Merck (MRK) Q2 FY26 earnings call: guidance and Q&A

Given sac-TMT's signal regardless of PD-L1 expression, could Merck pursue a broad sac-TMT/pembro trial against KEYNOTE-189, and are sac-TMT combos with both pembro and PD-1 VEGF possible for first-line lung cancer?

Dean Li confirmed that Merck is rethinking KEYNOTE-189 with sac-TMT as a next-gen chemo and is advancing trials to optimize combinations with IO agents like KEYTRUDA or MK-2010, moving quickly with signal-finding and dose-scheduling studies.

“My simple answer is yes on all accounts, but I'll just step back a little bit, which is for a -- sac-TMT we've stated, we think it's a cornerstone ADC. I mean it's a TROP-2 ADC, but it has a novel linker and payload.”

asked by Akash Tewari · answered by Dean Li

To what extent is the activity seen with TL1As in new indications like HS beyond what would be expected from a TNF inhibitor?

Dean Li explained that while TNFs are important, TL1A is a member of the TNF superfamily. He highlighted positive readouts in GI (UC) and derm (HS), giving confidence in derm possibilities. He noted that TL1A's clean safety profile makes combinations possible, and specific biomarker data supports moving forward in rheumatoid arthritis.

“In relationship to what we've seen so far, clearly, when you think about immunology, you think of 3 buckets, you think of GI, you think of derm and you think of rheumatology. In GI, clearly, we're very we're very eager to move forward in ulcerative colitis and Crohn's disease, and we're really eager to see the other half of the UC study.”

asked by Umer Raffat · answered by Dean Li

What is the profile of TL1A in ulcerative colitis given one positive Phase III, and how does the negative SSc-ILD study impact thinking about the fibrosis opportunity?

Dean Li stated they are eager for the second UC study readout to complete the regulatory package. For SSc-ILD, he noted it's a challenging disease where no anti-cytokine has worked, and the study showed no safety concerns. He cautioned against dismissing the immunofibrosis hypothesis based on this single study, especially if the placebo arm showed no progression.

“In relationship to SSC ILD. I would just step back. I don't know any anti-cytokine that has worked. So this was a bold move to move that forward. It's a challenging and refractory disease. We see no safety concerns.”

asked by Michael Yee · answered by Dean Li

How does Merck view the pace of initial access for LIPFENDRA, and is an outcomes trial needed as a commercial tipping point?

Rob Davis expressed satisfaction with the initial response to LIPFENDRA, noting a clean label and high physician/patient interest. He expects broad access to take time due to the pricing strategy but anticipates it will be a blockbuster opportunity long-term. Dean Li added that the FDA views LIPFENDRA as a cornerstone to demonstrate their priority review goals, including accessibility.

“As we look at it from an access perspective, overall, we're, I think, in pretty good shape. You remember, we really tried to set this up for broad access in the way we priced it and the way we're going. That said, we do believe it's going to take time to get that access established.”

asked by Geoffrey Meacham · answered by Robert Davis

What were the reasons for adding another seasonal Northern Hemisphere study for MK-1406, and was this based on data or regulatory components?

Dean Li clarified that the extension is to ensure the most robust label and global regulatory submissions, and to support a broader footprint for ex-U.S. markets, not due to any lack of confidence in existing data. Rob Davis reiterated that there's no change in confidence and the extension is about strengthening the filing given the time available due to a necessary bridging study.

“What we have said all along is that we plan to launch in 2029 and that, at the same time, I needed to do CMC work in relationship to getting it from 3 shots to 2 shots. And so that's the rate-limiting step.”

asked by Mohit Bansal · answered by Dean Li

What is the biggest risk to achieving the $70 billion potential opportunity, and which programs have increased confidence in the past 6 months?

Rob Davis stated that his confidence is higher than six months ago due to faster-than-expected readouts and meaningful clinical derisking. He cited sac-TMT and IDXD having positive readouts earlier than projected (originally 2027), and Tuli also reading out faster. He feels bullish across the board due to strong science and clinical studies.

“As you recall, at that time, we said there were 10 programs that represented 70% of the $70 billion. And the fact that so many of those are already having positive data. So we are clinically derisking them, and we're seeing good launches of those that are underway including an accelerated launch of LIPENDRA by several months.”

asked by Evan Seigerman · answered by Robert Davis