Merck & Co., Inc.

Thank you for standing by. Welcome to the Merck and Company Incorporated, Rathway, New Jersey, USA, Quarter One Sales and Earnings Conference Call. At this time, all participants are in listening mode until the question and answer session of today's conference. At that time, to ask a question, press star one on your phone to record your name at the prompt. This call is being recorded. If you have any objections, you may disconnect at this time. I would like to turn the call over to Mr. Dannenbaum. Senior Vice President, Investor Relations. Sir, you may begin.

Thank you, Dustin, and good morning, everyone. Welcome to the first quarter 2025 conference call for Merck and Company Incorporated, Rahway, New Jersey, USA. 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 Research Labs. Before we get started, I'd like to point out that we have items in our GAAP results, such as acquisition-related charges, restructuring costs, and certain other items that we have excluded from our non-GAAP results. There is a reconciliation in our press release. I will also 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 U.S. Private Securities Litigation Reform Act of 1995. Such statements are made based on the current beliefs of our company'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 SEC filings, including Item 1A and the 2024 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 & Company, Inc., Railway, New Jersey, USA, 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 our company's website. With that, I'd like to turn the call over to Rob.

Thank you, Peter. Good morning, and thank you for joining today's call. Our company made strong progress to start the year, with increasing contributions from our newer commercialized medicines and vaccines, and continued advancement of our pipeline. We're working with focus and urgency to both realize the full potential of our near-term opportunities and to rapidly progress the next wave of innovation that will positively impact the lives of the patients we serve and drive future value creation for all of our stakeholders. In what is a dynamic global environment, we continue to work with regulators and policymakers around the world to tackle some of the biggest health challenges and ensure patient and customer access to our life-saving and life-improving medicines and vaccines. Over the last few years, we've been evolving our supply chain strategy in an effort to better balance our manufacturing footprint, which aligns well with the new administration's efforts to regrow the U.S. manufacturing base. This can be seen by our efforts beginning with the passing of the Tax Cut and Jobs Act and accelerated since the pandemic. Of note, since 2018, we've invested $12 billion in U.S. manufacturing, and we've committed to an additional $9 billion plus for projects through 2028. Our investments are leading to more of our products for U.S. patients being manufactured in the U.S., as well as more opportunities for export. Turning to our first quarter results, our performance was in line with our expectations, with revenue of $15.5 billion, reflecting strength in oncology, animal health, and increasingly meaningful contributions from the continued strong launches of WinRevere and CapAxiv. As we look forward, we remain confident in our outlook for improved growth in the second half of the year. Considering the current environment, we are maintaining our full-year revenue and EPS guidance, excluding business development charges, which Caroline will speak to in more detail. The benefit from improved foreign exchange is offset in part by approximately $200 million of expected cost from tariffs implemented to date primarily between the U.S. and China, and to a lesser degree, Canada and Mexico. With respect to potential additional tariffs by the U.S., specifically on pharmaceuticals, our global supply chain and current inventory levels put us in a good position to navigate potential near-term impacts. and our ongoing efforts to locate more manufacturing in the U.S. for U.S. supply, including for the majority of our upcoming new products, will help us manage over the medium and long term. As I look at how we've started 2025, I'm proud of the continued advancement of our research efforts. Recently, we presented important Phase III data for WinRever in additional patient populations, supporting the strong potential for this product to improve the lives of more people living with pulmonary arterial hypertension. In addition, our HIV pipeline is now coming into sharper focus with data presentations from two Phase III trials of the Zolotrevir-based regimens. And new clinical trial starts and regulatory submissions in oncology reinforce our belief that we are well-positioned for long-term leadership with the promise of helping even more patients with cancer. The success of biopharmaceutical innovation on the scale we're driving is not measured in quarters, but rather in years. And we're seeing compelling progress on this front. Since 2021, we've nearly tripled our late phase pipeline through both the advancement of internally discovered compounds, as well as the completion of numerous important business development transactions across multiple therapeutic areas of great unmet need, including oncology, cardiometabolic, ophthalmology, and immunology. Together, our efforts have resulted in an expanded late-phase pipeline, comprising programs having potential commercial opportunity of over $50 billion by the mid-2030s. Winrevere and Capvaxin represent the initial launches from this robust pipeline of 20 promising potential new growth drivers we expect to come to the market over the next few years, almost all of which have blockbuster potential. Looking ahead, we have a rich slate of data readouts, presentations, filings, and additional approvals. Our pipeline includes some of the world's most scientifically advanced modalities, and Dean and our research colleagues are advancing several molecules that have foundational multi-indication potential in areas of significant unmet need. We've also deepened and extended our commitment to early research and development. And over the next few years, expect many of these programs to advance to phase two and to become visible to you. Thanks to the incredible efforts of our dedicated team and the strong progress we are achieving, we believe that we're well positioned to successfully navigate through the Katrina LOE period. And our work is not finished. Science and value-driven business development remains a top priority. and we continue to assess opportunities with urgency and an eye toward driving near and long-term growth and value creation. In summary, our results reflect the continued demand for breakthrough therapies and novel solutions that can address global health challenges. We're leveraging our scientific leadership to deliver the next wave of innovation that can save and improve lives around the world. Our commercial performance today continues to enable the advancement of our pipeline and in turn, create long-term value for patients, customers, and shareholders. We remain confident in our strategic direction, our commitment to research and development as the source for sustainable value creation, and our enduring promise to positively impact patients. With that, I'll turn the call over to Caroline.