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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) October 31, 2024 (October 31, 2024)

 

Merck & Co., Inc.

(Exact name of registrant as specified in its charter)

 

New Jersey

(State or other jurisdiction

of incorporation)

 

1-6571

(Commission

File Number)

 

22-1918501

(I.R.S. Employer

Identification No.)

 

126 East Lincoln Avenue, Rahway, NJ

(Address of principal executive offices)

 

07065

(Zip Code)

 

(Registrant’s telephone number, including area code) (908) 740-4000

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
         
Common Stock ($0.50 par value)   MRK   New York Stock Exchange
0.500% Notes due 2024   MRK 24   New York Stock Exchange
1.875% Notes due 2026   MRK/26   New York Stock Exchange
3.250% Notes due 2032   MRK/32   New York Stock Exchange
2.500% Notes due 2034   MRK/34   New York Stock Exchange
1.375% Notes due 2036   MRK 36A   New York Stock Exchange
3.500% Notes due 2037   MRK/37   New York Stock Exchange
3.700% Notes due 2044   MRK/44   New York Stock Exchange
3.750% Notes due 2054   MRK/54   New York Stock Exchange

 

 

 

 


 

Item 2.02. Results of Operations and Financial Condition.

 

The following information, including the exhibits hereto, is being furnished pursuant to this Item 2.02.

 

Incorporated by reference is a press release issued by Merck & Co., Inc. on October 31, 2024, regarding earnings for the third quarter of 2024, attached as Exhibit 99.1. Also incorporated by reference is certain supplemental information not included in the press release, attached as Exhibit 99.2.

 

This information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

  Exhibit 99.1 Press release issued October 31, 2024, regarding earnings for the third quarter of 2024
     
  Exhibit 99.2 Certain supplemental information not included in the press release
     
  Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  Merck & Co., Inc.
     
Date: October 31, 2024 By: /s/ Kelly E. W. Grez
    Kelly E. W. Grez
    Corporate Secretary

 

 

 

EX-99.1 2 tm2426878d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

  

  News Release
   

 

Merck Announces Third-Quarter 2024 Financial Results

 

- Total Worldwide Sales Were $16.7 Billion, an Increase of 4% From Third Quarter 2023; Excluding the Impact of Foreign Exchange, Growth Was 7%
o KEYTRUDA Sales Grew 17% to $7.4 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 21%
o WINREVAIR Sales Were $149 Million; U.S. Launch of WINREVAIR Gaining Momentum; Received Approval in the EU
o Animal Health Sales Grew 6% to $1.5 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 11%
- GAAP EPS Was $1.24; Non-GAAP EPS Was $1.57; GAAP and Non-GAAP EPS Include a Net Charge of $0.79 per Share Related to Certain Business Development Transactions
- Achieved Significant Milestones in Vaccine Programs
o CAPVAXIVE Recommended by the CDC’s ACIP for Pneumococcal Vaccination in Adults 50 Years of Age and Older
o Presented Positive Results From Clinical Studies Evaluating Clesrovimab (MK-1654), an Investigational RSV Preventative Monoclonal Antibody for Infants Entering Their First RSV Season
- Data Presented for Four Approved Medicines and Six Pipeline Candidates in More Than 20 Types of Cancer at ESMO Congress 2024, Including Overall Survival Data From KEYNOTE-522 and KEYNOTE-A18
- Completed Acquisition of Investigational B-Cell Depletion Therapy, CN201 (MK-1045), From Curon Biopharmaceutical
- Full-Year 2024 Financial Outlook
o Narrows Expected Worldwide Sales Range To Be Between $63.6 Billion and $64.1 Billion
o Now Expects Non-GAAP EPS To Be Between $7.72 and $7.77; Outlook Reflects a Net Negative Impact of $0.24 per Share Related to Business Development Transactions With Curon Biopharmaceutical and Daiichi Sankyo

 

RAHWAY, N.J., Oct. 31, 2024 – Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the third quarter of 2024.

 

“Our third-quarter results were strong, as we continue to make progress heading into 2025 and beyond," said Robert M. Davis, chairman and chief executive officer, Merck. "Our pipeline is advancing and expanding, demonstrating our success in creating a sustainable innovation engine, and positioning Merck with a more diversified portfolio to drive growth. I continue to remain confident in the strength of our business and our ability to execute, and I want to thank our colleagues across the globe for their focus and commitment as we work to create lasting value for patients, shareholders and all our stakeholders.”

 

- 2 -

 

Financial Summary

 

 

    Third Quarter  
$ in millions, except EPS amounts   2024     2023     Change     Change Ex-
Exchange
 
Sales   $ 16,657     $ 15,962       4 %     7 %
GAAP net income1     3,157       4,745       -33 %     -30 %
Non-GAAP net income that excludes certain items1,2*     3,985       5,427       -27 %     -23 %
GAAP EPS     1.24       1.86       -33 %     -30 %
Non-GAAP EPS that excludes certain items2*     1.57       2.13       -26 %     -23 %

 *Refer to table on page 7.

 

In the third quarter of 2024, total worldwide sales were $16.7 billion, an increase of 4% compared with the third quarter of 2023; excluding the impact of foreign exchange, growth was 7%. Sales growth in the third quarter of 2024 was primarily due to increased usage of KEYTRUDA globally, contributions from new launches, including WINREVAIR and CAPVAXIVE, and strong growth in Merck’s Animal Health business. Revenue growth in the third quarter of 2024 was partially offset by lower sales of JANUVIA and JANUMET, lower combined sales of GARDASIL/GARDASIL 9 and lower sales of LAGEVRIO. Third-quarter GARDASIL/GARDASIL 9 sales declined year-over-year due to reduced demand in China; outside of China, the company achieved double-digit sales growth for GARDASIL/GARDASIL 9 in almost every major region globally.

 

For the third quarter of 2024, Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.24 and non-GAAP EPS was $1.57. The declines in GAAP and Non-GAAP EPS in the third quarter of 2024 versus the prior year were largely due to a net charge of $0.79 per share in the aggregate for the acquisition of Eyebiotech Limited (EyeBio) and a related development milestone, the acquisition of CN201 (now known as MK-1045) from Curon Biopharmaceutical (Curon), as well as a payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement. There were no significant business development transaction charges in the third quarter of 2023.

 

Non-GAAP EPS in both periods excludes acquisition- and divestiture-related costs, costs related to restructuring programs, as well as income and losses from investments in equity securities.

 

 

1 Net income attributable to Merck & Co., Inc.

2 Merck is providing certain 2024 and 2023 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, annual employee compensation, including senior management’s compensation, is derived in part using a non-GAAP pretax income metric. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. For a description of the non-GAAP adjustments, see Table 2a attached to this release.

 

- 3 -

 

Year-to-date results can be found in the attached tables.

 

Third-Quarter Sales Performance

 

The following table reflects sales of the company’s top products and significant performance drivers.

 

    Third Quarter
$ in millions   2024     2023     Change     Change
Ex-Exchange
    Commentary
Total Sales   $ 16,657     $ 15,962       4 %     7 %   Approximately 2 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases, consistent with practice in that market.
Pharmaceutical     14,943       14,263       5 %     8 %   Increase driven by growth in oncology and cardiovascular, partially offset by declines in diabetes, vaccines and virology.
KEYTRUDA     7,429       6,338       17 %     21 %   Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC), renal cell carcinoma (RCC) and non-small cell lung cancer (NSCLC), as well as continued strong global demand from metastatic indications. Approximately 3 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases.
GARDASIL/GARDASIL 9     2,306       2,585       -11 %     -10 %   Decline primarily due to lower demand in China compared with prior year, partially offset by higher sales in the U.S., driven by public-sector buying patterns, higher pricing and demand, as well as higher demand in most international regions.
PROQUAD, M-M-R II and VARIVAX     703       713       -1 %     -1 %   Decline primarily due to timing of shipments and lower tenders in Latin America, largely offset by higher demand in certain international markets.
JANUVIA/JANUMET     482       835       -42 %     -38 %   Decline primarily due to lower pricing in the U.S., as well as ongoing generic competition in many international markets.
BRIDION     420       424       -1 %     0 %   Relatively flat compared with prior year due to generic competition in certain international markets, particularly in Europe and Japan, largely offset by higher demand and pricing in the U.S.
LAGEVRIO     383       640       -40 %     -36 %   Decline primarily due to lower demand in Japan, partially offset by uptake from commercial launch in the U.S.
Lynparza*     337       299       13 %     13 %   Growth primarily due to higher global demand.
Lenvima*     251       260       -3 %     -4 %   Decline primarily due to timing of shipments in China in the prior year, partially offset by higher demand in the U.S.

 

- 4 -

 

VAXNEUVANCE     239       214       12 %     13 %   Growth largely driven by continued uptake from launches in Europe and Japan, partially offset by lower demand in the U.S. due to competition.
PREVYMIS     208       157       32 %     36 %   Growth primarily due to higher global demand, particularly in the U.S.
ROTATEQ     193       156       24 %     25 %   Growth primarily due to public-sector buying patterns in the U.S. and timing of shipments in China.
WINREVAIR     149       -       -       -     Represents continued uptake since launch in the U.S. in the second quarter.
WELIREG     139       54       156 %     157 %   Growth primarily driven by higher demand in the U.S., largely attributable to ongoing uptake of a new indication.
Animal Health     1,487       1,400       6 %     11 %   Growth primarily driven by higher demand and pricing for both Companion Animal and Livestock product portfolios, as well as sales related to July 2024 acquisition of Elanco aqua business. Approximately 2 percentage points of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases.
Livestock     886       874       1 %     7 %   Growth primarily driven by higher pricing and higher demand for poultry and swine products, as well as sales related to acquisition of Elanco aqua business.
Companion Animal     601       526       14 %     17 %   Growth primarily driven by uptake from new product launches, including the injectable formulation of BRAVECTO in certain international markets, as well as higher pricing across product portfolio. Sales of BRAVECTO were $266 million and $235 million in current and prior year quarters, respectively, which represented growth of 13%, or 16% excluding impact of foreign exchange.
Other Revenues**     227       299       -24 %     -22 %   Decline primarily due to lower payments received for out-licensing arrangements and lower royalty income.

*Alliance revenue for this product represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

**Other revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities.

 

- 5 -

 

Third-Quarter Expense, EPS and Related Information

 

The table below presents selected expense information.

 

$ in millions   GAAP     Acquisition-
and
Divestiture-
Related Costs3
    Restructuring
Costs
    (Income)
Loss From
Investments
in Equity
Securities
    Non-
GAAP2
 
Third Quarter 2024                              
Cost of sales   $ 4,080     $ 639     $ 192     $ -     $ 3,249  
Selling, general and administrative     2,731       43       31       -       2,657  
Research and development     5,862       24       -       -       5,838  
Restructuring costs     56       -       56       -       -  
Other (income) expense, net     (162 )     (27 )     -       58       (193 )
                                         
Third Quarter 2023                                        
Cost of sales   $ 4,264     $ 552     $ 33     $ -     $ 3,679  
Selling, general and administrative     2,519       17       40       -       2,462  
Research and development     3,307       10       -       -       3,297  
Restructuring costs     126       -       126       -       -  
Other (income) expense, net     126       (24 )     -       17       133  

 

GAAP Expense, EPS and Related Information

 

Gross margin was 75.5% for the third quarter of 2024 compared with 73.3% for the third quarter of 2023. The increase was primarily due to the favorable impact of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9), partially offset by higher restructuring costs (primarily reflecting asset impairment charges), as well as higher amortization of intangible assets.

 

Selling, general and administrative (SG&A) expenses were $2.7 billion in the third quarter of 2024, an increase of 8% compared with the third quarter of 2023. The increase was primarily due to higher administrative, promotional, selling, and acquisition-related costs, partially offset by the favorable impact of foreign exchange.

 

Research and development (R&D) expenses were $5.9 billion in the third quarter of 2024, an increase of 77% compared with the third quarter of 2023. The increase was primarily due to a charge of $1.35 billion for the acquisition of EyeBio and a $100 million charge for a related development milestone, as well as a charge of $750 million to acquire CN201 (MK-1045) from Curon. The increase in R&D expenses was also driven by higher compensation and benefit costs, as well as higher clinical development spending. The increase in R&D expenses was partially offset by the favorable impact of foreign exchange.

 

Other (income) expense, net, was $162 million of income in the third quarter of 2024 compared with $126 million of expense in the third quarter of 2023. The favorability was primarily due to a $170 million payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement, lower exchange losses and lower net interest expense.

 

 

3 Reflects expenses related to acquisitions of businesses, including the amortization of intangible assets, intangible asset impairment charges and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements.

 

- 6 -

 

The effective tax rate of 22.7% for the third quarter of 2024 includes a 7.2 percentage point combined unfavorable impact related to the EyeBio and Curon transactions.

 

GAAP EPS was $1.24 for the third quarter of 2024 compared with $1.86 for the third quarter of 2023. GAAP EPS in the third quarter of 2024 includes a net charge of $0.79 per share in the aggregate for the EyeBio, Curon and Daiichi Sankyo transactions. There were no significant business development transaction charges in the third quarter of 2023.

 

Non-GAAP Expense, EPS and Related Information

 

Non-GAAP gross margin was 80.5% for the third quarter of 2024 compared with 77.0% for the third quarter of 2023. The increase was primarily due to the favorable impact of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9).

 

Non-GAAP SG&A expenses were $2.7 billion in the third quarter of 2024, an increase of 8% compared with the third quarter of 2023. The increase was primarily due to higher administrative, promotional and selling costs, partially offset by the favorable impact of foreign exchange.

 

Non-GAAP R&D expenses were $5.8 billion in the third quarter of 2024, an increase of 77% compared with the third quarter of 2023. The increase was primarily due to a charge of $1.35 billion for the acquisition of EyeBio and a $100 million charge for a related development milestone, as well as a charge of $750 million to acquire CN201 (MK-1045) from Curon. The increase in R&D expenses was also driven by higher compensation and benefit costs, as well as higher clinical development spending. The increase in R&D expenses was partially offset by the favorable impact of foreign exchange.

 

Non-GAAP other (income) expense, net, was $193 million of income in the third quarter of 2024 compared with $133 million of expense in the third quarter of 2023. The favorability was primarily due to a $170 million payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement, lower exchange losses and lower net interest expense.

 

The non-GAAP effective tax rate of 21.9% for the third quarter of 2024 includes a 6.0 percentage point combined unfavorable impact related to the EyeBio and Curon transactions.

 

Non-GAAP EPS was $1.57 for the third quarter of 2024 compared with $2.13 for the third quarter of 2023. Non-GAAP EPS in the third quarter of 2024 includes a net charge of $0.79 per share in the aggregate for the EyeBio, Curon and Daiichi Sankyo transactions. There were no significant business development transaction charges in the third quarter of 2023.

 

- 7 -

 

A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows.

 

 

    Third Quarter  
$ in millions, except EPS amounts   2024     2023  
EPS                
GAAP EPS   $ 1.24     $ 1.86  
Difference     0.33       0.27  
Non-GAAP EPS that excludes items listed below2   $ 1.57     $ 2.13  
                 
Net Income                
GAAP net income1   $ 3,157     $ 4,745  
Difference     828       682  
Non-GAAP net income that excludes items listed below1,2   $ 3,985     $ 5,427  
                 
Excluded Items:                
Acquisition- and divestiture-related costs3   $ 679     $ 555  
Restructuring costs     279       199  
Loss from investments in equity securities     58       17  
Decrease to net income     1,016       771  
Estimated income tax (benefit) expense     (188 )     (89 )
Decrease to net income   $ 828     $ 682  

 

Pipeline and Portfolio Highlights

 

In the third quarter, Merck continued to develop and augment its strong, diverse pipeline and achieve key regulatory and clinical milestones.

 

In cardiovascular disease, Merck continued to build on positive momentum in its U.S. launch of WINREVAIR. As of the end of September 2024, more than 3,700 patients have been prescribed WINREVAIR. The company also received the European Commission’s (EC) approval of WINREVAIR, in combination with other pulmonary arterial hypertension (PAH) therapies, for the treatment of adult patients with PAH with World Health Organization (WHO) functional Class II to III. WINREVAIR is the first activin signaling inhibitor approved for the treatment of PAH in Europe. WINREVAIR has launched in Germany and Merck is working to obtain reimbursement for WINREVAIR in other countries in the EU, which should occur in most other major European markets in the second half of 2025.

 

In oncology, Merck continued to reinforce its leadership in women’s and earlier stages of cancers and demonstrate progress in its research pipeline. At the European Society for Medical Oncology (ESMO) Congress 2024, three of the company’s data presentations were highlighted during Presidential Symposium sessions. These included overall survival (OS) data from the Phase 3 KEYNOTE-522 trial in high-risk, early-stage TNBC and from the Phase 3 KEYNOTE-A18 trial (also known as ENGOT-cx11/GOG-3047) in high-risk, locally advanced cervical cancer. In addition, new positive data on investigational candidates from Merck’s pipeline were presented, including for patritumab deruxtecan (HER3-DXd), an antibody-drug conjugate (ADC) being developed in collaboration with Daiichi Sankyo, and for sacituzumab tirumotecan (sac-TMT), an anti-TROP2 ADC being developed in collaboration with Kelun-Biotech.

 

The company also achieved several regulatory milestones, including new approvals for KEYTRUDA-based regimens in the U.S., Europe and Japan. In addition, Merck recently announced top-line results from the KEYNOTE-689 trial, which marks the first positive trial in two decades for patients with resected, locally advanced head and neck squamous cell carcinoma (LA-HNSCC).

 

- 8 -

 

In vaccines, the CDC’s Advisory Committee on Immunization Practices (ACIP) voted in October 2024 to recommend CAPVAXIVE for individuals 50 to 64 years of age. This decision expanded upon the initial unanimous recommendation in June 2024 for use of CAPVAXIVE in adults age 65 and older, among other cohorts.

 

At IDWeek 2024, Merck presented positive results from the Phase 2b/3 trial of clesrovimab (MK-1654), an investigational respiratory syncytial virus (RSV) preventative monoclonal antibody for infants. These results support the potential for clesrovimab to become the first and only single-dose immunization designed to protect infants with the same dose, regardless of weight, for the duration of their first RSV season (six months).

 

In immunology, long-term efficacy and safety data for tulisokibart (MK-7240), an investigational humanized monoclonal antibody directed to a novel target, tumor necrosis factor (TNF)-like cytokine 1A (TL1A), from the Phase 2 ARTEMIS-UC and APOLLO-CD studies in ulcerative colitis (UC) and Crohn’s disease (CD), were presented at the United European Gastroenterology (UEG) Week 2024 Congress. Both studies showed that, at week 50, maintenance of treatment efficacy was generally observed in 12-week induction responders. Phase 3 studies in UC and CD are ongoing.

 

In addition, Merck continued to expand and diversify its pipeline by securing strategic business development opportunities. Merck completed its acquisition of CN201 (MK-1045), a next-generation CD3xCD19 bispecific antibody with potential applications in B-cell malignancies and autoimmune diseases, from Curon. Merck also announced the expansion of the global development and commercialization agreement with Daiichi Sankyo to include MK-6070, an investigational delta-like ligand 3 (DLL3) targeting T-cell engager. The companies are planning to evaluate MK-6070 in combination with ifinatamab deruxtecan (I-DXd) in certain patients with small cell lung cancer (SCLC), as well as other potential combinations.

 

- 9 -

 

Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows.

 

Oncology FDA Approved KEYTRUDA Plus Pemetrexed and Platinum Chemotherapy as First-Line Treatment for Adult Patients With Unresectable Advanced or Metastatic Malignant Pleural Mesothelioma, Based on Results From Phase 3 KEYNOTE-483/CCTG IND.227 Trial (Read Announcement)
EC Approved KEYTRUDA Plus Padcev as First-Line Treatment of Unresectable or Metastatic Urothelial Carcinoma in Adults, Based on Results From Phase 3 KEYNOTE-A39/EV-302 Trial (Read Announcement)
KEYTRUDA Received 30th Approval From EC With Two New Indications in Gynecologic Cancers, Based on Results From Phase 3 KEYNOTE-868/NRG-GY018 and KEYNOTE-A18 Trials (Read Announcement)
KEYTRUDA Received New Approvals in Japan for Certain Patients With NSCLC, Based on Results From Phase 3 KEYNOTE-671 Trial, and for Radically Unresectable Urothelial Carcinoma, Based on Results From Phase 3 KEYNOTE-A39/EV-302 and Phase 2 KEYNOTE-052 Trials (Read Announcement)
KEYTRUDA Plus Chemotherapy Before Surgery and Continued as Single Agent After Surgery Reduced Risk of Death by More Than One-Third (34%) Versus Neoadjuvant Chemotherapy in High-Risk, Early-Stage TNBC, Based on Results From Phase 3 KEYNOTE-522 (Read Announcement)
KEYTRUDA Plus Chemoradiotherapy (CRT) Reduced Risk of Death by 33% Versus CRT Alone in Patients With Newly Diagnosed, High-Risk, Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18/ENGOT-cx11/GOG-3047 Trial (Read Announcement)
KEYTRUDA Ten-Year Data Demonstrated Sustained OS Benefit Versus Ipilimumab in Advanced Melanoma, Based on Results From Phase 3 KEYNOTE-006 Trial (Read Announcement)
KEYTRUDA Plus Lenvima in Combination With Transarterial Chemoembolization (TACE) Significantly Improved Progression-Free Survival Compared to TACE Alone in Patients With Unresectable, Non-Metastatic Hepatocellular Carcinoma, Based on Results From Phase 3 LEAP-012 Trial (Read Announcement)
KEYTRUDA Plus Trastuzumab and Chemotherapy Significantly Improved OS Versus Trastuzumab and Chemotherapy Alone in First-Line Treatment of Patients With HER2-Positive Advanced Gastric or GEJ Adenocarcinoma, Based on Results From Phase 3 KEYNOTE-811 Trial (Read Announcement)
KEYTRUDA Met Primary Endpoint of Event-Free Survival as Perioperative Treatment Regimen in Patients With Resected, LA-HNSCC, Based on Results From Phase 3 KEYNOTE-689 Trial (Read Announcement)
Patritumab Deruxtecan (HER3-DXd) Demonstrated Statistically Significant Improvement in Progression-Free Survival Versus Doublet Chemotherapy in Patients With Locally Advanced or Metastatic EGFR-Mutated NSCLC, Based on Results From Phase 3 HERTHENA-Lung02 Trial (Read Announcement)
Ifinatamab Deruxtecan Continued to Demonstrate Promising Objective Response Rates in Patients With Extensive-Stage SCLC, Based on Results From Phase 2 IDeate-Lung01 Trial (Read Announcement)
Merck and Moderna Initiated Phase 3 Trial Evaluating Adjuvant V940 (mRNA-4157) in Combination With KEYTRUDA After Neoadjuvant KEYTRUDA and Chemotherapy in Patients With Certain Types of NSCLC (Read Announcement)
Merck Initiated Phase 3 Shorespan-007 Trial for Bomedemstat, an Investigational Candidate for the Treatment of Certain Patients With Essential Thrombocythemia (Read Announcement)
Merck and Daiichi Sankyo Initiated Phase 3 IDeate-Lung02 Trial of Ifinatamab Deruxtecan in Patients With Relapsed SCLC (Read Announcement)
Merck and Exelixis Signed Clinical Development Collaboration To Evaluate Investigational Zanzalintinib in Combination With KEYTRUDA in Head and Neck Cancer and in Combination With WELIREG in RCC (Read Announcement)

 

- 10 -

 

Vaccines Clesrovimab (MK-1654), an Investigational RSV Preventative Monoclonal Antibody, Significantly Reduced Incidence of RSV Disease and Hospitalization in Healthy Preterm and Full-Term Infants, Based on Results From Phase 2b/3 MK-1654-004 Trial (Read Announcement)
CDC’s ACIP Recommended CAPVAXIVE for Pneumococcal Vaccination in Adults 50 Years of Age and Older (Read Announcement)
CAPVAXIVE Demonstrated Positive Immune Responses in Adults With Increased Risk for Pneumococcal Disease, Based on Results From Phase 3 STRIDE-8 Trial (Read Announcement)
Merck Announced Positive Top-line Results From Phase 3 Trial Evaluating Efficacy and Safety of GARDASIL 9 in Japanese Males (Read Announcement)
Cardiovascular EC Approved WINREVAIR in Combination With Other PAH Therapies for the Treatment of PAH in Adult Patients With Functional Class II-III, Based on Results From Phase 3 STELLAR Trial (Read Announcement)
Immunology Merck Presented New Long-Term Data for Tulisokibart (MK-7240), an Investigational Anti-TL1A Monoclonal Antibody, in Inflammatory Bowel Disease at UEG Week 2024 (Read Announcement)
Infectious Diseases Merck and Gilead Announced Phase 2 Data Showing a Treatment Switch to an Investigational Oral Once-Weekly Combination Regimen of Islatravir and Lenacapavir (MK-8591D) Maintained Viral Suppression in Adults at Week 48 (Read Announcement)
Ophthalmology Merck and EyeBio Initiated Phase 2b/3 Clinical Trial for MK-3000 for the Treatment of Diabetic Macular Edema (Read Announcement)

 

Sustainability Highlights

 

Merck issued its 2023/2024 Impact Report, reaffirming its commitment to operating responsibly and enabling broad access to its products. The report noted how the company reached more than 550 million people around the world with its medicines and vaccines through commercial channels, clinical trials, voluntary licensing and product donations.

 

Full-Year 2024 Financial Outlook

 

The following table summarizes the company’s full-year financial outlook.

 

    Full Year 2024  
    Updated     Prior  
Sales*     $63.6 to $64.1 billion       $63.4 to $64.4 billion  
Non-GAAP Gross margin2     Approximately 81%       Approximately 81%  
Non-GAAP Operating expenses2**     $27.8 to $28.3 billion       $26.8 to $27.6 billion  
Non-GAAP Other (income) expense, net2     Approximately $100 million expense       Approximately $350 million expense  
Non-GAAP Effective tax rate2     16.0% to 17.0%       15.5% to 16.5%  
Non-GAAP EPS2***     $7.72 to $7.77       $7.94 to $8.04  
Share count (assuming dilution)     Approximately 2.54 billion       Approximately 2.54 billion  

*The company does not have any non-GAAP adjustments to sales.

**Includes one-time R&D charges of $656 million for Harpoon Therapeutics, Inc. (Harpoon) acquisition, $1.45 billion for EyeBio acquisition and related development milestone payment, and $750 million for acquisition of CN201 (MK-1045) from Curon. Outlook does not assume any additional significant potential business development transactions.

***Includes net one-time charge of $1.05 per share in aggregate for the Harpoon, EyeBio and Curon transactions, and the cash payment received from Daiichi Sankyo.

 

- 11 -

 

Merck has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the company’s future GAAP results.

 

Merck continues to experience strong growth, including from KEYTRUDA, new product launches and Animal Health. As a result, Merck is narrowing the range of its full-year sales outlook.

 

Merck now expects its full-year sales to be between $63.6 billion and $64.1 billion, including a negative impact of foreign exchange of approximately 3 percentage points, at mid-October 2024 exchange rates. Approximately 2 percentage points of the negative impact of foreign exchange is due to the devaluation of the Argentine peso, which is being largely offset by inflation-related price increases, consistent with practice in that market.

 

Merck now expects its full-year non-GAAP effective income tax rate to be between 16.0% and 17.0%, which includes an unfavorable impact related to the one-time charge associated with the acquisition of CN201 (MK-1045) from Curon.

 

Merck now expects its full-year non-GAAP EPS to be between $7.72 and $7.77. The outlook includes a negative impact of foreign exchange of approximately $0.30 per share. The negative impact of foreign exchange is primarily due to the devaluation of the Argentine peso, which is being largely offset by inflation-related price increases, consistent with practice in that market. This revised non-GAAP EPS range reflects a net charge of $0.24 per share for the following items not previously included in the outlook:

 

The acquisition of CN201 (MK-1045) from Curon.
Payment received from Daiichi Sankyo related to the expansion of the existing development and commercialization agreement.

 

Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions.

 

Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, income and losses from investments in equity securities, as well as a tax benefit in 2024 due to a reduction in reserves for unrecognized income tax benefits, resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year.

 

- 12 -

 

Earnings Conference Call

 

Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, October 31, at 9 a.m. ET via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures, and slides highlighting the results, will be available at www.merck.com.

 

All participants may join the call by dialing (800) 369-3351 (U.S. and Canada Toll-Free) or (517) 308-9448 and using the access code 9818590.

 

About Merck

 

At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. For more information, visit www.merck.com and connect with us on X (formerly Twitter), Facebook, Instagram, YouTube and LinkedIn.

 

Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA

 

This news release of Merck & Co., Inc., Rahway, N.J., USA (the “company”) includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the company’s management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

 

Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the company’s ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the company’s patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

 

The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).

 

- 13 -

 

Appendix

Generic product names are provided below.

 

Pharmaceutical

BRIDION (sugammadex)

CAPVAXIVE (Pneumococcal 21-valent Conjugate Vaccine)

GARDASIL (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine, Recombinant)

GARDASIL 9 (Human Papillomavirus 9-valent Vaccine, Recombinant)

JANUMET (sitagliptin and metformin HCl)

JANUVIA (sitagliptin)

KEYTRUDA (pembrolizumab)

LAGEVRIO (molnupiravir)

Lenvima (lenvatinib)

Lynparza (olaparib)

M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live)

PREVYMIS (letermovir)

PROQUAD (Measles, Mumps, Rubella and Varicella Virus Vaccine Live)

ROTATEQ (Rotavirus Vaccine, Live, Oral, Pentavalent)

VARIVAX (Varicella Virus Vaccine Live)

VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine)

VERQUVO (vericiguat)

WELIREG (belzutifan)

WINREVAIR (sotatercept-csrk)

 

Animal Health

BRAVECTO (fluralaner)

  

###

 

 
 

 

Media Contacts: Investor Contacts:

 

Robert Josephson

(203) 914-2372

robert.josephson@merck.com

 

Michael Levey

(215) 872-1462

michael.levey@merck.com

 

Peter Dannenbaum

(732) 594-1579

peter.dannenbaum@merck.com

 

Steven Graziano

(732) 594-1583

steven.graziano@merck.com

 

 


 

MERCK & CO., INC.
CONSOLIDATED STATEMENT OF INCOME - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1

 

    GAAP           GAAP      
                      Sep YTD     Sep YTD      
      3Q24     3Q23     % Change       2024       2023     % Change  
Sales   $ 16,657     $ 15,962       4 %   $ 48,544     $ 45,485     7 %
                                               
Costs, Expenses and Other                                              
Cost of sales     4,080       4,264       -4 %     11,365       12,214     -7 %
Selling, general and administrative     2,731       2,519       8 %     7,952       7,700     3 %
Research and development     5,862       3,307       77 %     13,354       20,904     -36 %
Restructuring costs     56       126       -56 %     258       344     -25 %
Other (income) expense, net     (162 )     126       *       (151 )     388     *  
Income Before Taxes     4,090       5,620       -27 %     15,766       3,935     *  
Taxes on Income     929       870               2,377       2,332        
Net Income     3,161       4,750       -33 %     13,389       1,603     *  
Less: Net Income Attributable to Noncontrolling Interests     4       5               15       12        
Net Income Attributable to Merck & Co., Inc.   $ 3,157     $ 4,745       -33 %   $ 13,374     $ 1,591     *  
                                               
Earnings per Common Share Assuming Dilution   $ 1.24     $ 1.86       -33 %   $ 5.26     $ 0.62     *  
                                               
Average Shares Outstanding Assuming Dilution     2,541       2,546               2,543       2,549        
Tax Rate     22.7 %     15.5 %             15.1 %     59.3 %      
                                               
* 100% or greater                                              

 

 


 

MERCK & CO., INC.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 GAAP TO NON-GAAP RECONCILIATION
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 2a

 

    GAAP     Acquisition
and
Divestiture-
Related
Costs (1)
    Restructuring
Costs (2)
    (Income)
Loss from
Investments
in Equity
Securities
    Certain
Other
Items
    Adjustment
Subtotal
    Non-GAAP  
Third Quarter                                                        
Cost of sales   $ 4,080       639       192                       831     $ 3,249  
Selling, general and administrative     2,731       43       31                       74       2,657  
Research and development     5,862       24                               24       5,838  
Restructuring costs     56               56                       56        
Other (income) expense, net     (162 )     (27 )             58               31       (193 )
Income Before Taxes     4,090       (679 )     (279 )     (58 )             (1,016 )     5,106  
Income Tax Provision (Benefit)     929       (129 )(3)     (46 )(3)     (13 )(3)             (188 )     1,117  
Net Income     3,161       (550 )     (233 )     (45 )             (828 )     3,989  
Net Income Attributable to Merck & Co., Inc.     3,157       (550 )     (233 )     (45 )             (828 )     3,985  
Earnings per Common Share Assuming Dilution   $ 1.24       (0.22 )     (0.09 )     (0.02 )             (0.33 )   $ 1.57  
                                                         
Tax Rate     22.7 %                                             21.9 %
                                                         
Sep YTD                                                        
Cost of sales   $ 11,365       1,708       374                       2,082     $ 9,283  
Selling, general and administrative     7,952       88       67                       155       7,797  
Research and development     13,354       60       2                       62       13,292  
Restructuring costs     258               258                       258        
Other (income) expense, net     (151 )     (48 )             (107 )             (155 )     4  
Income Before Taxes     15,766       (1,808 )     (701 )     107               (2,402 )     18,168  
Income Tax Provision (Benefit)     2,377       (350 )(3)     (118 )(3)     23 (3)     (259 )(4)     (704 )     3,081  
Net Income     13,389       (1,458 )     (583 )     84       259       (1,698 )     15,087  
Net Income Attributable to Merck & Co., Inc.     13,374       (1,458 )     (583 )     84       259       (1,698 )     15,072  
Earnings per Common Share Assuming Dilution   $ 5.26       (0.57 )     (0.23 )     0.03       0.10       (0.67 )   $ 5.93  
                                                         
Tax Rate     15.1 %                                             17.0 %

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. In addition, annual employee compensation, including senior management’s compensation, is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

(1) Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses primarily reflect the amortization of intangible assets and Animal Health intangible asset impairment charges. Amounts included in other (income) expense, net, primarily reflect royalty income related to the prior termination of the Sanofi-Pasteur MSD joint venture.

 

(2) Amounts primarily include employee separation costs, accelerated depreciation and asset impairments associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

 

(3) Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.  

 

(4) Represents a benefit due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year.

 

 


  

MERCK & CO., INC.
FRANCHISE / KEY PRODUCT SALES
(AMOUNTS IN MILLIONS)
(UNAUDITED)
Table 3

 

    2024       2023     3Q     Sep YTD
      1Q     2Q     3Q     Sep YTD       1Q     2Q     3Q     Sep YTD     Nom %     Ex-Exch %     Nom %     Ex-Exch %
TOTAL SALES (1)    $ 15,775     $ 16,112     $ 16,657     $ 48,544     $ 14,487     $ 15,035     $ 15,962     $ 45,485     4     7     7     10
PHARMACEUTICAL     14,006       14,408       14,943       43,358       12,721       13,457       14,263       40,442     5     8     7     10
Oncology                                                                                      
Keytruda     6,947       7,270       7,429        21,646       5,795       6,271       6,338       18,403     17     21     18     22
Alliance Revenue – Lynparza (2)     292       317       337       947       275       310       299       884     13     13     7     8
Alliance Revenue – Lenvima (2)     255       249       251       755       232       242       260       734     -3     -4     3     3
Welireg     85       126       139       349       42       50       54       146     156     157     138     139
Alliance Revenue – Reblozyl (3)     71       90       100       261       43       47       52       142     91     91     84     84
Vaccines (4)                                                                                      
Gardasil/Gardasil 9     2,249       2,478       2,306       7,032       1,972       2,458       2,585       7,015     -11     -10     -     3
ProQuad/M-M-R II/Varivax     570       617       703       1,891       528       582       713       1,823     -1     -1     4     4
Vaxneuvance     219       189       239       647       106       168       214       488     12     13     33     34
RotaTeq     216       163       193       572       297       131       156       584     24     25     -2     -1
Pneumovax 23     61       59       68       188       96       92       140       327     -51     -51     -42     -40
Hospital Acute Care                                                                                      
Bridion     440       455       420       1,315       487       502       424       1,413     -1     -     -7     -6
Prevymis     174       188       208       570       129       143       157       430     32     36     33     36
Dificid     73       92       96       261       65       76       74       215     31     31     21     21
Zerbaxa     56       62       64       182       50       54       53       157     22     25     16     19
Noxafil     56       45       41       141       60       55       51       167     -20     -13     -15     -5
Cardiovascular                                                                                      
Alliance Revenue - Adempas/Verquvo (5)     98       106       102       306       99       68       92       259     11     11     18     18
Winrevair             70       149       219                                     -     -     -     -
Adempas (6)     70       72       72       214       59       65       65       189     11     13     13     15
Virology                                                                                      
Lagevrio     350       110       383       843       392       203       640       1,236     -40     -36     -32     -27
Isentress/Isentress HD     111       89       102       302       123       136       119       377     -14     -10     -20     -16
Delstrigo     56       60       65       180       44       50       54       148     21     25     22     26
Pifeltro     42       39       42       123       34       38       37       109     14     15     13     14
Neuroscience                                                                                      
Belsomra     46       53       78       177       56       63       58       176     35     40     -     7
Immunology                                                                                      
Simponi     184       172       189       545       180       180       179       539     5     7     1     2
Remicade     39       35       41       115       51       48       45       144     -9     -5     -20     -16
Diabetes (7)                                                                                      
Januvia     419       405       278       1,102       551       511       581       1,642     -52     -49     -33     -30
Janumet     251       224       204       679       329       354       255       937     -20     -13     -28     -23
Other Pharmaceutical (8)     576       573       644       1,796       626       560       568       1,758     13     15     2     5
ANIMAL HEALTH     1,511       1,482       1,487       4,480       1,491       1,456       1,400       4,347     6     11     3     7
Livestock     850       837       886       2,573       849       807       874       2,530     1     7     2     7
Companion Animal     661       645       601       1,907       642       649       526       1,817     14     17     5     7
Other Revenues (9)     258       222       227       706       275       122       299       696     -24     -22     2     4

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

 

(1) Only select products are shown.

 

(2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

(3) Alliance Revenue represents royalties.

 

(4) Total Vaccines sales were $3,424 million, $3,656 million and $3,675 million in the first, second and third quarter of 2024, respectively, and $3,133 million, $3,557 million and $4,002 million in the first, second and third quarter of 2023, respectively.

 

(5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.

 

(6) Net product sales in Merck's marketing territories.

 

(7) Total Diabetes sales were $745 million, $715 million and $592 million in the first, second and third quarter of 2024, respectively, and $950 million, $951 million and $924 million in the first, second and third quarter of 2023, respectively.

 

(8) Includes Pharmaceutical products not individually shown above.

 

(9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $61 million, $15 million and $15 million in the first, second and third quarter of 2024, respectively, and $51 million, $3 million and $65 million in the first, second and third quarter of 2023, respectively.

 

 

 

EX-99.2 3 tm2426878d1_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF OPERATIONS - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

 

    2024     2023     % Change  
      1Q     2Q       3Q     Sep YTD       1Q     2Q     3Q     Sep YTD       4Q     Full Year       3Q     Sep
YTD
 
Sales   $ 15,775     $ 16,112     $ 16,657     $ 48,544     $ 14,487     $ 15,035     $ 15,962     $ 45,485     $ 14,630     $ 60,115       4 %     7 %
                                                                                                 
Costs, Expenses and Other                                                                                                
Cost of sales     3,540       3,745       4,080       11,365       3,926       4,024       4,264       12,214       3,911       16,126       -4 %     -7 %
Selling, general and administrative     2,483       2,739       2,731       7,952       2,479       2,702       2,519       7,700       2,804       10,504       8 %     3 %
Research and development     3,992       3,500       5,862       13,354       4,276       13,321       3,307       20,904       9,628       30,531       77 %     -36 %
Restructuring costs     123       80       56       258       67       151       126       344       255       599       -56 %     -25 %
Other (income) expense, net     (33 )     42       (162 )     (151 )     89       172       126       388       78       466       *       *  
Income (Loss) Before Taxes     5,670       6,006       4,090       15,766       3,650       (5,335 )     5,620       3,935       (2,046 )     1,889       -27 %     *  
Income Tax Provision (Benefit)     903       545       929       2,377       825       637       870       2,332       (821 )     1,512                  
Net Income (Loss)     4,767       5,461       3,161       13,389       2,825       (5,972 )     4,750       1,603       (1,225 )     377       -33 %     *  
Less: Net Income Attributable to Noncontrolling Interests     5       6       4       15       4       3       5       12       1       12                  
Net Income (Loss) Attributable to Merck & Co., Inc.   $ 4,762     $ 5,455     $ 3,157     $ 13,374     $ 2,821     $ (5,975 )   $ 4,745     $ 1,591     $ (1,226 )   $ 365       -33 %     *  
                                                                                                 
Earnings (Loss) per Common Share Assuming Dilution (1)   $ 1.87     $ 2.14     $ 1.24     $ 5.26     $ 1.11     $ (2.35 )   $ 1.86     $ 0.62     $ (0.48 )   $ 0.14       -33 %     *  
                                                                                                 
Average Shares Outstanding Assuming Dilution (1)     2,544       2,544       2,541       2,543       2,551       2,539       2,546       2,549       2,533       2,547                  
Tax Rate     15.9 %     9.1 %     22.7 %     15.1 %     22.6 %     -11.9 %     15.5 %     59.3 %     40.1 %     80.0 %                

 

* 100% or greater

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

 

(1) Because the company recorded a net loss in the second quarter and the fourth quarter of 2023, no potential dilutive common shares were used in the computation of loss per common share assuming dilution as the effect would have been anti-dilutive.

 

 


 

MERCK & CO., INC.

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 GAAP TO NON-GAAP RECONCILIATION

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

 

    GAAP     Acquisition
and
Divestiture-
Related
Costs (1)
    Restructuring
Costs (2)
    (Income)
Loss from
Investments
in Equity
Securities
    Certain
Other
Items
    Adjustment
Subtotal
    Non-GAAP  
Third Quarter                                                        
Cost of sales   $ 4,264       552       33                       585     $ 3,679  
Selling, general and administrative     2,519       17       40                       57       2,462  
Research and development     3,307       10                               10       3,297  
Restructuring costs     126               126                       126        
Other (income) expense, net     126       (24 )             17               (7 )     133  
Income Before Taxes     5,620       (555 )     (199 )     (17 )             (771 )     6,391  
Income Tax Provision (Benefit)     870       (53 )(4)     (32 )(4)     (4 )(4)             (89 )     959  
Net Income     4,750       (502 )     (167 )     (13 )             (682 )     5,432  
Net Income Attributable to Merck & Co., Inc.     4,745       (502 )     (167 )     (13 )             (682 )     5,427  
Earnings per Common Share Assuming Dilution   $ 1.86       (0.20 )     (0.07 )                   (0.27 )   $ 2.13  
                                                         
Tax Rate     15.5 %                                             15.0 %
                                                         
Sep YTD                                                        
Cost of sales   $ 12,214       1,564       94                       1,658     $ 10,556  
Selling, general and administrative     7,700       62       93                       155       7,545  
Research and development     20,904       29       1                       30       20,874  
Restructuring costs     344               344                       344        
Other (income) expense, net     388       (12 )             (218 )     573 (3)      343       45  
Income Before Taxes     3,935       (1,643 )     (532 )     218       (573 )     (2,530 )     6,465  
Income Tax Provision (Benefit)     2,332       (249 )(4)     (88 )(4)     47 (4)      (60 )(4)      (350 )     2,682  
Net Income     1,603       (1,394 )     (444 )     171       (513 )     (2,180 )     3,783  
Net Income Attributable to Merck & Co., Inc.     1,591       (1,394 )     (444 )     171       (513 )     (2,180 )     3,771  
Earnings per Common Share Assuming Dilution   $ 0.62       (0.55 )     (0.18 )     0.07       (0.20 )     (0.86 )   $ 1.48  
                                                         
Tax Rate     59.3 %                                             41.5 %

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors’ understanding of the company’s results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics.  In addition, senior management’s annual compensation is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

(1) Amounts included in cost of sales primarily reflect expenses for the amortization of intangible assets. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses primarily reflect expenses for the amortization of intangible assets. Amounts included in other (income) expense, net, primarily reflect royalty income, partially offset by an increase in the estimated fair value measurement of liabilities for contingent consideration related to the prior termination of the Sanofi-Pasteur MSD joint venture. Additionally, the nine-month period includes a $37 million loss on the sale of a business.

 

(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company's formal restructuring programs.

 

(3) Reflects a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation.

 

(4) Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 

 


 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

THIRD QUARTER 2024

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3a

 

    Global     U.S.     International  
    3Q 2024     3Q 2023     % Change     3Q 2024     3Q 2023     % Change     3Q 2024     3Q 2023     % Change  
TOTAL SALES (1)    $ 16,657     $ 15,962       4     $ 8,736     $ 7,715       13     $ 7,922     $ 8,247       -4  
PHARMACEUTICAL     14,943       14,263       5       8,227       7,153       15       6,717       7,110       -6  
Oncology                                                                        
Keytruda     7,429       6,338       17       4,500       3,795       19       2,929       2,543       15  
Alliance Revenue – Lynparza (2)     337       299       13       161       153       5       177       146       21  
Alliance Revenue – Lenvima (2)     251       260       -3       173       160       9       78       100       -22  
Welireg     139       54       156       127       51       148       12       3       *  
Alliance Revenue – Reblozyl (3)     100       52       91       82       43       93       18       10       83  
Vaccines (4)                                                                        
Gardasil/Gardasil 9     2,306       2,585       -11       1,020       838       22       1,285       1,746       -26  
ProQuad/M-M-R II/Varivax     703       713       -1       572       567       1       131       146       -10  
Vaxneuvance     239       214       12       137       182       -25       103       33       *  
RotaTeq     193       156       24       131       108       21       62       48       28  
Pneumovax 23     68       140       -51       19       42       -54       49       98       -50  
Hospital Acute Care                                                                        
Bridion     420       424       -1       339       265       28       81       159       -49  
Prevymis     208       157       32       101       70       43       107       87       24  
Dificid     96       74       31       83       69       20       13       5       190  
Zerbaxa     64       53       22       39       29       34       26       24       6  
Noxafil     41       51       -20       1       4       -85       40       47       -15  
Cardiovascular                                                                        
Winrevair     149               -       147               -       3               -  
Alliance Revenue - Adempas/Verquvo (5)     102       92       11       96       96       -1       7       -4       *  
Adempas (6)     72       65       11                               72       65       11  
Virology                                                                        
Lagevrio     383       640       -40       84               -       299       640       -53  
Isentress/Isentress HD     102       119       -14       54       58       -6       48       61       -21  
Delstrigo     65       54       21       15       13       15       50       40       23  
Pifeltro     42       37       14       31       27       12       12       10       20  
Neuroscience                                                                        
Belsomra     78       58       35       20       23       -12       58       35       66  
Immunology                                                                        
Simponi     189       179       5                               189       179       5  
Remicade     41       45       -9                               41       45       -9  
Diabetes (7)                                                                        
Januvia     278       581       -52       67       328       -80       211       252       -16  
Janumet     204       255       -20       15       43       -67       190       211       -10  
Other Pharmaceutical (8)     644       568       13       213       189       13       426       381       12  
ANIMAL HEALTH     1,487       1,400       6       487       462       6       999       938       6  
Livestock     886       874       1       194       205       -5       692       669       3  
Companion Animal     601       526       14       293       257       14       307       269       14  
Other Revenues (9)     227       299       -24       22       100       -78       206       199       4  

 

*200% or greater

 

Sum of U.S. plus international may not equal global due to rounding.

 

(1) Only select products are shown.

 

(2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

(3) Alliance Revenue represents royalties.

 

(4) Total Vaccines sales were $3,675 million and $4,002 million on a global basis in the third quarter of 2024 and 2023, respectively.

 

(5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.

 

(6) Net product sales in Merck's marketing territories.

 

(7) Total Diabetes sales were $592 million and $924 million on a global basis in the third quarter of 2024 and 2023, respectively.

 

(8) Includes Pharmaceutical products not individually shown above.

 

(9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $15 million and $65 million on a global basis in the third quarter of 2024 and 2023, respectively.

 

 


 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

SEPTEMBER YEAR-TO-DATE 2024

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

 

    Global     U.S.     International  
    Sep YTD
2024
    Sep YTD
2023
    % Change     Sep YTD
2024
    Sep YTD
2023
    % Change     Sep YTD
2024
    Sep YTD
2023
    % Change  
TOTAL SALES (1)    $ 48,544     $ 45,485       7     $ 24,089     $ 21,393       13     $ 24,455     $ 24,092       2  
PHARMACEUTICAL     43,358       40,442       7       22,563       19,840       14       20,795       20,602       1  
Oncology                                                                        
Keytruda     21,646       18,403       18       13,031       11,142       17       8,614       7,261       19  
Alliance Revenue – Lynparza (2)     947       884       7       449       439       2       498       445       12  
Alliance Revenue – Lenvima (2)     755       734       3       523       476       10       233       258       -10  
Welireg     349       146       138       320       141       128       29       6       *  
Alliance Revenue – Reblozyl (3)     261       142       84       215       108       99       45       33       36  
Vaccines (4)                                                                        
Gardasil/Gardasil 9     7,032       7,015       -       2,045       1,718       19       4,988       5,297       -6  
ProQuad/M-M-R II/Varivax     1,891       1,823       4       1,500       1,435       5       391       388       1  
Vaxneuvance     647       488       33       397       423       -6       251       65       *  
RotaTeq     572       584       -2       388       381       2       185       203       -9  
Pneumovax 23     188       327       -42       36       105       -66       152       223       -32  
Hospital Acute Care                                                                        
Bridion     1,315       1,413       -7       1,020       841       21       296       572       -48  
Prevymis     570       430       33       265       186       43       305       244       25  
Dificid     261       215       21       231       199       16       30       16       93  
Zerbaxa     182       157       16       106       86       23       77       71       8  
Noxafil     141       167       -15       9       29       -69       132       138       -4  
Cardiovascular                                                                        
Alliance Revenue - Adempas/Verquvo (5)     306       259       18       283       249       14       22       10       123  
Winrevair     219               -       216               -       3               -  
Adempas (6)     214       189       13                               214       189       13  
Virology                                                                        
Lagevrio     843       1,236       -32       144               -       699       1,236       -43  
Isentress/Isentress HD     302       377       -20       147       165       -11       155       212       -27  
Delstrigo     180       148       22       42       37       13       139       110       26  
Pifeltro     123       109       13       86       78       10       37       31       20  
Neuroscience                                                                        
Belsomra     177       176       -       53       60       -11       124       117       6  
Immunology                                                                        
Simponi     545       539       1                               545       539       1  
Remicade     115       144       -20                               115       144       -20  
Diabetes (7)                                                                        
Januvia     1,102       1,642       -33       428       842       -49       674       800       -16  
Janumet     679       937       -28       70       182       -62       610       755       -19  
Other Pharmaceutical (8)     1,796       1,758       2       559       518       8       1,232       1,239       -1  
ANIMAL HEALTH     4,480       4,347       3       1,417       1,418       -       3,063       2,929       5  
Livestock     2,573       2,530       2       529       543       -3       2,044       1,987       3  
Companion Animal     1,907       1,817       5       888       875       1       1,019       942       8  
Other Revenues (9)     706       696       2       109       135       -19       597       561       6  

 

*200% or greater

 

Sum of U.S. plus international may not equal global due to rounding.

 

(1) Only select products are shown.

 

(2) Alliance Revenue represents Merck’s share of profits, which are product sales net of cost of sales and commercialization costs.

 

(3) Alliance Revenue represents royalties.

 

(4) Total Vaccines sales were $10,755 million and $10,692 million on a global basis for September YTD 2024 and 2023, respectively.

 

(5) Alliance Revenue represents Merck's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs.

 

(6) Net product sales in Merck's marketing territories.

 

(7) Total Diabetes sales were $2,053 million and $2,826 million on a global basis for September YTD 2024 and 2023, respectively.

 

(8) Includes Pharmaceutical products not individually shown above.

 

(9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $91 million and $118 million on a global basis for September YTD 2024 and 2023, respectively.

 

 


 

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3c

 

    2024     2023     % Change  
    1Q     2Q     3Q     Sep YTD     1Q     2Q     3Q     Sep YTD     4Q     Full Year     3Q     Sep YTD  
TOTAL PHARMACEUTICAL   $ 14,006     $ 14,408     $ 14,943     $ 43,358     $ 12,721     $ 13,457     $ 14,263     $ 40,442     $ 13,141     $ 53,583       5       7  
                                                                                                 
United States     6,936       7,399       8,227       22,563       6,117       6,570       7,153       19,840       6,698       26,539       15       14  
% Pharmaceutical Sales     49.5 %     51.4 %     55.1 %     52.0 %     48.1 %     48.8 %     50.1 %     49.1 %     51.0 %     49.5 %                
Europe (1)     2,555       2,572       2,620       7,748       2,326       2,401       2,497       7,224       2,491       9,715       5       7  
% Pharmaceutical Sales     18.2 %     17.9 %     17.5 %     17.9 %     18.3 %     17.8 %     17.5 %     17.9 %     19.0 %     18.1 %                
China     1,744       1,790       996       4,530       1,694       1,887       1,674       5,255       1,456       6,710       -40       -14  
% Pharmaceutical Sales     12.5 %     12.4 %     6.7 %     10.4 %     13.3 %     14.0 %     11.7 %     13.0 %     11.1 %     12.5 %                
Japan     802       664       919       2,386       737       652       1,062       2,451       629       3,081       -13       -3  
% Pharmaceutical Sales     5.7 %     4.6 %     6.2 %     5.5 %     5.8 %     4.8 %     7.4 %     6.1 %     4.8 %     5.7 %                
Latin America     601       661       730       1,992       470       566       696       1,731       596       2,328       5       15  
% Pharmaceutical Sales     4.3 %     4.6 %     4.9 %     4.6 %     3.7 %     4.2 %     4.9 %     4.3 %     4.5 %     4.3 %                
Asia Pacific (other than China and Japan)     580       595       669       1,844       703       705       636       2,045       616       2,661       5       -10  
% Pharmaceutical Sales     4.1 %     4.1 %     4.5 %     4.3 %     5.5 %     5.2 %     4.5 %     5.1 %     4.7 %     5.0 %                
Eastern Europe/Middle East/Africa     395       353       400       1,147       381       370       301       1,052       299       1,351       33       9  
% Pharmaceutical Sales     2.8 %     2.4 %     2.7 %     2.6 %     3.0 %     2.7 %     2.1 %     2.6 %     2.3 %     2.5 %                
Canada     138       143       133       414       141       127       133       401       138       540       -       3  
% Pharmaceutical Sales     1.0 %     1.0 %     0.9 %     1.0 %     1.1 %     0.9 %     0.9 %     1.0 %     1.1 %     1.0 %                
Other     255       231       249       734       152       179       111       443       218       658       124       66  
% Pharmaceutical Sales     1.9 %     1.6 %     1.5 %     1.7 %     1.2 %     1.6 %     0.9 %     0.9 %     1.5 %     1.4 %                

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding. 

 

(1) Europe represents all European Union countries, the European Union accession markets and the United Kingdom.

 

 


 

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

 

OTHER (INCOME) EXPENSE, NET

 

    3Q24   3Q23   Sep
YTD
2024
    Sep
YTD
2023
 
Interest income   $ (127 )   $ (73 )   $ (269 )   $ (295 )
Interest expense     330       317       943       836  
Exchange losses     33       85       177       208  
Loss (income) from investments in equity securities, net (1)     31       33       (169 )     (240 )
Net periodic defined benefit plan (credit) cost other than service cost     (157 )     (138 )     (476 )     (364 )
Other, net     (272 )     (98 )     (357 )     243  
Total   $ (162 )   $ 126     $ (151 )   $ 388  

 

(1) Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investment funds. Unrealized gains and losses from investments that are directly owned are determined at the end of the reporting period, while gains and losses from ownership interests in investment funds are accounted for on a one quarter lag.