay myself increased 31% driven by our safety and Dmitry will come through in the U S.

We have seen very encouraging early trends in new patient share following the launch of keynote 581 in first line RCC.

We are also excited by the recent launch of when Iraq for patients with touching the HL associates to list.

Caroline Litchfield: We are also excited by the recent launch of Wellireg for patients with certain VHL-associated tumors. Welly Red continues to generate strong interest among scientific leaders, providers, and patients and is off to a promising start. We expect to extend its reach to broader RCC indications in the future. Our vaccines portfolio again delivered strong growth, driven by Gardasil, which grew 50% to $1.5 billion and nearly 40% for the full year. Outside the U.S., robust growth was driven by strong underlying demand across all key geographies, particularly China, as well as increased supply.

<unk> continues to generate strong interest among scientifically to providers and patients and he's off to a promising start.

We expect to extend its reach to broader RCC indications in the future.

Our vaccines portfolio again delivered strong growth driven by Gardasil, which grew 50% to one $5 billion and nearly 40% for the full year.

Outside the U S. Revpar growth was driven by strong underlying demand across all key geographies, particularly China as well as increased supply.

This growth more than offset the decline in the U S. Due to timing of CDC put it as well as the replenishment of the CDC stockpile in the fourth quarter of 2020.

Caroline Litchfield: This is more than enough to decline in the US due to timing of CDC purchases as well as the fact that, Also impacting HPV immunization levels was the prioritization of COVID vaccinations in younger age cohorts. However, underlying global demand for Gardasil remains strong, as it is increasingly being recognized as a vaccine that can help prevent certain HPV-related cancers in both females and males. In our hospital acute care portfolio, Bridgion fell by 24% driven by increased usage of neuromuscular blockade reversal agents and its growing share within the class.

Both are impacting HPV immunization levels with the prioritization of counterfeit vaccinations in younger age cohorts.

Underlying global demand for Gardasil remains strong I think it is increasingly being recognized as a vaccine that can help prevent certain HPV related cancers in both female and male.

And our hospital acute care portfolio with young sales grew 24% driven by increased usage of neuromuscular blockade reversal agent and brilliance growing set within the car.

Our animal health business delivered another quarter of strong growth with sales, increasing 8% companion animal sales increased 26% driven by global team module parasiticide, including the perfecto line of product as well as vaccines.

Caroline Litchfield: Our animal health business delivered another quarter of strong growth, with sales increasing 8%, companion animal sales increasing 26%, driven by global demand for parasiticides, including the Brevecto line of products, as well as vaccines. Recall that we experienced changes in distribution of purchasing patterns which negatively impacted last year's results. Livestock sales were flat, as strong global demand for poultry and flying products was offset by a difficult year-over-year comparison due to the recording of an extra month of sales relating to antelics in the fourth quarter of 2020.

Recall that we experienced changes in distributor purchasing person, which negatively impacted last year's results.

Livestock sales were flat as strong local demand for poultry and swine products was offset by a difficult year over year comparison due to the recording of an extra month's itself relating to any panic in the fourth quarter of 2020.

I will now walk you through the remainder about D&O and my comments will be on a non-GAAP basis.

Caroline Litchfield: I will now walk you through the remainder of our P&L, and my comments will be on a non-GET basis. The growth margin was 74.8%, a decrease of 0.2 percentage points. As a reminder, we share profits from Money's Pyramid equally with our partners, which is reflected within the cost of sales and reduces our gross margin. However, this impact was largely offset by stable mix and lower discard. Operating expenses increased 3% to $5.3 billion as we continue to invest in our growth drivers and pipelines.

Gross margin was 74, 8% a decrease of two percentage points.

As a reminder, we should have profit from monarch terrific equally with Fox.

But she is reflected within the firm.

And reduces our gross margin.

This impact was largely offset by favorable mix and lower discard.

Operating expenses increased 3% five $3 billion as we continue to invest behind our growth drivers and pipeline.

Other expense was approximately $50 million.

Caroline Litchfield: Other expense was approximately $50 million. Ashley Atexrate with 11.2%, which is lower than our prior guidance. These were a more favorable mix of income and expense some previously estimated. The effective tech rate for the fourth quarter of 4.3% reflects the impact of the lower full-year rate as well as foreign tech credit.

Absolutely a tax rate with 11, 2%.

Is lower than our prior guidance due to a more favorable mix of income and expense than previously estimated.

The effective tax rate for the fourth quarter of four 3%.

The impact of the lower full year rate as well as foreign tax credit.

Taken together, we earned $1.80 per share.

Caroline Litchfield: Taken together, we earned $1.80 per share. It is worth noting that our underlying operating results were toward the upper end of our expectations, and the contributions from MonuPyrivis and the favorable tax rate resulted in EPS that exceeded our prior guidance. Turning now to our 2022 Non-Gap Guidance, we believe the strong underlying momentum in our business will continue, and we will also benefit from increased MoneyPiravir revenue. We expect revenue to be between $56.1 billion and $57.6 billion, representing growth of 15% to 18%, including a negative impact from foreign exchange of approximately 2% using mid-January rates.

It just wasn't nice things that our underlying operating results were towards the upper end of our expectation and the contributions from money per se and the favorable tax rate resulted in EPS that exceeded our prior guidance.

Turning now to our 2022 non-GAAP guidance.

We believe the strong underlying momentum in our business.

And this will continue and we will also benefit from increased monotherapy of revenues.

We expect revenues to be between 51, and 57 $6 billion, representing growth of 15% to 18%, including a negative impact from foreign exchange of approximately two cents using mid January rates.

Caroline Litchfield: Our gross margin is expected to be approximately 74%. We expect operating expenses to grow at a mid to high single-digit rate, driven in part by the addition of R&D expenses related to the Acceleron acquisition. In other income and expense, we expect an expense of approximately $350 million. We assume a full year tax rate between 13 and 14 percent.

Our gross margin is expected to be approximately 74%.

We expect operating expenses to grow at mid to high single digit rate driven in part by the addition of R&D expenses related to the et cetera on acquisition.

In other income and expense, we expect expense of approximately $350 million.

We assume a fully attach rates between 13 and 14%.

We assume 253 billion shares outstanding.

Caroline Litchfield: We assume 2.53 billion shares outstanding. Taken together, we expect EPS of $7.12 to $7.27, reflecting growth of 18% to 21%. This range includes a negative impact from foreign exchange of approximately 1% using mid-January rates.

Taken together, we expect EPS of $7 12, $7, 27%, reflecting growth of 18% 21%.

This range includes the negative impact from foreign exchange of approximately 1% using mid January rates.

As you consider your models there are a few areas to focus on.

Caroline Litchfield: As you consider your models, there are a few areas to focus on. First, on Money Pirate. We are excited by our regulatory authorizations to date and believe monucleophile will be an important treatment option to combat the ongoing pandemic. We have announced a number of supply and purchase agreements, providing approximately 10 million courses of therapy. Based on agreements now in place, we are confident in our ability to achieve $5 billion to $6 billion in revenues in 2022, weighted to the first half of the year.

First on Montney pair of it we are excited by our regulatory authorization to date and believe money per se. It will be an important treatment option to combat the ongoing pandemic.

We have announced a number of the clients purchase agreements, providing approximately 10 million courses of therapy.

Based on agreements now in place we are confident in our ability to achieve 5 billion to $6 billion in revenues in 2022 weighted to the first half of the year.

Next we expect continued strong growth of Keytruda, which should benefit from increased expansion in ex U S market and the continued ramp of recent launches closely.

Caroline Litchfield: Next, we expect continued strong growth of Keytruda, which would benefit from increased expansion in ex-U.S. markets and the continued ramp of recent launches globally. On Gardasil, we continue to expect robust demand, along with increased supply, to drive strong year-over-year growth, albeit not at the same pace as in 2021. In the U.S., increased uptake in the mid-adult cohort, as well as catch-up from missed doses due to the pandemic, will drive growth. Outside the US, we continue to expect strong demand across regions, particularly in China and from a relaunch in Japan.

Oh God to Phil we continue to expect robust demand along with increased supply to drive strong year over year growth, albeit not at the same pace as in 2021.

In the U S increased stopped taking the meet adult cohort as well as catch up from missed doses due to the pandemic will drive growth.

Outside the U S. We continue to expect strong demand across the region, particularly in China and from a relaunch in Japan.

Caroline Litchfield: Global HCV vaccination levels remain low, and we continue to believe Gardasil's opportunity for growth is significant. In pneumococcal, we are excited by the recent launch of vaccines in adults and the potential opportunity for approval in pediatrics, which represents a larger portion of the pneumococcal market. We expect some offset, however, from the impact on U.S. sales of Pneumovax 23 as the market continues to shift towards newer pneumococcal conjugate vaccines. We also expect to experience modest LOE pressure on Genovia in the second half of 2022, as we lose exclusivity in some of the larger ex-U.S. markets.

Global HPV vaccination levels remain low and we continue to believe God philosophe Attunity for growth is significant.

And you have a cocoa we are excited by the recent launch affects me Fox didn't at all and the potential opportunity for approval in pediatrics, which represents the largest portion of the pneumococcal market.

We expect some offset however from the impact of U S sales Pneumovax 23.

The market continues to shift towards newest pneumococcal conjugate vaccine.

We also expect to experience modest pressure on Januvia in the second half of 2022.

Please 50, and some of the larger U S market.

So animal health, given our broad and innovative portfolio, we are well positioned to again drive above market growth in 2022 and beyond.

Caroline Litchfield: For Animal Health, given our broad and innovative portfolio, we are well positioned to again drive above market growth in 2022 and beyond. Finally, as we look out to 2025, we remain confident in our ability to achieve strong revenue growth, driven largely by our de-risked portfolio and operating margins in excess of 43%. Our capital allocation priorities remain unchanged.

Finally, as we look out to 2025, we remain confident in our ability to achieve strong revenue growth driven largely by our diverse portfolio and operating margin in excess of 43%.

Our capital allocation priorities remain unchanged.

Caroline Litchfield: First, we will continue to prioritize investment in our business and pipeline to drive near and long-term growth. We will also continue to augment our internal pipeline through strategic business development. We were active in 2021, including the acquisitions of Acceleron and Pandion, and we intend to pursue additional value-enhancing opportunities. We remain committed to the dividend, with the goal of increasing it over time. To the extent that we have excess cash, we will return it to shareholders through share repurchase.

But we will continue to prioritize investments in our business and pipeline to drive near and long term growth.

We also continue to augment our internal pipeline two strategic business development.

We were active in 2021, including the acquisition Civic Center, and Pentagon, and we intend to pursue additional value enhancing opportunities.

We remain committed to the dividend with the goal of increasing it over time.

If we have excess cash we will return it to shareholders through share repurchases.

To conclude our call.

Caroline Litchfield: To conclude, our growth in the fourth quarter underscores our confidence in the underlying strength of our business and in the global demand for our innovative medicines and vaccines. We remain in a position of financial and operational strength, and our continued execution will enable us to deliver on that promise now and well into the future. With that, I'd now like to turn the call over to Dean. Thank you, Caroline. Good morning, everyone.

In the fourth quarter underscored our confidence in the underlying strength of our business and in the global demand for our innovative medicines and vaccines.

We remain in a position of financial and operational strength.

And our continued execution will enable us to deliver on that promise now and well into the future with that.

Now like to turn the call over to Dave.

Thank you Caroline good morning, everyone I will provide a brief summary of notable achievements in 2021, and then report on progress since the last earnings call.

Dean Lee: I will provide a brief summary of notable achievements in 2021 and then report on progress since the last earnings call. In 2021, we made meaningful advancements across our broader pipeline with approvals for new molecular entities, including Vex NuVants, Urquivo, and Wellerig, and an EUA for MonuPierre. In 2021, we made meaningful advancements across our broader pipeline with approvals for new molecular entities including Vex NuVants, Urquivo, and Wellerig. We also made strides in women's cancers with U.S. regulatory approvals for Keytruda and cervical, endometrial, and triple negative breast cancer. In total, we received more than 30 approvals and filed more than 20 NDAs and SBLAs in the United States, EU, Japan, and China.

In 2021, we made meaningful advancements across our broader pipeline with approvals for new molecular entities, including <unk> or cubo, and well rig and an EUA for ammonia peer over there.

We also made strides in women's cancers with U S regulatory approvals for Keytruda cervical endometrial and triple negative breast cancer.

In total we received more than 30 approvals and filed more than 20 M. D. As in S. BLA in the United States, EU, Japan and China in.

Dean Lee: In 2022, we look to build on this progress and momentum. I will now cover notable regulatory milestones and clinical updates for our pneumonia pure rear oncology pneumococcal HIV and cardiovascular program. As we enter the third year of the pandemic, the Omicron variant continues to wreak havoc on our communities and healthcare systems. In the United States alone, we are now seeing approximately 2,000 deaths a day.

2022, we look to build on this progress and momentum.

I will now cover notable regulatory milestones and clinical updates for our ammonia peer here oncology pneumococcal HIV and cardiovascular programs.

As we enter the third year of the pandemic.

Cranberry continues to wreak havoc on our communities and health care systems in the United States alone. We are now seeing approximately 2000 deaths a day.

Dean Lee: Vaccines and treatment options have the potential to help combat this pandemic. Since the first authorization for MonuPiravir by the UK in November, we have received authorizations in nine additional countries, including an emergency use authorization in the United States and a special approval for emergency use in Japan. In addition, other countries have provided authorizations to our voluntary license holders. Findings from the MOVE OUT clinical trial published in the New England Journal of Medicine at the end of last year showed monupiravir significantly reduced hospitalization or death in adult patients most in danger of progressing to severe disease. Physicians and Patients. Approximately 90% fewer deaths were seen in those taking monupiravir.

Vaccines and treatment options have the potential to help combat this pandemic.

This is the first authorization for ammonia peer group by the U K in November we have received authorizations in nine additional countries, including an emergency use authorization in the United States and a special approval for emergency in Japan. In addition, other countries have provided authorizations to our voluntary license holders.

Findings from the move out clinical trial published in the New England Journal of Medicine at the end of last year showed multi peer very significantly reduced hospitalization or death in adult patient most in danger of progressing to severe disease importantly.

For physicians and patients approximately 90% fewer deaths were seen in those taking ammonia you pair. There. These results reinforce that ammonia pair of Eric can provide an important oral treatment option for certain adult at high risk for severe illnesses.

Dean Lee: These results reinforce that monupiravir can provide an important oral treatment option for certain adults at high risk of severe illness. The Director of the United States, CDC, has indicated the need to prioritize therapeutic interventions for people with the highest risk of progression, such as those with certain comorbidities. We believe monupiravir's low propensity for drug-drug interactions makes it a meaningful and important option for appropriate patients with COVID-19 who are receiving treatments for underlying conditions such as heart disease, hypertension, and diabetes, and for those who have repaired liver or kidney function, consistent with local recommendations.

The director of the United States CDC has indicated the need to prioritize therapeutic interventions for people with the highest risk of progression such as those with certain comorbidities. We believe ammonia peer of yours, a low propensity for drug drug interactions, making it a meaningful and important option for appropriate patients with coke.

With 19 or receiving treatments for underlying conditions, such as heart disease, hypertension, and diabetes and for those with impaired liver or kidney function consistent with local recommendations.

Dean Lee: To date, this pandemic has consisted of successive waves of SARS-CoV-2 variants, most recently Omicron. Last week, we announced data from multiple independent studies indicating that Monu-Piravir is active against the Omicron variant in vitro. However, each surge comes with distinct public health and disease characteristics and corresponding treatment and prevention challenges. The potential threat of rapidly emerging variants reinforces the need for treatment options with high barrier-to-resistance that target evolutionarily conserved aspects of viral biology. Recognizing the importance of an oral antiviral, we committed to manufacturing ammonia purivere and have it ready for supply to patients within the U.S. upon emergency use authorization.

To date. This pandemic has consisted of successive waves of Sars Colby to vary most recently all my crap last week, we announced data from multiple independent studies, indicating that ammonia peer there is active against the home crowd bearings in vitro.

Each surge comes with a distinct public health and disease characteristics and corresponding treatment and prevention challenges the potential threat of rapidly emerging variant reinforces the need for treatment options with high barrier to resistance that target average dilution narrowly conserved aspects of the viral biology.

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Recognizing the importance of an oral anti bot, we committed to manufacturing among your peer over and have it ready for supply to patients within the U S. Upon emergency use authorization.

Dean Lee: Caroline noted, we were able to fulfill that promise and ensure delivery of this important treatment. We are working with governments and partners around the globe to stay ahead of the curve and to further Merck's contribution to fighting this pandemic. Next, we continue to fortify our position in oncology. Several recent milestones highlight our strategy of targeting earlier stage cancers where there is potential for improved outcomes by reducing the risk of recurrence. We received FDA and European Commission approval for Keytruda in the adjuvant setting for renal cell carcinoma, and FDA approval for certain stages of melanoma. RCC approval was based on Keynote 564. Keytruda is the first and only immunotherapy treatment option for certain patients at intermediate high or high risk of recurrence in the adjuvant setting and for Melanoma.

Caroline noted, we were able to fulfill that promise and ensure delivery of this important treatment.

We are working with governments and partners around the globe.

Stay ahead of the curve and to further merck's contribution in fighting this pandemic.

Next we continue to fortify our position in oncology. Several recent milestones highlight our strategy of targeting earlier stage cancers, where there is potential for improved outcomes by reducing risk of recurrence, we received FDA and European Commission approval for Keytruda in the adjuvant setting for renal cell carcinoma.

Dean Lee: The approval was based on Keynote 716 and provides for the adjuvant treatment of patients 12 years and older with Stage 2B and 2C disease following complete resection. Both approvals provide patients with important new options shown to help reduce the risk of recurrence. Similarly, we recently announced positive findings from the Keynote-091 or PEARL study evaluating Keytruda as adjuvant treatment for patients with stage 1b to 3a non-small cell lung cancer following surgical resection.

And FDA approval for certain stages of melanoma and <unk>.

The approval was based on keynote five six for Keytruda in the first and only immunotherapy treatment option for certain patients at intermediate high or high risk of recurrence in the adjuvant setting and in melanoma. The approval was based on keynote 716 and provides for the adjuvant treatment of patients 12 years.

And owners with stage <unk> disease following complete resection.

Both approvals provide patients with important new options shown to help reduce the risk of recurrence.

Similarly, we recently announced a positive finding from the keynote 191 or Pearl study evaluating keytruda as adjuvant treatment for patients with stage one to three a non small cell lung cancer following surgical resection.

And an interim analysis the trial met one of its dual primary end point, demonstrating a statistically significant improvement in disease free survival in all comers when treated with keytruda compared to placebo. The trial will continue to analyze DFS in patients, whose tumors express high levels of PDL one.

Dean Lee: In interim analysis, the trial met one of its dual primary endpoints, demonstrating a statistically significant improvement in disease-free survival in all comers when treated with Keytruda compared to placebo. The trial will continue to analyze DFS in patients whose tumors express high levels of PD-L1, the other dual primary endpoint which did not meet statistical significance at the time of the planned interim analysis, as well as overall survival, a key secondary We are continuing to make progress in women's cancer based on data from the Phase 3 Olympia trial. The FDA granted priority review for lympharza for the adjuvant treatment of patients with BRCA-mutated ERR2-negative high-risk early breast cancer previously treated with chemotherapy either before or after surgery.

The other dual primary end point, which did not meet statistical significance at the time of the planned interim analysis as well as overall survival a key secondary endpoint.

We are continuing to make progress in women's cancer based on data from the phase III Olympiad trial. The FDA granted priority review for <unk> for the adjuvant treatment of patients with B R. C. A mutated or two negative high risk early breast cancer previously treated with chemotherapy either before.

Or after surgery, we anticipate FDA action during the first quarter of 2022.

Dean Lee: We anticipate FDA action during the first quarter of 2022. Moving to the broader portfolio. The FDA issued a complete response letter for the new drug applications for jefapixen and requested additional information related to the measurement of efficacy. There were no safety concerns for Jeffa Pixon, and we will continue with the FDA to discuss next steps as we look to address the significant unmet need in patients with chronic cough. In Japan, we are pleased to announce the Ministry of Health, Labor, and Welfare-approved LIVNUA, the trademark for Jaffa Pixen for adults with refractory or unexplained chronic cough. Meanwhile, momentum continues in our new Mokako disease program. Following U.S. approval in July 2021, the European Commission approved the vaccine events for individuals 18 years of age and older in December.

Moving to the broader portfolio.

The FDA issued a complete response letter for the new drug applications for Jeff at Pixar and have requested additional information related to the measurement of efficacy.

There were no safety concerns for Jeff of Pictures, and we will continue with the FDA to discuss next steps as we look to address the significant unmet need in patients with chronic cough.

In Japan, we are pleased to announce the ministry of Health Labor and welfare approved lifting you are the trademark for Geoff it picks it for adults with refractory or unexplained chronic cough.

Momentum continues in our pneumococcal disease program following the U S approval in July 2021, the European Commission approved <unk>, new bench and individuals' 18 years of age and older in December .

Dean Lee: Also in December, we announced the FDA-granted Priority Review of our Supplemental Application for Vaxnuvant in the Pediatric Setting. Importantly, VaxNuVans incorporates serotypes 22F and 33F and provides robust responses on other key disease-causing serotypes, like serotype 3, therefore offering the potential to prevent additional invasive diseases in children. We anticipate regulatory action in the spring of this year. Merck has a proud legacy of HIV research, and we remain committed to those impacted by this virus.

Also in December we announced the FDA granted priority review of our supplemental application for <unk> in the pediatric setting.

Shortly vacs, new rents incorporates serotypes 22 F 33 up and provides a robust response on other key disease, causing serotypes like serotype, three therefore offering the potential to prevent additional invasive disease in children, we anticipate regulatory action in the spring of this year.

Mark has a proud legacy of HIV research and we remain committed to those impacted by this virus. Following the announcement of the FDA clinical hold for ongoing trials evaluating as lots of here, we are working to understand the data and the principles of the findings we believe in the potential of the nucleoside reverse transcriptase translocation inhibitor.

Dean Lee: Following the announcement of the FDA clinical holds for ongoing trials evaluating Eslachever, we are working to understand the data and the principles of the findings. We believe in the potential of the nucleoside reverse transcriptase and translocation inhibitor mechanism for both the prevention and treatment of HIV, and we intend to share updates in the future.

Bitter mechanism for both the prevention and treatment of HIV, and we intend to share updates in the future.

Dean Lee: Looking across our broader pipeline, as Rob noted, in the fourth quarter, we completed the acquisition of Acceleron. Lead candidate Satatasep is an excellent complement to our pipeline and has the potential to provide a novel approach to treating pulmonary arterial hypertension. The integration is proceeding according to plan, and the Phase 3 program is on track.

Looking across our broader pipeline as Rob noted in the fourth quarter. We completed the acquisition of accelerated its lead candidate <unk> is an excellent complement to our pipeline and has the potential to provide a novel approach to treating pulmonary arterial hypertension. The integration is proceeding according to plan.

And the Phase III program is on track we.

Dean Lee: We plan to provide further details on our cardiovascular pipeline at an investor event in the spring. Closing, 2021 was a tremendous year where we demonstrated our ability to advance both our internal and external pipeline. We are well positioned to continue our momentum into 2022 with a dual focus, becoming the leading oncology company by 2025 and sustaining that position beyond 2028 while also extending our impact across other therapeutic areas. I look forward to providing further updates in the coming year. Now I turn the call back to Peter.

We plan to provide further details on our cardiovascular pipeline at an investor event in the spring.

In closing 2021 was a tremendous year, where we demonstrate our ability to advance both our internal and external pipelines.

We are well positioned to continue our momentum into 2022 with a dual focus becoming a leading oncology company by 2025 and sustaining that position beyond 2028, while also expanding our impact across other therapeutic areas I look forward to providing further updates in the coming year.

Now I turn the call back computer.

Thank you Pete.

Peter Dannenbaum: Thank you, Dean. Grace, will you please start the Q&A? And we'd like to ask analysts to limit themselves to one question this morning in order to get to as many questioners as possible. Thank you. Thank you. As a reminder, to ask a question, you will need to press the star key, then the number 1 on your telephone keypad. To withdraw a question, press the pound key.

Bruce would you please start the Q&A and we'd like to ask analysts to limit themselves to one question. This morning in order to get to as many questioners as possible.

Thank you.

Thank you.

As a reminder to ask a question you will need to press Star then the number one on your telephone keypad until we drive question press the pound key.

Peter Dannenbaum: Your first question comes from the line of Geoff Meacham from Bank of America. Your line is open. Morning, everyone. Thanks for the question. It's one for Dean or for Rob.

Your first question comes from the line of Geoff Meacham from Bank of America. Your line is open.

Good morning, everyone. Thanks for the question.

I guess, one for dean or for Rob how strategically important as multi peer there is the goal to maximize the revenue. This year, assuming that resistance doesn't emerge or are you guys, making investments in a potential combination to turn this business into maybe a longer or.

Rob Davis: How strategically important is Molnupirvir? Is the goal to maximize revenue this year, assuming that resistance doesn't emerge? Or are you guys making investments in a potential combination to turn this business into maybe a longer-term contributor? Thank you.

Longer contributor thank you.

Rob Davis: So, you know, as we look at Molnupiravir, obviously, you heard from Caroline the guidance we're giving for this year, but I think you've hit upon an important point, which we do see the potential for Molnupiravir beyond the current situation with COVID-19 and the pandemic, given the fact that it does have such good activity more broadly in mRNA viruses, and, as we believe, can be pan- But maybe I'll turn it over to Dean to expand upon what we're thinking about from a developmental perspective for the longer term. Yeah, so if I may, let's just frame, you know, how many deaths we have a day in the United States. I mean, it's quite staggering where we are at this point.

Yes, Jeff Thanks for the question. So as we look at moment cleared where obviously you heard from Caroline the guidance, we're giving for this year, but I think you've hit upon an important point, which we do see the potential for more of a peer of your beyond the current situation with COVID-19 independent given the fact that it does have such good activity more broadly.

And mrna viruses and as we believe it could be pan Corona virus effective and as we showed recently with six preclinical studies working well against the omicron variance and we believe we will continue to work against future brands that maybe I'll turn it over to dean to expand upon what were thinking about from a developmental perspective.

Longer term yeah. So if I if I may let's just frame how many that we have a day in the United States I mean, it's quite staggering where we are at this point I would just emphasize ammonia pair of air is an oral drug.

Dean Lee: And I would just emphasize Molnupiravir is an oral drug, as we all know. It's effective in reducing hospitalization and death, and I really think when we think about the death rate in the United States and worldwide, having access to medicines that can reduce mortality by greater than 80, 85, or 90 percent is going to be really important. And Molnupiravir is one of the drugs that can do that, and I think that needs to be sort of emphasized throughout.

No it's effective in reducing hospitalization and death and I really think when we think about the death rate in the United States and throughout.

Having access to medicines that can reduce mortality greater than 80, 590%.

It is going to be really important and no new peer group is one of such drugs that can do that and I think that needs to be sort of emphasize throughout.

Dean Lee: Now, in relation to Molnupiravir directly, you know, those people who we have to be concerned about drug-drug interactions or renal insufficiency or liver insufficiency are often those people at the highest risk. And the fact that Molnupiravir has a profile that is really useful in those patients is important. But I do want to emphasize that, by first principles, the whole mechanism and the molecule are designed to be as variant proof as can be theoretically possible.

In relationship to ammonia peer for directly those people, who we have to be concerned about drug drug interactions or renal insufficiency or liver insufficiency are often those people at the highest risk.

Fact that ammonia Paraguay has a profile that that is really useful in those patients.

As important I do want to emphasize that by first principles the whole mechanism and the molecule is the.

<unk> designed to be as a variant proof as as can be theoretically possible.

Dean Lee: And what we've seen with Omicron and potentially what we will see with other variants is that the theoretical becomes real. With Omicron, for example, all of a sudden, there's a series of antibody treatments that are no longer effective. And then the other point that I would make is, you know, when we sent our EUA in October, we all held hands and said that we would be able to produce. Unknown Speaker I think it's important to recognize that when we sent our EUA in October, we were in that position, and we demonstrated when we got an EUA in late December how fast we could distribute.

What we've seen with the OMA crown and potentially what we will see with other variances that theoretical becomes real with all Micron. For example, all of US that there was a series of.

<unk> antibody treatments that are no longer effective.

And then the other point that I would make is when we sent our EUA in October we held hands that we would be able to produce.

Supply distribute.

This drug immediately and I think that's been shown that.

When we send our EUA in October we went that position and we demonstrated when we got an EUA in late December how fast we could we could distribute.

Dean Lee: I just want to emphasize that when one looks at the death rate when we sent in our EUA and what the death rate is now, it's three-fold higher. So I just want to emphasize that. When you think about the future, I suppose there are different bookends one can think through, and the different bookends would be, okay, maybe we could get a really lethal sub-variant. Then that issue of us having a resistance profile that we're very confident about could be really important. The other possibility of a bookend is that this becomes sort of more endemic. So if everyone's getting it, it's not necessarily that lethal for healthy people.

Just want to emphasize that I think.

When one looks at the death rate when we sent in our EUA and what the death rate now is threefold higher so I just want to emphasize that when you think about the future.

Posed to us different book ends with one can think through and the different bookends would be okay. Maybe we could get a really lethal sub variant then that issue of us having a resistance profile that we're very confident about it could be really important.

Other possibility, but book and is that this becomes sort of more endemic so it's everyone's getting it it's not necessarily that lethal for healthy people, but in that situation like in flu. It is it is the most vulnerable patients are the ones who need to get treated.

Dean Lee: But in that situation, like in the flu, the most vulnerable patients are the ones who need to get treated. And that most vulnerable population is often those people you have to worry about drug-drug interactions, renal and liver insufficiency. So in that context, with just COVID-19, that's how we think about pneumonia, a pure virus. In relationship to your question about eventually, does the field have to really think about combinations?

That most vulnerable population theyre often those people you have to worry about.

Drug interactions renal and liver insufficiency. So in that context, just COVID-19, that's how we think about no new peer reviewed in relationship to your question about eventually the field have to really think about combinations I do think and I do think it's important that we have an arsenal of multiple mec.

Dean Lee: I do think, and I think it's important that we have an arsenal of multiple mechanisms of action, because in every viral disease that I know, the virus is pretty good at evading different mechanisms of action, and I think we may have to think about this combination issue that you've talked about, and we have invested both internal resources and other mechanisms of action, and we're in conversations with other people with different mechanisms of action. So the fundamental thing is, I think we need to have a view that we need to be prepared, that we're going to need multiple options, and Monu Parivar... For more information, please contact the U.S. Embassy in the United States. And if I may add, this is Caroline. We have guided to $5 billion to $6 billion of revenue this year. That's on the basis of approximately 10 million courses.

Minutes of them actions, because every viral disease that I know of.

Iris is pretty good at abating different mechanisms of actions and I think we may have to think about this combination issue that you've talked about and we have invested both in turn.

Internal resources on other mechanisms of action and we're in conversations with other people with different mechanism of action. So.

Fundamental thing is I think we need to have a view that we need to be prepared that we're going to need multiple options and ammonia per barrel is an important part of the arsenal.

This.

Space and globally will need that.

And if I may add this is Caroline.

We have guided two 5 billion to $6 billion of revenue. This year. That's on the basis of approximately 10 million courses to Dean's point, our company remains focused on ensuring there is enough supply dependent on how things move forward. So we are still convey.

Caroline Litchfield: To Dean's point, our company remains focused on ensuring there is enough supply, dependent on how things move forward. So we are still committed to the 10 million courses we did manufacture in 2021 and more than double that in 2022. So we will have in excess of 30 million courses to support the way the pandemic and the use of monopiravir progress. Thank you, Jeff.

<unk> to the 10 million courses, we do manufacture in 2021 and more than double that in 2022. So we will have in excess of 30 million courses to support how the pandemic and healthy use of money per se.

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Thank you Jeff next question please.

Peter Dannenbaum: Next question, please. Great. Thank you. Your next question comes from the line of Chris Shibutani from Goldman Sachs. Your line is open. Thank you very much. Good morning.

Thank you. Our next question comes from the line of Chris <unk> from Goldman Sachs. Your line is open.

Dean Lee: On Keytruda, an important part of that leadership strategy is the adjuvant opportunity as well as combinations. With the adjuvant, can you just comment a little bit more in terms of what you think you're seeing so far and how that's progressing? And with the combinations, it looks like the data is scheduled to read out more in the 24-25 timeframe. Dean, perhaps, is there an opportunity that we might potentially be able to get a look earlier than then on any of the combination efforts? Thank you. Right, so I just want to emphasize that there are two types of combinations that we have.

Thank you very much good morning on Keytruda important parts of that leadership strategy is the adjuvant opportunity is both combinations with the adjuvant can you just comment a little bit more in terms of what you think youre seeing so far and how thats progressing and with the combinations. It looks like the data is scheduled to read out more in the 'twenty four 'twenty five timeframe.

Dean perhaps is there an opportunity we might potentially be able to get a look earlier than than on any of the combination efforts. Thank you.

Right. So I just want to emphasize there are two.

Two types of combinations that we have we have an io io combinations and I think that's what you're referring to in relationship to Keytruda, whether it's with outages with lag three detail like four in that and Youre right those readouts.

Dean Lee: We have an I-O-I-O combination, and I think that's what you're referring to in relationship to Ktruda, whether it's with our KJIT, LAG-3, CTLA-4, and so on. And you're right, those readouts, you know, are event-driven and the fetch, and that'll be, you know. We'll see where it is, but I think your timing is a reasonable sort of timing in terms of phase three readouts. In relation to other combinations, I want to draw your attention to the combinations of Keytruda with chemotherapy and other ADCs that we've worked with other companies on, but I would also focus your attention on the readouts of Keytruda with Lenvima that continue to Spula and Keytruda with Lenparza.

Our event, driven and such and that'll be.

We'll see where it is but I think your timing is is a reasonable sort of timing in terms of phase III readouts in relationship to other combinations I want to draw your attention to the combinations of Keytruda with chemotherapy with with other adcs that we've worked.

With other companies with but I would also focus your attention also on the Readouts of Keytruda with bema that continue to spool up and Keytruda with limited parse that and the reason why I think that's important as we think about how to raise the immuno oncology profile of Keytruda with other Io agent.

Dean Lee: And the reason why I think that's important is we think about how to raise the immuno-oncology profile of Keytruda with other IO agents, but also, as we see Lenparza and Lenvima, they give us readouts of how to think about DNA repair and recombination and second and third generations of different sorts of compounds in that place. And also, in relationship to Lenvima, where you're looking at blocking vascular endothelial growth factor, RTKs, it gives us a thought as to how to think of drugs such as Wellerig, which also plays in that sort of same sort of place.

But also as we see them in cars and Lynn Bema there are.

They give us readouts of how to think about DNA repair.

Combination in second and third generations of different compounds, they're not in place and also in relationship to Lynn Bema, where youre looking at blocking vascular endothelial growth factor our TK. It gives us a thought as to how to think of drugs, such as well rig which also plays in that sort of thing.

Sort of place and so we're very interested in seeing how well rate plays out and sporadic renal cell carcinoma, and then we will ask ourselves.

Rob Davis: And so we're very interested in seeing how Wellerig plays out in sporadic renal cell carcinoma, and then we will ask ourselves, hmm, outside of renal cell carcinoma, where else should Wellerig be used where an anti-angiogenesis agent has been shown to be effective? Yeah, and maybe, Chris, just to ask, answer the first part of your question, you know, how are we seeing the adjuvant space? Obviously, we are very excited about moving into earlier lines of therapy.

Outside of renal cell carcinoma, where else should it play where an anti angiogenesis agents has been shown to be effective.

Rob Davis: We think this is a real area of growth. Obviously, the strength we're seeing in Keytruda is about how we're able to expand into new indications and continue to broaden. If you look, we had just in 2021 alone 21 approvals of new or expanded indications for Keytruda. You know, three of those were in the adjuvant space. With adjuvant triple negative breast cancer, adjuvant renal cell carcinoma, and moving into stage 2 cancer and adjuvant melanoma.

And then maybe Chris just to answer the first part of your question. How are we seeing the adjuvant space. Obviously, we are very excited about moving into earlier lines of therapy. We think this is a real area of growth. Obviously the strength. We're seeing in Keytruda is about how we're able to expand into new indications and continue to do.

If you look we've had just in 2000.

21 alone 21 approvals of new or expanded indications for Keytruda three.

Three of those were in the adjuvant space with adjuvant triple negative breast cancer adjuvant renal cell carcinoma, and moving into stage two kingdoms. We're in adjuvant melanoma. So important growth there and if you look at that combined with the remaining other indications we already have in the other ones in adjuvant Mel.

Rob Davis: So, important growth there, and if you look at that combined with the remaining other indications we already have and the other ones in adjuvant MEL, and what we hope to have soon with Keynote 091 in adjuvant non-small cell lung cancer, we're looking at movement into the earlier spaces, driving approximately 50% of the growth for the drug for Keytruda through 2025. And we think by 2025, it'll be about 30% of So, this is an area where we're starting to put runs on the board, and I think we're going to show that the breadth of what Keytruda could do, both in maintenance as well as in the metastatic space, is going to be very important as we build the leadership to go on. And to be clear, Rob's referencing the U.S. markets.

And what we hope to have soon with you.

Nine one.

<unk> non small cell lung cancer, we're looking at movement into the earlier spaces driving approximately 50% of the growth for the drug for Keytruda through 2025, and we think by 2025, there will be about 30% of our total revenue coming from the adjuvant indications. We have so this is an area where we're starting to put runs.

On the board.

And I think we're going to show that the breadth of what Keytruda can do both and maintenance as well as in the metastatic space is going to be very important as we build the leadership for the long term.

And to be clear Roz referenced in the U S markets next question. Please grace.

Thank you. Your next question comes from the line of Steve Scala from Cowen Your line is open.

Peter Dannenbaum: Next question, please, Grace. Thank you. Your next question comes from the line of Steve Scala from Cowen. Your line is open. Thank you. I'd like to ask about a more obscure pipeline agent.

Thank you I'd like to ask about a more obscure pipeline agent Santa Fe believes that there is no discernible evidence of benefit of the Merck RSV monoclonal antibody versus the <unk> monoclonal antibody and that incentive fee is so far ahead that Santa Fe unquestionably will dominate.

Dean Lee: Sanofi believes that there is no discernible evidence of benefit of the Merck RSV monoclonal antibody versus the Sanofi monoclonal antibody and that Sanofi is so far ahead that it unquestionably will dominate. So I'm wondering what Merck thinks. And if you disagree with Sanofi, then why is your antibody better than theirs? Thank you. Yeah, you know, I want to be a little bit careful that I'm answering questions about another company's drug. I think that, you know, having a monoclonal antibody that can treat RSV in a really important Asian population is critical. There will be data coming out, and we will see what that data looks like, but we think that there is an opportunity to have a really effective drug that is really easier to provide to that patient population.

Great.

So I'm wondering what Merck sinks and if you disagree with Tennessee, then why is your antibody better than theirs. Thank you.

Yeah, I wanted to be a little bit careful that I'm answering questions about.

Another company's drug I think that.

Having a monoclonal antibodies that can kind of pre RSV.

Really important.

<unk> population.

Is is critical.

<unk>.

You now have data that will be coming out and we'll have to see what that data looks like but we do think that there is opportunity to have a really effective drug that.

That really is easier to provide.

To that that patient population.

Dean Lee: I am a little bit hesitant to comment directly, but we are very confident in the profile of our antibody drug. Studies, and we will just have to see what the clinical data looks like. Thank you, Steve.

A little bit hesitant to comment directly but we are very confident in the profile of our.

Our RSV antibody.

Studies.

And we will just have to see what the clinical data looks like as the clinical data that comes through.

Great. Thank you Steve next question please.

Peter Dannenbaum: Next question, please, Grace. Thank you. Next, we have Umer Raffat from Evercore Eyes.

Thank you and next we have Omar Saad from Evercore ISI. Your line is open.

Hi, guys. This is John Miller on for them alright. Thanks, so much for taking the question.

Dean Lee: Hi, your line is open. Hi guys, this is John Miller on for Umer. Thanks so much for taking the time to answer the question. On, is leptoravir, is there, obviously, the long duration and the long PK here is a major selling point, but is there any chance to avoid CD4 monitoring or maybe to get around some of the potential toxicity that you've been looking at or evaluating if you stick to a submilligram daily dose rather than trying to push for the weekly or monthly doses? Is that a potential path forward for lept

Ooh is.

Is left from here is there obviously the long duration in the long PK here is a major selling point is but is there any chance to avoid CD for monitoring or maybe to get around some of the potential tax issues that you've been looking at or evaluating if you stick to sub milligram.

<unk> daily dose rather than trying to push for the weekly or monthly doses is that a potential path forward for us last year in the HIV franchise.

Yeah. So let me take that so we are.

Dean Lee: Yeah, so let me take that. So, you know, we are evaluating a considerable body of data. You mentioned trends in lymphocytes that have been observed in different trials that we've had. I will point out that our phase three with hiselotrophic delivery demonstrated the efficacy and just the highly efficacious nature of hiselotrophic in that combination, which is two days.

Sally waiting a considerable body of data.

You mentioned trends of lymphocytes that that had been observed in different Ah trials.

Trials have reached that I would point.

ALS, our phase III with his latchford ravelry demonstrated.

The efficacy.

The highly efficacious nature of it the launch of her in that combination, which is Q day.

We will have a near term evaluations of future options.

Dean Lee: We will have a near-term evaluation of future options, but we are still very committed to this longer-acting sort of point of view as well. So to get to your question, we have data in relationship to two-day hiselotrophic delivery, and it's highly efficacious. So we are going to look at the body of data in relation to whether there are ways to continue to make that long sort of resident time be able to have less frequent either prep or treatment. And we're evaluating that data as we speak. Great. Thank you, John.

But we are still very committed to this this longer acting sort of point of view as well so to get to your question. We have data in relationship to two day is lots of very corroborate and it's highly efficacious. We are going to look at the body of data in relationship to are there ways to.

Continue to make that long sort of resident.

Time.

B be able to have a less frequent either kraft before treatment.

And we're evaluating that data as we speak.

Great. Thank you John next question please.

Peter Dannenbaum: Next question, please, Grace. Thank you. This next question comes from the line of Mara Goldstein from Mizuho. Your line is open.

Your next question comes from the line of Mara Goldstein from Mizuho. Your line is open.

Great. Thank you so much for taking the question.

Rob Davis: Great, thanks so much for taking the question. I'm wondering, in the last couple of weeks, there have been a number of comments made by some of your competitors around valuations and M&A. And since you did discuss acquisitions as part of strategy, I'm wondering if you could maybe opine as well as to where you sent valuations are relative to the overall strategy of continuing to supplement the company's pipeline. Thanks for the question, Mara.

Wondering in the last couple of weeks have been a number of comments made by some of your competitors around valuations and M&A and since you did discuss the acquisitions as part of strategy I'm wondering if you could maybe opine as well as to where you think valuations are relative to the overall strata.

G of continuing.

To supplement the company's pipeline.

Rob Davis: As you pointed out, we are seeing in the biotech space, valuations have pulled back quite a bit of weight. I think it's too early to see whether or not this is a permanent rebasing in the market or if it is just a temporary change in the marketplace. We need to see how that plays out. And the other thing that's going to be important is what happens with investment flows into the space.

Thanks for the question Mara so.

You pointed out we are seeing in the biotech space valuations have pulled back quite a bit of weight I think it's too early to see whether or not this is a permanent rebase them in the market.

If it is just a temporary change in the marketplace, we need to see how that plays out and the other things could be important is what happens with the investment flows into the space you are seeing ipos starts to slow.

Rob Davis: You are seeing IPOs start to slow, and it would be interesting to see if cash investments start to also slow down as people look to invest in the space with a lower valuation in the market, as you point out.

And would it be interesting to see your cash investment starts has also slowed down as people look to invest into the space with.

A lower valuation in the market as you pointed out whether or not that drives to sellers being willing to see the restatement of value that will allow us to do deals of different levels, we'll have to see but it doesn't change the importance. We see of doing business development for the company. You know obviously, we're very focused first and foremost on driving them.

Rob Davis: Whether or not that drives sellers being willing to see the restatement of value that will allow us to do deals at different levels, we'll have to see. But it doesn't change the importance we see of doing business development for the company. Obviously, we're very focused, first and foremost, on driving and accelerating our own pipeline, but we know we have to augment it. And we are going to continue to focus on this area, and I'm confident that we're going to find opportunities where the scientific opportunity matches our capabilities and where we see good value will allow us to do value-enhancing deals regardless of the market situation. Thank you, Mara. Next question, please. I think your next question comes from the line of Tim Anderson from Wall Street for user Trilanizo. Thanks for taking our question. This is Adam speaking on behalf of Tim Anderson.

Still writing our own pipeline, but we know we'd have to augment it and we're going to continue to focus in this area and I'm confident that we're going to find opportunities where the scientific opportunity matched to our capabilities.

Where we see good value will allow us to do value enhancing deals regardless of the market situations.

Humira next question please.

Thank you. Our next question comes from the line of Tim Anderson from Wolfe Research. Your line is open.

Thanks for taking our question. This is Adam on behalf of Tim Anderson.

On your oral Pcf's canine program, you say that youre going into phase two in 2022.

Dean Lee: On your oral PCSK9 program, you say that you're going into Phase 2 in 2022. Assuming that this takes two years to wrap up, what would a Phase 3 trial look like in terms of length and comparator? Guessing that this might not take until the late 2020s to report out.

Assuming that this takes two years to wrap up what would a phase III trial look like in terms of length and comparator.

Guessing that this might not.

Until the late 2020 to report out thanks.

Yes. Thank you for that question. So the question is about our oral P. C S canine.

Dean Lee: Thanks. Yeah, thank you for that question. So the question is about our oral PCFK-9 drug. We presented the phase one sort of readouts and relationship to that. The phase two readouts will be very important. As everyone recognizes, cardiovascular risk is just a tremendous risk everywhere. It's actually, you could view it as an epidemic. You know what I mean?

Doug.

We presented the phase one sort of readouts in relationship to that the phase II Readouts will be very important as everyone recognizes cardiome.

Cardiovascular risk is just a tremendous risk throughout.

Actually you could view it as an epidemic that continues.

Dean Lee: For more information, please visit www.ncbi.nlm.nih.gov, www.youtube.com, www.youtube.com, or www.youtube.com. Carter, Jason N. But we're very eager to see how well this agent works in our phase two trials in driving the levels of LDL down. And that will give us the confidence to really advance this for patients. But again, driving the LDL down will be an important registrational change. Point, that has been... That has been a path for other drugs as well, but we will also have to do outcome studies in addition. Thank you, Adam.

The there there will be two sort of important considerations to take one is as we advanced the oral PCF canine.

The biomarker of reducing LDL is a powerful.

<unk> biomarker or that has been established as an important biomarker that has provided.

Our path for registration based on that.

Even prior to having sort of readouts in terms of cardiovascular outcomes in terms of that.

And.

And.

Ah patient endpoint. So we believe that we're going to have to do both.

But we're very.

We're very eager to see how well this agent work in our phase II trials and driving the levels of LDL down and that will give us the confidence to really advances for patients, but again driving the LDL down will be an important register.

<unk>.

That has been.

That has been a path for other drugs as well, but we will also have to do outcomes study in addition to that.

Thank you next question please grace.

Peter Dannenbaum: Next question, please, Grace. Thank you. Next up, we have Matt Harrison from AERIS.

Thank you and next up we have Matt Harrison from Arris Youre line is open.

Hi, This is Charlie young for on for Matthew Thanks for taking the question can.

Rob Davis: Your line is open. Hi, this is Charlie Young for Matthew. Thanks for taking the question. Can you provide, you know, in terms of your launch expectation of vaccine events this year and, you know, perhaps even, you know, next year, especially after the pediatric indication approval? Thank you.

Can you provide.

In terms of your launch expectation of new wins this year.

And Neil.

Perhaps even next year, especially after the pediatric indication approval. Thank you.

Rob Davis: Yeah, so obviously, we're very excited about Vax New Vans and the opportunity that this presents, starting with, as you point out, the adult indication, which we've received, and as you probably know, we did see the MMWR come out and validate the ACIP recommendations. So we're at a point now where reimbursement is established in the marketplace, and we are beginning to ship product. You know, as we look at this, we see a real opportunity because if you look at the profile of Vax New Vans, in combination with Pneuma Vax 23, you're looking at an agent that has the broadest coverage.

So obviously, we're very excited about what the current events.

<unk> presents starting with as you pointed out the adult.

Indication, which we've received and as you probably know we did see the.

W are come out and validate the <unk> recommendation. So we're at a point now where reimbursement is established in the marketplace and we are beginning to ship product as we look at this we see a real opportunity because if you look at what is the profile of vacuum advance in combination with Pneumovax 23, Youre looking at.

Rob Davis: Between the two, we have 15 serotypes in Vax New Vans, you're adding nine additional serotypes, four of which are unique to Pneuma Vax 23, and as we look at the coverage, obviously, in things like serotype 3, we showed with Vax New Vans that we are very competitive, if not superior, to competition in the marketplace, and we know that serotype 3 is an important contributor and driver of disease, as is serotypes 22F and 33F, which are in ours as well.

The agent that has the broadest coverage between the two we have 15 serotypes and vaccines brands Youre, adding nine additional serotypes for which are unique to Pneumovax 23, and as we look at the coverage obviously in things like serotype. Three we showed with vaccine events that we are very competitive if not superior.

Earlier.

Competition in the marketplace and we know that serotype three is an important contributor and driver of disease as is serotypes.

<unk> 22, and 33 of which are in ours as well so as we looked at it you've got broad coverage, you've got important coverage and high disease, causing serotypes.

Rob Davis: So as we look at it, you've got very broad coverage, you've got important coverage in high disease-causing serotypes, and we have important data showing how the drug works in at-risk and immunocompromised patients, which will be in the label. And we're well-positioned. We're going to have to, you know, obviously, fight it out at the commercial level, but we think we're well-positioned to do that, and we are already starting to look forward to what we see in the pediatric space.

We have important data showing how the drug works.

Risks and comp immuno compromised patients, which will begin to label. It was in the label. So we're well positioned we're going to have to.

Obviously winding down at the commercial level, but we think we're well positioned to do that and we already are starting to look forward to what we see in the pediatric space.

Rob Davis: Right now, hopefully, we're going to see, with the PDUFA in April, the opportunity to get that drug into the marketplace, but obviously, we're going to build on the momentum from the launch in adults to then carry that forward into the pediatric setting. So, so far, all went well, good contracting was underway, and we're off to a good start. Thank you, Charlie.

Right now hopefully we're going to see with the producer in April .

We're going to see hopefully the opportunity to get the drug into the marketplace.

We're going to build on the momentum from the launch in adults.

Then carry that forward into the into the pediatric setting so so far.

Started well good contracting underway and we're off to a good start.

Thank you Charlie next question. Please grace. Thank you we have Andrew Baum from Citi. Your line is open.

Peter Dannenbaum: Next question, please, Grace. Thank you. We have Andrew Baum from Citi.

Thank you a question on the Saturday of unit positioned to disprove Micropump Gerald toxicity is the cause for the lymphocyte compression would you file for approval for the once a day combination. If you have no clear line of sight on a longer dosing periods formulations.

Dean Lee: Your line is open. Thank you. A question on this latter bit. A unit position to disprove my subconjural toxicity of the cause for the lymphocyte impression, or would you file for approval for the one-to-day combination if you have no clear line of sight on the long-of-dosing periods formulation? You broke up just a little bit.

You broke up just a little bit in relationship to.

Dean Lee: In relationship to... the mechanism by which the lymphocyte trend that we disclosed is going down, we're looking at the mechanism of action. I would say just two brief points. One is that there is a question of whether or not there are ways to get around it by looking at the dose that was provided. And then the second sort of question is the mechanism. The mechanism we're still evaluating. I believe your question was in relation to mitochondrial toxicity.

The mechanism by which the lymphocyte trend that we disclosed is going down we're looking at the mechanism.

Action I would say just two brief points. One is there is a question of.

Whether or not there are ways to get around it but looking at the dose that was provided and then there's a second sort of question is the mechanism. The mechanism. We're still evaluating I believe your question was in relationships mitochondrial toxicity that does not list is the first place that we.

Dean Lee: That does not seem to be the first place that we would go in relationship to the data that we have right now, but I don't want to rule out anything right now as we're evaluating all the data as we go. Thanks, Andrew. Next question, please, Grace. Next, we have Louise Chen from Cancer. Elaine is open. Hi, thanks for taking my question. So one to ask you if the headlines about the logistical obstacles for oral antivirals are accurate. And if they are, how are you working through them?

Would go in relationship to the data that we have right now, but I don't want to rule out anything right. Now is we're evaluating all the data as we speak.

Thanks, Andrew next question please Greg.

Next we have Louise Chen from Cantor Your line is open.

Hi, Thanks for taking my question. So I wanted to ask you if the headlines about the logistical obstacles for oral antivirals, how accurate are they and if they are how are you working through them. Thank you.

Rob Davis: [inaudible] Yeah, I appreciate the question, Louise. So if you look at the situation, and I think you're probably focused mainly on the United States, you know, we are in a situation where we did deliver doses of courses of therapy to the United States before the end of the year. A little over 900,000 courses of therapy were delivered to them. And since then, we've continued to add to that, and by the end of this week, we should have the full 3.1 million courses delivered to the distribution hub that they have. Obviously, at that point, it's us working with the government, but it's up to the government on where and how they distribute it from the hubs out into the pharmacies and the local markets.

Yeah.

The question is so if you look at the situation and I think youre, probably focused mainly in the United States.

We are in a situation, where we did deliver to the United States.

Doses of courses of therapy before the end of the year a little over 900000 courses of therapy were delivered to them.

And we've continued to add to that and by the end of this week, we should be to the full $3 1 million courses delivered to the distribution hubs.

Obviously at that point, it's working with the government, but it's up to the government on where and how they are distributed from the hubs.

And to the into the pharmacies in the local markets I think the real thing we're focusing on in discussions with the government is how do we increase the messaging to help people understand how they can find out where they can go to get the antivirals and there is located or sites that the government has on the web and we're trying to make sure as much.

Rob Davis: I think the real thing we're focusing on in discussions with the government is how do we increase the messaging to help people understand how they can find out where they can go to get the antivirals. And there are locator sites that the government has on the web, and we're trying to make sure as much as we can to help people know to go look there because the drug is in the marketplace. You just have to be able to find out where to go find it.

As we can to help people know to go look there because the drug is in the marketplace. You just have to be able to find out where to go find it.

Rob Davis: And we will continue to partner with the government any way they need to ensure we can get access as quickly and as broadly as possible. Obviously, we're very focused beyond the U.S. as well, and I feel very good about what we're doing. You probably saw that we announced that we had to deal with UNICEF for 3 million courses.

And we will continue to partner with the government are anywhere they need to ensure we can get access as quickly and as global as possible. Obviously, we're very focused beyond the U S as well and I feel very good about we're doing you probably saw we announced that we had to deal with UNICEF for 3 million courses that really us trying to help make sure we could ask.

Rob Davis: That really is us trying to help make sure we can accelerate access to low- and middle-income countries as we wait for the generic manufacturers who we have done licenses with to ramp up production. So, hopefully, that will help fill in the gap in those markets as we wait for the generics to be able to ultimately come online. Thank you Louise, next question, please Grace. Next, we have Daina Graybosch from SVB Lyric.

Access to the low and middle income countries as we wait for the generic manufacturers, who we had licenses with as they ramp up production. So hopefully that will help fill in the gap in those markets as we waited for the.

The generics to be able to ultimately come online.

Thank you Luis next question. Please grace.

And next we have Dana Gray Bosch from SBB Leerink. Your line is open.

Dean Lee: Your line is open. Hi, thanks for the question. I'm going to go back to Katruda and Oncology and the IO combinations. So we're going to see multiple randomized readouts of KIDJIT from Roche this year. And I think, as somebody mentioned earlier, you guys have multiple trials of KIDJIT and LAG3 coming in the future. I wonder if you could talk about how your development strategy could be differentiating for these IO-IO combinations. In particular, can you highlight anywhere where your base position of Katruda may give you an advantage? Let me ask you a scientific question about that.

Hi, Thanks for the question I'm going to go back to Keytruda in oncology in the I O combinations. So we're going to see this year multiple randomized readouts of kitchen from Roche.

And I think as somebody mentioned earlier, you guys have multiple trials of ticket and lag three coming in the future I Wonder if you could talk to how your development strategy.

Differentiating for these Io Io combinations in particular can you highlight anywhere where youre base position of Keytruda may give you an advantage.

Let me take the scientific question in relationship to that.

Dean Lee: So thanks for that question. I would emphasize just the general principle that we have, which is that we believe that there are ways to improve the, you know, immuno-oncology sort of axis of PD-1 by adding another checkpoint inhibitor. We believe that that is going to be potentially a different checkpoint inhibitor or a different addition to PD-1. We're not so sure that there's one additional checkpoint inhibitor that you could add to PD-1 that would have as broad of an impact as PD-1 has itself.

So thanks for that question.

I would emphasize just the general principle that we have which is we believe that there are ways to improve the immuno oncology sort of access of PD, one by adding another checkpoint inhibitor.

We believe that that is going to be potentially a different checkpoint inhibitor or a different addition to PD one given a different tumor types. So we're not so sure that there is one additional checkpoint inhibitor that you could add to PD, one that would have as broad of it.

Impact S. P. One has itself so our strategy has been good.

Dean Lee: So our strategy has been to invest in CTLA-4, to invest in TIGIT, to invest in LAG-3, and to invest in ILT-4. I think the strategy of some of our other colleagues is to place a larger bet on each of those combinations more broadly. So I think that's something that I think is really important... The second point that I would also emphasize is you want to show the contribution of each component, and you want to show that what you're adding on to the PD-1 is really better than the PD-1.

To invest in <unk> to invest in ticket and invest and lag three to invest in Iot for I think the strategy of some of our.

Other colleagues is placed a larger bet on each of those combinations more broadly.

So I think that's something that I think is really important the second point that I would also emphasizes you want to show contribution of component and you want to show that what's your added on to the PD. One is really better than the PD, one and the reason I want to emphasize that is that one should also look at what the base.

Dean Lee: And the reason I want to emphasize that is that one should also look at what the base of our PD-1 response is compared to others in relationships. So it is my belief that targeting the PD-1 axis is, in general, more effective than, for example, PD-L1. So that gives us a distinguishing position as well. And then the third issue is, you know, especially in lung cancer where physicians are very comfortable with where we stand in relation to PD-1, with our PD-L1, monotherapy sort of differentiation as well as PD-1 plus chemo.

Of our PD, one responses compared to other.

Others in relationship. So it is my belief that targeting the PD one axis is in general more effective than for example, a PD L. One so that gives us a distinguishing position as well and then the third issue is.

Especially in lung where.

Physicians are very comfortable in relationship of where we stand in relationship with PD, one with our PD, one monotherapy sort of differentiation as well as PD, one plus chemo.

In relationship.

Dean Lee: And also, we're driving our PD-1 into earlier stages of cancer, for example, in lung and others. I think that gives us sort of a leg up as well. So three things. One is how we think strategically about IO-IO combinations. And then the second sort of thing is in relationship to a PD-1 versus a non-PD, a non-PD-1 sort of position, so PD-1 versus PD-L1.

Also we are driving our PD one into earlier stages of cancer for example, in lung and others I think that gives us sort of a leg up as well. So three things. One is how we think strategically about Io Io combinations and then the second sort of thing is in relationship to the PD one versus non.

On PD.

Non PD one.

Position, so PD, one versus PDL, one and also our ability to sort of paint the holes.

Dean Lee: And also, our ability to sort of paint the whole from adjuvant all the way to later stage is something that I think gives physicians enormous comfort in our base drug. Thank you, Dean. Thank you, Daina. And thank you all for your good questions today. We realize there is a peer call starting right now, so we want to be mindful of that. If you have any follow-ups, please reach out to the IR team at any time, but we appreciate the good questions today and your interest.

From adjuvant all the way to later stage.

Something that I think gave us positioned enormous.

Comfort in our base drug.

Great. Thank you Dana Thank you Dana and thank you all for your good questions. Today, we realize there is a pure call starting right now so we want to be mindful of that do you have any follow ups. Please reach out to the IR team at any time, but we appreciate the good questions today and your interest. Thank you. Thank you.

Thank you everyone, ladies and gentlemen. This concludes today's conference call. Thank you all for joining human all disconnect.

Peter Dannenbaum: Thank you. Thank you, everyone. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining us. You may not all disconnect.

Grace Lacroix: Thank you all for joining us. Thank you for joining us... [music]

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