Merck & Co., Inc.

Thank you for standing by. Welcome to the Merck & Co. Q2 Sales and Earnings Conference Call. At this time, all participants are in a listen-only mode until the question and answer session of today's conference. At that time, to ask a question, press star 1 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. I would now like to turn to call over to Mr. Peter Dannenbaum, Vice President, Investor Relations. Sir, you may begin.

Thank you, Cedric, and good morning, everyone. Welcome to Merck's second quarter 2023 conference call. Speaking on today's call will be Rob Davis, Chairman and Chief Executive Officer, Caroline Litchfield, Chief Financial Officer, and Dr. Dean Lee, President of Merck Research Labs. Before we get started, I'd like to point out a few items. You will see that we have items in our GAAP results, such as acquisition-related charges, restructuring costs, and certain other items. You should note that we have excluded these from our non-GAAP results and provide a reconciliation in our press release. I would like to remind you that some of the statements that we make today may be considered forward-looking statements within the meaning of the safe harbor provision of the United States Private Securities Litigation Reform Act of 1995. Such statements are made based on the current beliefs of Merck's management and are subject to significant risks and uncertainties. If our underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Our FCC filings, including Item 1A in the 2022 10-K, identify certain risk factors and cautionary statements that could cause the company's actual results to differ materially from those projected in any of our forward-looking statements made this morning. Merck undertakes no obligation to publicly update any forward-looking statements. During today's call, a slide presentation will accompany our speaker's prepared remarks. These slides, along with the earnings release, today's prepared remarks, and our SEC filings are all posted to the investor relations section of Merck's website. With that, I'd like to turn the call over to Rob.

Thanks, Peter. Good morning and thank you for joining today's call. We continue to make great progress in bringing forward compelling science to help address the world's most urgent unmet medical needs. Thanks to the unwavering commitment and discipline of our global teams, we're advancing our innovative pipeline in executing operationally in support of our key growth drivers. Our science-led strategy is generating innovations that save and improve the lives of patients and animals around the world and is delivering strong underlying growth for our business. We're building on our strong track record and advancing our strategic priorities. We're progressing our deep pipeline, including Certatercept, for which we have completed our FDA submission, and augmenting it with further strategic business development, where we can add value by applying our clinical expertise and leveraging our global scale to accelerate broad access to patients. An excellent example of this is our acquisition of Prometheus Biosciences, which we completed in June. We're now actively integrating the talented team and are moving with speed toward initiation of a Phase III clinical trial. The addition of Prometheus significantly strengthens our presence in immunology, an area with substantial unmet medical need, and builds on the significant scientific insight we have gained in immuno-oncology. It also brings us a potential first-in-class, best-in-class novel TL1A inhibitor which provides us the opportunity to transform the standard of care in a patient population suffering from debilitating immune-mediated diseases. With the foundation of great science and the legacy of commercial excellence, we're well-positioned to deliver sustainable value over the long term. Focusing now on the short term, we delivered strong underlying growth, excluding the year-over-year decline in Montgomery of sales, led by robust demand across key growth drivers in oncology and vaccines. We remain confident in our outlook for the remainder of 2023, which Caroline will address in just a moment. Moving to our research organization, our promising late stage pipeline continues to demonstrate tangible and impactful benefits for patients across a broad range of diseases. In oncology, we highlighted data from our expansive pipeline at ASCO, including for Keytruda in earlier stage lung cancer. The strong results of Keynote 671 for the neoadjuvant and adjuvant treatment of patients with non-small cell lung cancer support our aspiration to fundamentally shift the way cancer is managed by developing treatment regimens in the earlier stage where the potential for better outcomes is higher. Additionally, we're leveraging Keytruda's wide-reaching benefit across a range of cancer types to identify and bring forward promising new candidates. At ASCO, we shared positive data for Keytruda in combination with V940, our investigational individualized neoantigen therapy in collaboration with Moderna in the adjuvant treatment of melanoma. And promising data was also presented by our partner, Kahlun Biotech, for MK2870, our TROP2 ADC in non-small cell lung cancer. Each of these novel candidates offer a glimpse into the future of cancer care and the potential to meaningfully improve outcomes for patients. We have also made progress outside of oncology. We're advancing our population-specific approach to pneumococcal vaccination and are very pleased to have announced positive top-line results for our adult vaccine candidate, V116. If approved, V116 would be the first pneumococcal conjugate vaccine specifically designed for adults. And Dean will speak to our progress in cardiometabolic disease including positive data we recently presented for our GLP-1 glucagon receptor dual agonist. I commend Dean and his team on the significant work being done to advance our broad pipeline and their commitment to Merck's purpose. Innovation is the core of who Merck is, and it's what our company strives to achieve every day. We're grounded in the relentless pursuit of advancing science and raising the bar of innovation to deliver value for patients. With that in mind, I'd like to speak for a moment about the Inflation Reduction Act. We've consistently communicated our support for elements of the law that improve patient affordability and access, such as the Medicare Part D reform, but which do so without damaging the very promising long-term innovation potential of the biopharmaceutical industry. Through the complaint we recently filed in US District Court, Merck is taking a principled stand against the negative long-term impacts of the price negotiation provision of the IRA, which we believe amounts to unconstitutional price setting that violates several provisions of the U.S. Constitution. This misguided policy does not strike the right balance between incenting investment and innovation and improving affordability and access. That said, we remain committed to working with the U.S. government to find a better approach to improve affordability and access while protecting further drug breakthroughs that benefit patients facing unmet medical needs. We know it is critical that we provide broad access both to our current portfolio of medicines and vaccines and to our future innovations in order to serve the greatest number of patients possible now and for years to come. Our upcoming annual impact report will highlight accomplishments across our four priority areas, including access to health, where a portion of employee compensation will now be driven by metrics linked to our progress. In summary, our science-led strategy is working. We're driving significant scientific, commercial, and operational momentum, which we expect will enable strong four-year growth. I want to thank our talented, dedicated, and diverse global team for their hard work and commitment to delivering value for patients, shareholders, and all of our stakeholders. With these efforts, I'm confident we will continue to drive sustained success well into the future. With that, I'll turn the call over to Caroline.