Q3 2025 Merck & Co Inc Earnings Call
Speaker #3: Welcome to the Merck Company , Inc. . Rahway , new Jersey , USA . Third quarter sales and Earnings conference call . At this participants are in a listen only mode until the question and answer session of today's conference at that time .
Speaker #3: To I would now like to turn the call over to Mr. Peter Dannenbaum , Senior Vice President , Investor Relations . Sir , you may begin .
Speaker #3: ask a question , press Star one on your phone and record your name at the prompt . This call is being recorded . If you have any objections , you may disconnect at this time .
Turning to our third quarter results, we're pleased to deliver solid performance with continued strength, across oncology and Animal Health.
contributions from our new product launches, when Rivera cat-backs is and most recently in ponja,
In research, several notable updates, highlight our strong progress.
And cardiovascular, we announced positive topline results from the Coral Reef Lipids trial, the third and largest Phase 3 study evaluating Illicit, our investigational oral PCSK9 inhibitor, in the treatment of hyperlipidemia.
We look forward to sharing these results at the American Heart Association meeting next week and submitting these data to regulatory authorities.
in pulmonary arterial hypertension full results from the Hyperion study in recently diagnosed patients, reinforce our confidence in the practice changing potential of when River
Additionally, we secured FDA approval for our supplemental bla for Win. River, based on the strong results of the Zenith trial.
Oncology. We're pleased that the FDA approved. Subcutaneous pollen.
Or Katrina QX and that the chmp granted, a positive opinion.
QX will provide patients and providers. And important new options that can be injected in as little as 1 minute.
We're working relentlessly to continue to develop and deliver new treatment options for patients with cancer.
We presented data across a broad range of oncology medicines and candidates.
Including important findings from breakthrough therapy, designated adc's.
Finally, we continue to expand our efforts in immunology.
Including for another of our important late stage candidates to lease our keyboard where we initiated phase 2B trials. In 3 immunoglobulin,
These add to the phase 2, study already underway in SSC, ild, and the ongoing phase 3s in all sort of colitis and Crohn's disease.
We're pleased to welcome our new colleagues from Verona Pharma and look forward to adding our commercial capabilities and scale to accelerate the launch of Oda there. A novel first in class, maintenance treatment for chronic obstructive pulmonary disease.
Strategic Business Development remains a top priority.
We're assessing potential targets, with urgency given our desire to make additional compelling Investments. When both science and value aligned.
In summary, we remain highly focused on building on the strong clinical and Commercial progress. We made in the quarter.
The Investments we're making to advance and expand. Our pipeline are increasingly translating into positive Clinic results and successful new product launches.
This is giving us improved line of sight towards the transformation of our portfolio to one with a far more diversified set of growth drivers.
With each Milestone, we achieve including compelling, strategic Business Development.
My conviction that we're well positioned to drive the next chapter of success for our company increases.
I want to recognize the commitment and effort of our teams across the world together. I'm confident, we'll achieve long-term growth, and create sustainable value for both patients and shareholders with that. I'll turn the call over to Caroline.
Thank you rob. Good morning.
As work noted we delivered solid performance in the quarter with growth driven by continued strength in oncology and Animal Health as well as increasing contributions from our many new product launches.
These results, reinforce the conviction we have in our science-led strategy, and in our outlook for continued growth.
We remain confident in our ability to deliver strong results in the near term and are committed to making disciplined investments in compelling science to drive long-term value for patients, customers and shareholders.
now, turning to our third quarter results,
Total company revenues were 7.3 billion. An increase of 4% or 3%, excluding the impact of foreign exchange
The following Revenue comments will be on an ex exchange basis.
Wrong demand from metastatic indications and robust uptake in earlier stage cancers.
Usage in tumors, that primarily affects women including cervical breast and endometrial. Cancers was a key contributor to growth.
In addition we saw increased use of Cuda in combination with pads. Set in first line locally Advanced or metastatic urothelial cancer.
In the U.S., growth benefited by approximately $100 million from an extra Tuesday of shipments, partially offset by other channel movements.
We are also excited by the recent FDA approval and launch of ketra qlux which occurred at the end of the quarter.
Our broader oncology portfolio achieved another quarter of strong growth, driven by Weller egg with sales, increasing 41% to 196 million, predominantly driven by increased use in certain patients with previously treated Advanced renal cell carcinoma in the US.
As well as continued uptake from ongoing launches in certain International markets.
In vaccines data, silk sales will 1.7 billion dollars a decrease of 25%.
Excluding China, sales declined 3%, primarily due to lower sales in Japan, reflecting the expiration of reimbursement for the catch-up cohort. Partially offset by sales growth of 13% in the US, which was attributable to price and CDC, purchasing patterns,
In new cells were 244 million driven by demand from both retail, pharmacies and non- Retail customers, as well as the expected seasonal inventory, bill.
We look forward to helping protect more adults from invasive, new maccc disease and to driving continued growth of this important product.
Vex new Vance, sales decreased 7%. Due to a competitor, preferential recommendation in Japan, which more than offset growth in certain International markets.
In the US sales, were roughly flat as competitive. Pressures were largely offset by. Favorable, CDC stockpile activity,
In RSV in fonia sales of 79 million, reflect initial stocking ahead of expected demand.
We look forward to helping protect infants born during or entering their first RSD season.
In cardiovascular win, Rivera continued its strong momentum with global sales of 360 million.
In the US, approximately 1500. New patients. Received the prescription and over 24,000. Total prescriptions were dispensed in the quarter. A testament to the continued. Strong demand for this important treatment option.
There was also an approximate 40 million negative impact from the timing of distributed purchases which fully reversed in October.
Compelling additional data from ongoing studies which Dean will speak to in a moment. Further support, our outlook for steady new patient starts
Over time, we expect an increasing proportion of use in patients, whose background therapy is not include a prostate cycle.
Outside the US, we continue to make progress with securing approvals and reimbursement, including the recent launch in Japan which is off to a good start.
Overall, we look forward to positively impacting the lives of more patients with pah.
Our Animal Health business again delivered strong growth, with sales increasing by 7%.
Livestock sales grew 14% driven by higher demand, across all species, as well as its benefit from timing of sales.
companion animal sales declined, 3%, due to a reduction in vet visits and competition in parasitic sites, partially offset by Price improved Supply and new product launches
I will now walk you through the remainder of our p&l, and my comments will be on a non-gaap basis.
Gross margin was 81.9% and increase of 1.4 percentage points driven by favorable product mix.
Operating expenses decreased specifically at 0.6 billion dollars.
In business development charges in the quarter.
Compared with 2.2 billion dollars in charges a year ago.
Excluding these charges, operating expenses were flat, reflecting an increase in investments in support of our robust early and late stage pipeline, as well as key growth drivers.
Offset by the timing of expenses.
Other expense was 106 million.
Our tax rate of 13.4% benefited from certain discrete items.
Taken together, earnings per share were $2.58.
Now, turning to our 2025 non-gaap guidance, which now includes the acquisition of Verona farmer, as well as the restructured agreement for Costello,
we expect full year Revenue to be between 64.5 and 65 billion.
This range represents growth of 1 to 2%. Excluding a negative impact from foreign exchange of approximately 0.5% using mid October rates.
Our gross margin assumption remains approximately 82%, including an updated estimate of less than $100 million in costs related to the impact of tariffs.
Operating expenses are now assumed to be between 25.9 and 26.4 billion.
This guidance does not assume additional significant potential business development transactions.
Other expense is now expected to be between 400 and 500 million.
We now assume a fully a tax rate between 14 and 15%.
We assume approximately 2.51 billion shares outstanding.
Taken together, our EPS guidance is 8.93 to $8.98.
Relative to 2024. This range includes a negative impact from foreign exchange of approximately 15 cents using mid October rates.
Recall, our prior guidance midpoint was 8.92.
Our current guidance midpoint of 8.96 reflects a benefit from the restructured agreement for Celia go of 9 cents, partially offset by an estimated negative impact related to the acquisition of Verona of 4 cents.
As you consider your models, there are a few items to keep in mind.
Bookie truda as previously communicated year-over-year growth in the US in the fourth quarter, is expected to be negatively impacted by approximately 200 million due to the timing of Health sailor purchases.
For influenza, we are pleased with the initial purchases in the US.
Keep in mind that most of this was stocking ahead of expected usage in this RSV season.
Lastly, as Rob noted, we have 1 of the most robust pipelines in our recent history.
Importantly, all of our major programs are advancing and we are excited about the additional opportunities in front of us.
As we have said, before, we intend to fully invest Behind These opportunities. And as we look to 2026,
We expect an acceleration in underlying operating expense growth, driven by investment in both R&D and SG&A, to fuel our pipeline and new launches, including more than half a billion dollars of investment to maximize the potential of OTV.
This will enable us to continue to bring forward Innovative medicines and vaccines.
To make a difference in the lives of patients and drive growth for our company.
Now, turning to Capital allocation, where our strategy remains unchanged.
We will prioritize investments in our business to drive near and long-term growth.
We will continue to invest in our Peak growth drivers and expansive pipeline of Novel candidates, Each of, which has significant potential to address important unmet medical needs,
We remain committed to our dividend with the goal of increasing it over time.
Value enhancing transactions.
We are maintaining our increased pace of share repurchases and expect approximately 5 billion dollars for the full year.
To conclude as we finish the year, we are confident in the Outlook of our business driven by global demand for our Innovative inline portfolio. The exciting progress, we are seeing with our many product launches and our exceptional pipeline.
With continued investment in Innovation and our ongoing focus on execution, we remain. Well, positioned to deliver value to the patients customers and shareholders now, and well into the future with that, I'd now like to turn the call over to Dave.
Thank You, Caroline. Good morning everyone. The third quarter was marked by several notable clinical and Regulatory milestones.
I will start with updates and oncology followed by vaccines and infectious disease Immunology, Opthalmology. And then cover advancement in our cardiovascular and Pulmonary programs.
I will close by highlighting key upcoming events through the first half of 2026.
Progress, continues across our diverse oncology portfolio.
Last month, we received FDA approval for Katrina. Qlex injection for subcutaneous administration of pemberley map.
Contra culex offers a substantially quicker Administration time than intravenous infusion of katuda and can be administered subcutaneously by a healthcare provider. In as little as 1 minute, when given every 3 weeks, it has the potential to provide flexibility in the sight of care while helping to increase efficiency in and Access to Health Care Systems.
We also see opportunity for use in certain patients with earlier stage disease.
To date katuda based regimens have received FDA approval for 10 indicates in the earlier setting.
Last month, the European medicine's agencies committee for medicinal products for human use. Granted, a positive opinion for subcutaneous administration of katuda.
The European commission has approved katuda as part of a perioperative regimen for the treatment of certain adult patients, with respectable locally Advanced, head and neck squamous cell. Carcinoma based on the phase 3 keynote, 689 trial,
we continue to build upon the extensive body of evidence for katuda in multiple indication spanning both earlier and metastatic stages of disease.
At the European Society for medical oncology Congress. Data from the Contra program were showcased in 2 presidential Symposium sessions.
These include progression-free and overall survival results from keynote B96, in certain patients with Platinum resistant, recurrent ovarian cancer,
The FDA has accepted our spla for priority review and set a Padua date of February 20th.
Also at esmo event-free and overall survival data, from keynote 905, in patients, with muscle invasive, bladder cancer, Who are ineligible for cisplatin, based chemotherapy conducted in collaboration with a stellis and fizer were presented.
The FDA has also accepted this SBA for priority review with a pdufa date of April 7th.
The successive katuda has enabled us to build a diversified oncology pipeline.
At esmo data from our growing portfolio of antibody drug. Conjugate candidates were also presented including results for Sac. TMT are Trope 2 Target ADC from the phase 3 up to Trope, Lung o4 Study in patients with egfr mutated non small cell lung cancer conducted by our collaborator alas.
Also earlier this week, we were pleased to announce positive results for Weller egg a first in class oral hip to Alpha inhibitor across adjuvant and advanced renal cell carcinoma based on 2 phase 3 trials.
Light Sparks 22 in combination with katuda and Light, spark 11 in combination with Lima in collaboration with ASI.
Next to vaccines and infections disease.
Starting with CIS are $21. Valento conjugate vaccine.
Following the approval in the US and EU in August. The Japanese Ministry of Health, labor and Welfare are granted approval for Kev for the prevention of new MCO, infections in the elderly, and adults at high risk.
We are also evaluating the potential of Kev in additional patient types.
At the European Society of Clinical Microbiology and Infectious Diseases Conference on Vaccines,
Results of the phase 3 stride 13 trial examining the safety tolerability and immunogenicity in Children and adolescents, aged 2 to 17 years who are at increased risk of pumas were presented.
The FDA has accepted for review. The SBA and set up Padua date of June 18th.
Regarding RSV.
Following approval on June and fonia are long-acting, monoclonal antibodies for the prevention of RSV disease in infant entering or during their first RSV season is now available.
Early this month, we received a positive CHMP opinion from the European Medicines Agency.
Turning to HIV, we have development program, spanning both treatment and prep settings anchored by our investigation. Oh, nrti is larger and MK 8527.
earlier this month, new findings were presented at the European AIDS conference including
48 week, phase 3 data for driver. And his lover as a 1. Daily oral 2 drug regimen for the treatment of adults, with viral, logically suppress, hiv1 infections, on anti-retroviral therapy, and 96 week, Phase 2, outcomes data for the investigation of once, weekly, all combination of his lover. With Lena, capir for adults, with virologic, suppress, hiv1 infections in collaboration with daileader
Moving to Immunology, then Opthalmology.
Is a humanized monoclonal antibody that targets. Tumor necrosis Factor like cytokine 1A that is associated with inflammation and fibrosis.
The phase 3, Atlas trial in ulcerative colitis, recently completed enrollment and the phase 3, Aries trial in Crohn's disease remains on track.
Building on these studies. We recently announced an expansion of the development program evaluating Talisa part in dermatology and Rheumatology indications with the initiation of 3 phase 2B trials.
Since the acquisition of ibio last year, we have made significant progress advancing the phase 3 clinical development program for Mk 30000.
Our novel candidate targeting the wind pathways for certain retinal diseases.
Enrollment in the phase 3, Brunello study in patients with diabetic macular. Edema is complete. And the studies primary. Completion date has been accelerated to September 2026.
Super Tuscan a phase 2 study evaluating mk300 in patients with neovascular age related macular, degeneration as well as retinal vein. Occlusion is currently enrolling.
In addition earlier this month at the iseler event hosted by the American Academy of Ophthalmology, we presented promising. First time Phase 1 data from the rila study evaluating MK 8748
Our tetravalent by specific antibody targeting tie to and vegf.
In patients with macular edema secondary to Branch retinal vein occlusion and neovascular age related macular degeneration.
Based on these data, we plan to initiate late-state trials in 2026.
Next. So our cardiovascular and Pulmonary programs Wind River. The first and only active in signaling inhibitor for the treatment of adults, with pulmonary arterial hypertension continues to generate evidence, for benefit across a broad spectrum of patients with pah.
Results from the Phase 3 Hyperion trial in recently diagnosed adults with PAH were presented at the European Respiratory Society meeting.
Adding 1 River on top of background therapy. Showed a significant 76% reduction in risk of clinical worsening events compared to background therapy alone. Despite early, termination of the study due to loss of clinical equipoise.
The findings were also published in the New England Journal of Medicine.
The FDA also recently, approved an update to the Wind River product label based on the results of the phase 3 Zenith trial.
With the expanded indication Wind River. Here is the first paw therapy to have an indication that includes components of the clinical worsening events.
Hospitalization for pH, lung transplantation and death.
With the closing of the Verona Pharma acquisition. We welcome new colleagues to the team.
Together, we are well positioned to build upon the success of OTV. A first in class duel possible destroys 3 and 4 inhibitor for the maintenance treatment of chronic obstructive pulmonary disease.
We planted the ongoing work in brachi Isis and evaluate utility and additional indications combination therapies and alternative formulations.
Despite advances in the screening and treatment, there continues to be a cardiovascular disease, epidemic with ascvd as the leading cause of death globally.
In September, we announced that Enide, our investigational oral PCSK9 inhibitor, met all primary and key secondary endpoints in the Coral Reef lipid study, demonstrating statistically significant and clinically meaningful reductions in LDL cholesterol for the treatment of adults with hypercholesterolemia on a moderate or high-intensity statin or with documented statin intolerance.
This is the third.
Positive phase 3 trial for enlisted ties.
we look forward to presenting the detailed results of the coral reef lipid study as well as a coral reef study focused on famiglio heterosis, hyper cholesterol, limia at the American Heart Association, scientific sessions meeting next week in New Orleans,
Please, mark your calendars for an investor event at aha, on the evening of Sunday, November 9th, where we will highlight these results and provide an overview of our cardiovascular and Pulmonary programs.
We continue to see strong momentum across the pipeline as Rob noted. There are approximately 80 phase 3 trials underway across multiple therapeutic areas.
We have initiated more than 15 phase 3, trials this year and expect to have an increasing number in 2026.
as we look through the first half of 2026, we anticipate a regular Cadence of Milestones across therapeutic areas, including
An oncology update on February 20th will be provided for certain patients with platinum-resistant recurrent ovarian cancer. This is based on KEYNOTE B96.
The April 7th for dupa date, for certain patients, with earlier stage mibc based on keynote 905.
In HIV the April 28th pdufa date for the combination of therapy and as Lacher and oral once daily treatment regimen and data from the phase 3 is lend 1 and 2 trials evaluating is larger in combination with lenacapavir as a once weekly oral treatment regimen.
In Immunology. Phase 2 data for Talisa Bart from the Athena study and FSC ild.
And cardio pulmonary for Wind River data from The Phase 2, Cadence, study in pulmonary hypertension due to left heart disease or inicie, presentation of detailed results from 3 phase 3, trials from the coral, reef development program.
In 2026.
And now, I turn the call back to Peter.
Thank you, Dean Julie. We're now ready for Q&A. If I could request that each analyst limit themselves to one question, we need to end at the top of the hour. Thank you.
ladies and gentlemen, if you wish to ask a question,
Star 1 on your telephone keypad.
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1 moment, please for our first question.
Our first question comes from Assad Hater with Goldman Sachs.
Please go ahead.
Great. Thanks for taking the question. Um, maybe for Rob on BD. Uh, I was reassured to hear in the prepared remarks that you are assessing potential targets with urgency and suddenly of your Verona deal, seemed well received, and it seems that the market wants you to see uh, wants to see more of those types of transactions from you. So I guess any updated framing on what you're looking for would be helpful. And then related uh there's also been an ongoing pickup and discussions about the potential re-emergence of uh potentially transformative larger transactions in the industry. Just give them the external environment. So curious if you could share your updated views there, thank you.
Great Assad. Thanks for the question, you know, as it relates to Business Development, as you point out we were very excited about getting the the closure of the the deal with Varane. And as you know, we continue to see Yoda vert is a multi-billion dollar opportunity. So excited about that but as we've also said, we're not done. We do need to do more. Uh, we continue to look across all therapeutic areas. I would say, you know, obviously the areas of focus for us continue to be aligned with what is our, our, our key therapeutic areas from the business perspective, oncology continues to see a lot of opportunities Immunology cardio, metabolic, uh and the like or where we're continuing to focus as is always the case science will drive us. Uh and when we see a scientific opportunity where there's an unmet need that we think strategically aligns with our approach. If we see value, we'll move. So no change in our approach. And as you think about deal size, we continue to be focused in that 1 to 15 billion dollar range.
As the primary area. But as we've been clear to say in the past we are willing to go larger than that. Um but always with the focus on science and always understanding that if we look and see an opportunity, we're going to do it based on on that unmet need. As you think forward to the your broader question on the re-emergence, the potential larger scale deals. You know our view of that has not changed. We do not think that a transformative.
Um, acquisition a Synergy driven deal. Is something that we need to do nor aligns with with our our future. Uh because as you know we have 1 of the most robust pipelines we've ever had and we see large. Synergy driven deals as disruptive to that activity and so our Focus will be on bringing in pipeline assets, not on those types of deals. But as you think about that, as we said in the past, we're open to phase 1 all the way through phase 3, and where we can find it commercial opportunities. So, we look at the full spectrum. Great, thank you Assad. Next question, please Julie.
Thank you.
Our next question comes from Jeff Mitchum, with Citi Bank. Please go ahead.
Great uh, morning everyone. Thanks for the question. Um, how the pipeline 1 for Dean. So, on the expanding development of your tl1, an Immunology, I'm assuming that a broad development program, you know, was already in place surrounding the Prometheus deal but maybe you talk about the selection of the indications uh that you just announced from a mechanism and perspective and maybe what additional development opportunities, do you like across the ini space? Thank you.
Yeah, thank you very much for the for the question. I mean, the focus initially was in the Gi space and where our ambition is to be the first and Best in Class tl1a. Uh we've always talked about that expansion. We've always thought about that expansion and and that expansion has been recently.
about not just
similar to other.
Right. Thank you. Jeff next question please Julie.
Thank you. Our next question comes from eash. Tari with Jeffrey. Is your line is open.
Hi, thanks so much. So your team is talked about a 1.0 and 2.0 solid tumor strategy with 1.0 being stacked team 3, sorry, Sac, TMT and then 2.0 is combining the adc's, with the pd1 badge. Up at esmo, it looked like your Trope 2 is showing a 6 to 12 month benefit on overall survival. At least it's trending that way in second line. Um, and that's triple what we're seeing with the pd1 by Jeff. So what gets you more excited? The signal you're seeing with your Trope 2 or the pd1 badge, F class? And how does that impact your appetite to potentially run another round of phase 3 combo trials with the Lenovo acid? Thank you.
Yeah, so, I should probably reset. I, I don't, I don't believe that we've said anything in relationship to how you've talked about it in terms of the the, the different phases. We are extremely excited about the Trope to the sock. TMT. And we've had a productive relationship with keelin 1 of the things. I would just emphasize is it's very easy to sit there and say, oh, this is a Trope to ADC and we throw all the Trope to adc's in a bucket as if they're not different. I think the recent data
Suggests that there may be differences and we're really interested as we move.
You know, 15 phase 3 studies, but 10 of them are actually in places where the, the other Trope dose haven't gone. So we're we're very interested in pushing the sack TMT uh, with and in, in the appropriate place with aisle, or with other Precision targeted in relationship to the pd1 Vega. We're also interested in advancing that and seeing that data, just evolved, not just with us, but from the outside world and that will Define to us where we would put the people on vegf in relationship to peace 1. But I just want to just make sure that we're very, we're very excited about the safety Mt. We've shown data keelin has shown data, you've highlighted how it's different.
uh, we believe that, uh, we're a, we're eager to see the the trials that
That can drive that in not just in the Chinese patient populations but uh, in the US and globally.
Right, thanks. Ah, next question, please.
Thank you. Our next question, comes from Evans sagerman with BMO Capital markets, your line is open.
Hi guys. I wanted to just touch on the influenza launched in the United States heading into RSV season. Can you just talk about the initial feedback say versus the competition and kind of what you're seeing in terms of potential uptake as we head into RSV season. Thank you.
Yeah. Maybe I'll start and then if Caroline wants to jump in. She can as well. You know, overall, um we feel good about where we are, where we are within fonia, if you look at um, how that launch is progressed. I would point out that while we did receive all the full approvals. We were a couple weeks later than initially expected, so that did play into this because it put us a little bit later into, um, into the season. Uh, we did highlight this kind of line pointed out in the prepared. Remarks, there was 75 or 79 million dollars of initial stocking, uh, and that really was the, the seating order from the vfc, as well as other wholesaler distributor stocking. So, as we sit here tonight, sit here. Right now, looking at the season. And, and into next year, you know, we really continue to see an opportunity. I, I would point out if you think about the benefits and fans, you brings, uh, there's no weight based dosing. Um, our ability to look at our total contracted portfolio, vaccines all of the things we've talked about continue to make us believe this will
Will be a very important vaccine and as we look forward into 26 and Beyond, we continue to see that, we'll see where the rest of 25 plays out, but it's uh all in all given the timing. When we started we feel good and just to add to Rob's comments. We had the seating order in the third quarter. We expect that to be utilized during the fourth quarter feedback. From customers has been very good and we look forward to having an impact this season and much more of an impact as we go into 2026, right? Thanks for having next question, please.
Thank you. Our next question comes from Dana. Grayash with lyric Partners, your line is open.
Of which of those tumor types of the ten approved is driving that Revenue. Thank you.
Yeah, I I'll start Dana and then Caroline can jump in as well. So if, if you recall, if you look at where we are in the earlier stage setting, we have currently 10 approved indications now 5 with, uh, overall survival, um, which is important. And if you look at where we are, um, going forward, the drivers of that, you know, in that cervical continues to be important RCC, we continue to see tnbc and non small cell and Cancer. All are important drivers. We're obviously excited, we don't have approval yet but you heard that we have yet another potential uh OS benefit coming uh 9:05 I believe it is and we the dean spoke about earlier so yet more coming and that's in muscle invasive, bladder cancer. So uh, a lot out there, we're excited about where it goes. It's driving over half of our growth right now is coming from earlier stage indications. And we achieved if you look back to we indicated, we would be
A 25% in 2024 and 25. We're now we're exceeding 25%. We've not given specific targets but we see it growing as a percent overall of total sales. Uh and it's over half of our growth so it is an important driver especially as we think about the QX launch, that is just starting to get underway.
Great thanks. Dana next question, please.
Thank you. Our next question, comes from Chris shot with JP Morgan. Please go ahead.
Uh, great. Uh, thanks so much. Just robbed a question on an MFN, appreciate the color and the prepared remarks. But just following some of the recent deals administration both with Pfizer and Astra, should we be thinking about this type of structure as a reasonable framework for the industry? And just any updates in terms of where Merck is in terms of its discussion with the administration on MFN. Thank you. Yeah, yeah Chris, thanks for the question. You know, as I said in the prepared remarks.
Oh we're aligned with what the administration is trying to achieve which is uh to lower the out-of-pocket costs for patients at the pharmacy counter. And at the same time to get foreign prices up to ensure that foreign governments are paying their fair share. So, those broad-based principles, we're aligned with we are in continuing discussions with, uh, the administration. I'm not going to give any specific updates. Other than to say, I am very optimistic that we're going to have a constructive outcome to those discussions. Uh and the framework, you know we'll wait until we actually have something to talk about there to be more specific to how we see ours coming out. Great, thanks Chris. Next question. Please Julie.
Thank you. Our next question comes from carter gold with caner. Your line is open.
Uh good morning. Thanks for taking the question. Uh, you had a pair of good uh well rig data recently, uh Sudan, I wanted to ask you around your confidence on ultimately hitting on OS in the o22 study and the importance of that in uh moving the needle on adoption in that setting.
Yeah, so we're we are equally excited about the Weller egg, you know. It's a first and last treatment, we've announced the Top Line phase 3 for the second line as well as the add event. And I also think it's important that in, in 1 of the trials, the ability of a hip to Alpha to do something on top of a ve EGF. Uh, uh, blocking agent is important in relationship to OS. I think OS is always really important, it's important for the FDA, but most importantly, it's important for patients. So we are really eagerly awaiting to see if and when we cross that boundary. Um, and so yeah we we are, we are excited and we have a broad portfolio program in, uh, in Weller egg, uh, and so we'll be anxious to share those results when we get them, right? Thank you. Carter next question, please Julie. Thank you. Our next question, comes from Terrence Flynn with Morgan Stanley. Your line is open
Hi, thanks for taking the question. Um, Caroline, I know you commented. Um, somewhat on expenses for 2026. Uh, was just wondering if you can give us any comments on the top line in terms of some of the pushes and pulls as we think about that, recognizing you probably don't want to give guidance at this point, but just maybe help us think through some of the levers there. Thank you.
The Animal Health business, where growth will also be driven by new launches, including Bravecto, Quantum, the 12-month injection, as well as our new dermatology product, Melvi.
We also have the expectation of continued growth in oncology for the last question. Well, regg has strong growth with greater potential ahead of it, as we get into other, um, successful studies and treats a broader range of patients. And we do expect continued growth in Katrina, albeit at a slightly slower Pace than we've seen. As we are getting to Peak penetration in some of the indications. And we do expect some headwind from price in our exas markets.
The other headwinds that we will face will be related to loss of exclusivity and generic entrance. And that really is deficit. That seem generic entrance halfway through 2025, in the US bridion which will have its LOE partway through 2026. And we also expect the headwind of Ira price, setting on the uh January family, and the uh generic entrance for Januvia, Midway through next year. But overall confident in our ability, to continue to positively impact patients and drive to solid growth.
Right? Thank you. Terrence, next question. Please, Julie.
Thank you. Our next question comes from, Umar rafit with evercore. Your line is open.
I was wondering if I should ask about the Organon situation, but I realized it's multiple years removed as a standalone company, so maybe there's not a whole lot you could say. Anyway, let me focus instead on the Cadence trial and Dean. My question is, it finished in late September, and you're indicating the first half of 2026. It sounds to me like that's a little longer than I would have expected to get the readout out there on a 150-patient trial. So could you just catch us up on your thought process there? Thank you.
Yeah, so just as everyone knows we have Zenith Hyperion earlier in disease. Those those data have come through. Uh, we have a primary completion date of cadence this year, and we said that we would be presenting it to, uh, the data in a meeting. I I, I, I believe that we will be putting out a Topline once we know it as well. So, when we talked about the first half of or the the first quarter or first, half of 2026, we were talking about the full data at a medical meeting. Um, we are eager to see that results because that result will suggest to us, uh, how how much we can, uh, use win river outside of the patient population? That's formally paw and so we're eager to see those results as well.
Great. Thank you. Boomer next question, please.
Thank you. Our next question comes from Courtney brain with Bernstein. Your line is open.
Hi everyone. Thanks so much for taking my question today. Um, just coming back to to some of the the White House, price policy, uh, pressures and and comments, you've made already. Um, I wanted to ask this in a slightly different way. Um, if we look at kind of merch ratio of Revenue today, it's about 50/50 inside the US versus outside, the US.
How different?
Is that to be?
Could be attributed to product mix.
And how much down to to kind of Equalization of price?
Thank you so much.
Yeah, Courtney thanks for the question. I'm not going to get into specific guidance. You know, obviously, if you look at, um, where we're our business is driving, we're excited about the diversity of the pipeline. We're bringing a lot of those opportunities. Uh, disproportionately will be us-based, uh, primarily just because of the nature of the drugs and and the uptakes and and the value you can assert to the US market. So you know mix will affect how we look forward how mfn or other pricing Dynamics change. It's too early to say uh because we need to see what it is. Uh and so I would leave it at that for right now.
Great. Thanks. Courtney. Next question, please.
Thank you. Our next question comes from Bal Devon. With googleheim Securities. Your line is open.
You know, uh, the US recommendations but also then xus given you'll be annualizing out of the China and Japan impact. So just any sense of I think consensus is affecting the, the robust return to growth for that product over the next several years. Just curious, how you're thinking about that. Thanks.
Thank you for the question for Neil. So, guard Is Still Remains a very important product and we're really proud of the impact that we're having in helping protect people from certain HPV related, cancers,
As we look forward in the United States. Indeed, today we are seeing growth in our vaccinations, in the 9 10 age group, as well as the mid adult segment and that's being offset by a lower level in the Adolescent segment and that's really driven by a reduction in the eligible population. And there are some macro factors there as we look forward for the United States. We are hopeful for growth. But clearly, as you mentioned, the atip recommendation around that dosing schedule will very much impact whether we do or don't grow to grow in the United States. And as we've said before, we will always look at having the appropriate price point in the United States. Based on the value that we are providing Society outside of the United States. You rightly note that we will let the impact of China as well as the reduction in the cohort.
Bought for the catch-up in Japan as we go through 2026. So we look forward to protecting more people around the world. What we're seeing in countries outside of the United States, some of the public programs have really reached maturity. So we expect a routine cohort to be vaccinated each and every year
The private Market is a great opportunity for growth for us and that's really in the mid adult segment age 27 through 45 where we're creating the system to enable people to get vaccinated in many countries around the world and it's also in some countries in the broad age cohort. So we will be working to activate that cohort, it does take time but will be activating that cohort to drive growth in the private segment as we go forward overall, we expect modest growth for garter, Phil in the near term.
Great. Thanks Mom. Next question, please.
Thank you. Our next question comes from Louisa Ha with Baron B. Your line is open.
Hello. Thank you for taking my question. Uh just back to K, Trudeau, could you just update us on your latest expectations for conversion from um IV to subcutaneous and the kind of pace that we could expect and and with that in mind Caroline you you made a comment on K truda growth at a slower pace for 26. So just to check whether that is the overall front.
Choice or IV only and will you report the sales separately? Thank you.
Yeah. Uh, this Louis, this is Rob. I may be starting in Caroline can address the last part of your question. So if you look at expectations for for QX,
As we've said, it's it's early in the launch, but, uh, everything appears to be on track and there's no changes to what we previously communicated. We continue to expect that we're going to achieve 30 to 40% patient, adoption. Um and that that will take us uh out to 18 to 24 months to achieve that so nothing has changed there. I would highlight as we pointed out in the past that we will have permanent J Code, but we won't get that probably for 6 months. And during that first 6 month window, you can anticipate a sore uptick, just because, uh, with people using temporary J codes. There can be longer reimbursement in the windows and so some people will hesitate to, to order until they have the permanent J Code. We've done everything we can to learn from the, the, uh, other subcutaneous products that have launched ahead of us. I can tell you that we've put in place. I believe a commercial Contracting strategy, that really will make it frictionless frictionless frictionless.
Point, we are really excited about the contributions that qlux can bring. As we do provide treatment options for more and more patients as next year, unfolds,
And we will anticipate reporting separately in 2026. Thank you, Peter. All right, maybe last question, please join me.
Thank you. Our last question comes from Alex Hammond with wolf research, your line is open.
Thanks for taking the question on I bio. Can you help with the phase 3 Brunello resulting contacts? What's the largest Dean in the trial? A success? And I guess given the competitive nature of this indication. How do you plan to execute commercially?
Well, let me just say that we're really excited about pushing this first in class MK 30000, uh, novel candidate targeting the wind pathway. I, I would just remind, I believe, this is the first time, a novel mechanism has been pushed through, uh, in relationship to, uh, having clear human genetic evidence for it and we plan to evaluate that MK 30000 not just in diabetic, macular edema, but also neovascular uh, age related macular, uh, uh degeneration as well. In terms of um, in terms of commercial sort of execution, I would hold off until we see the data from these trials. But we're pushing very fast, and very forward in relationship to this because this could be 1 of the First new mechanisms
Kind of like the Wind River story, where it's the first generally, new mechanism, that can make a profound effect on such a broad disease.
Yeah, and maybe just to add a little bit on on the commercial opportunity, you know in, if you look at where we are today in the United States, there's about 1.6 million patients with diabetic macular edema. So, this is the leading cause of vision loss in people with diabetes. Uh, and so, if you look at that population, uh, still there's a very large opportunity because 30, to 40% of patients, on therapy are not responsive to the current anti veg app. So the ability potentially to see, conversions is significant. Uh, if you look at it's about a 13 billion dollar market today, and we believe that our ability to drive that, uh, kind of conversion with this new molecular entity is important as far as the commercial infrastructure. We're really combining the ibio leadership, strengths and our expertise in Opthalmology and and pushing these forward. And I, and I'm quite confident that we will have the global infrastructure to be able to drive this. We're investing pretty heavily on this.
And when you look at this in combination with the tie spectus, you know, this is a multi-billion dollar opportunity for the company. We're very excited. I think this is one of the underappreciated areas of what we have. And, uh, I credit Dean and the team—they've advanced these by a couple of years from what we originally anticipated when we did the deal. So this is a win in my book.
Great. Thank you Alex. Thank you all for your great questions and we'll end the call there. Please reach out to the IR team if you have any follow-ups.
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