Merck & Co. (MRK) Q4 FY25 earnings call: guidance and Q&A

Given the strong flu season, are event rates occurring ahead of plan for the ANCHOR trial, and should an interim disclosure be expected in March or later?

The Northern Hemisphere enrollment is complete, and Southern Hemisphere enrollment is ongoing. The trial is event-driven, and the focus is on generating robust data across subpopulations for future labeling. No communication plans for interim analysis have been disclosed at this time.

“This is an event-driven trial. I want to have the right trial size. I want the powering of assumptions. But most importantly, I need to make sure that I have strong data throughout a series of subpopulations that will be important for the future label.”

asked by Mohit Bansal · answered by Dean Li

Why does Merck's TROP2 ADC development strategy seem conservative compared to competitors, especially regarding first-line NSCLC or head-to-head trials, given the potential for a differentiated asset?

Merck views sac-TMT as a 'workhorse ADC' with best-in-class potential, similar to how linker/payload changes differentiate HER2 ADCs. The company has 16 Phase III studies for sac-TMT, with 11 being first-in-class, indicating an ambitious program. They believe they have differentiated approaches in NSCLC and breast cancer, and aim to be first in other tumor types.

“I would challenge a little bit the characterization that we do not have a robust and ambitious program. We have 16 Phase III studies.”

asked by Akash Tewari · answered by Dean Li

How should the market model KEYTRUDA's IP run rate, considering potential patent extensions to 2029, and what is the expected ramp for QLEX prior to IV biosimilar introduction?

While the compound patent expires in December 2028, two method patents could extend protection to May or November 2029, and confidence in defending these has grown. For planning, Merck remains conservative, assuming 2028. QLEX adoption is targeted at 30% to 40% by 2028, with pricing strategy designed to drive adoption, regardless of the exact LOE date.

“Two of those, one, a method of making patent actually is extended out to May of 2029. And the second one, a method of use patent goes out to November of 2029. And so as we looked at this, initially, we were conservative in our assumptions and always based off the compound patent, always though with the intent that we would defend the entire patent estate. I think what has evolved over time is that as case law has emerged, our confidence that we will be able to defend those additional 2 patents has grown.”

asked by Alexandria Hammond · answered by Robert Davis

What is the importance and unmet need for a 2-drug HIV regimen like islatravir compared to the standard 3-drug regimen (Biktarvy)?

Islatravir is a next-generation nucleoside analog with high potency and barrier to resistance. A 2-drug regimen without an integrase strand transfer inhibitor (INSTI) backbone could be important for patients concerned about metabolic and long-term issues associated with INSTIs. Merck is also developing once-weekly and once-monthly oral options, including a related compound for PrEP, to offer diverse choices for patients.

“So the ability to send a different sort of repertoire of compounds, especially if you can spare the integrase would be potentially very important. For some people, that's often viewed in light of metabolic and long-term issues with HIV treatment.”

asked by Evan Seigerman · answered by Dean Li

Given minimal top-line growth in 2025 and 2026 despite growth products, should investors expect Merck to be a modest-growth company, or can it achieve strong, sustainable sales growth in the decade ahead?

Merck expects to be a strong growing company long-term, disagreeing with the 'modest growth' characterization, which takes one year out of context. The $70 billion commercial potential by mid-2030s, which is double KEYTRUDA's peak and $20 billion higher than a year ago, supports this. Most of this pipeline will be de-risked by 2027. Adjusting for one-time LOE headwinds, 2026 growth is in the 4-8% range, indicating strong underlying performance.

“So I'm not sure I agree with your characterization that we will be a modest growing company in every year or less depending on what happens. That's, I think, taking 1 year out of context.”

asked by Steve Scala · answered by Robert Davis

How does Merck balance the $70 billion non-risk-adjusted revenue opportunity from its current pipeline with its BD strategy, especially in light of recent large deal rumors?

Merck does not comment on market rumors. The $70 billion commercial potential highlights significant internal progress and confidence. The BD strategy remains focused on scientific advancement, unmet needs, strategic alignment, and value creation. While the sweet spot for deals is up to $15 billion, Merck is willing to pursue larger, scientifically compelling deals with the same disciplined approach.

“If you look at where we're focused, it's where we've always said, which is for opportunities where we see significant scientific advancement, addressing an unmet need aligned with our strategy and importantly, where we see value creation. Where we see those things align, we move, but we've always done it with discipline.”

asked by Umer Raffat · answered by Robert Davis

What gives Merck confidence in MK-3000, a new mechanism, and how large is the opportunity for this asset, assuming positive data?

MK-3000 is a first-in-class Wnt agonist, targeting vascular stability in the eye, a novel mechanism compared to existing VEGF-based therapies. It addresses the 30-40% of patients with suboptimal response to VEGFs in diabetic macular edema (DME) and wet AMD. The combined market for DME and wet AMD is about $15 billion in the US. With MK-8748 (Tie2 agonist VEGF inhibitor), Merck sees a greater than $5 billion opportunity, considering it an underappreciated area.

“This is the first pathway that is based on the genetics of vascular stability in the eye, and we have the first agonistic antibody towards that. So we're really interested in seeing whether this mechanism will work because it will be the first non-vascular endothelial growth factor that's going to be driving to the indications of age-related macular degeneration and diabetic macular edema.”

asked by Christopher Schott · answered by Dean Li