Attenuated live varicella virus vaccine(Merck)

RAHWAY, N.J.--( BUSINESS WIRE )--Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2024. “ Our business is demonstrating strong momentum as we exit the first half of the year,” said Robert M. Davis, chairman and chief executive officer, Merck. “ Through excellent scientific, commercial and operational execution, we’re achieving significant milestones for our company and for patients, including the launch of WINREVAIR. I am proud of our dedicated teams around the world that are working tirelessly to advance our deep pipeline as we continue delivering innovation that solves unmet medical needs.” Financial Summary $ in millions, except EPS amounts Second Quarter 2024 2023 Change Change Ex- Exchange Sales $16,112 $15,035 7% 11% GAAP net income (loss) 1 5,455 (5,975) N/M N/M Non-GAAP net income (loss) that excludes certain items 1,2* 5,809 (5,220) N/M N/M GAAP EPS 2.14 (2.35) N/M N/M Non-GAAP EPS that excludes certain items 2* 2.28 (2.06) N/M N/M *Refer to table on page 7. N/M – Not meaningful For the second quarter of 2024, Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $2.14 and non-GAAP EPS was $2.28. GAAP and non-GAAP loss per share for the second quarter of 2023 include a charge of $4.02 per share for the acquisition of Prometheus Biosciences, Inc. (Prometheus). 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. Non-GAAP EPS in the second quarter of 2024 also excludes a tax 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. Year-to-date results can be found in the attached tables. Second-Quarter Sales Performance The following table reflects sales of the company’s top products and significant performance drivers. Second Quarter $ in millions 2024 2023 Change Change Ex-Exchange Commentary Total Sales $16,112 $15,035 7% 11% 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 14,408 13,457 7% 11% Increase driven by growth in oncology, cardiovascular and vaccines, partially offset by declines in diabetes and virology. KEYTRUDA 7,270 6,271 16% 21% Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer (TNBC) and renal cell carcinoma, as well as non-small cell lung cancer in the U.S., and continued strong global demand from metastatic indications. Approximately 4 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 2,478 2,458 1% 4% Growth primarily due to higher sales in the U.S. driven by higher pricing, demand and public-sector buying patterns, as well as higher demand in certain ex-U.S. markets. Growth was largely offset by lower sales in China due to timing of shipments compared with prior year. JANUVIA/JANUMET 629 864 -27% -23% Decline primarily due to lower pricing and demand in the U.S., as well as ongoing generic competition in many international markets, particularly in Europe and the Asia Pacific region. PROQUAD, M-M-R II and VARIVAX 617 582 6% 7% Growth largely from higher pricing and demand in the U.S. BRIDION 455 502 -9% -8% Decline primarily due to generic competition in certain ex-U.S. markets, particularly in Europe and the Asia Pacific region, partially offset by higher demand in the U.S. Lynparza* 317 310 2% 4% Growth due to higher demand in the U.S. and certain international markets, particularly in China and Europe. Lenvima* 249 242 3% 4% Growth primarily from higher demand in the U.S. VAXNEUVANCE 189 168 13% 16% Growth largely driven by continued uptake from launches in Japan and Europe, partially offset by lower demand and public-sector buying patterns in the U.S. PREVYMIS 188 143 31% 35% Growth primarily due to higher global demand, particularly in the U.S., China and Europe. ROTATEQ 163 131 25% 26% Growth primarily due to timing of shipments to China and public-sector buying patterns in the U.S., partially offset by lower demand in the U.S. WELIREG 126 50 150% 150% Growth primarily driven by higher demand in the U.S., largely attributable to launch of a new indication. LAGEVRIO 110 203 -46% -42% Decline due to lower demand and pricing in certain markets in the Asia Pacific region, partially offset by higher demand in Japan and the U.S. WINREVAIR 70 - - - Represents sales in the U.S. following approval in March 2024. About 40% of sales were attributable to doses administered to patients and remainder was due to distributors building inventory in support of increasing demand. Animal Health 1,482 1,456 2% 6% Growth primarily driven by higher pricing in both Livestock and Companion Animal product portfolios, as well as higher demand for Livestock products, partially offset by a decline in Companion Animal distributor inventory. 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. Livestock 837 807 4% 11% Growth primarily driven by higher demand for ruminant and poultry products, as well as higher pricing across product portfolio. Companion Animal 645 649 -1% 1% Sales were relatively flat compared with prior year reflecting lower distributor inventory, largely offset by higher pricing across product portfolio. Sales of BRAVECTO were $331 million and $326 million in current and prior-year quarters, respectively, which represented growth of 2%, or 3% excluding impact of foreign exchange. Other Revenues** 222 122 82% 53% Growth primarily due to higher royalty income and favorable impact of revenue hedging activities. *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. Second-Quarter Expense, EPS and Related Information The table below presents selected expense information. $ in millions GAAP Acquisition- and Divestiture- Related Costs 3 Restructuring Costs (Income) Loss From Investments in Equity Securities Non- GAAP 2 Second Quarter 2024 Cost of sales $3,745 $606 $66 $- $3,073 Selling, general and administrative 2,739 24 31 - 2,684 Research and development 3,500 20 - - 3,480 Restructuring costs 80 - 80 - - Other (income) expense, net 42 (17) - (49) 108 Second Quarter 2023 Cost of sales $4,024 $467 $32 $- $3,525 Selling, general and administrative 2,702 25 52 - 2,625 Research and development 13,321 9 1 - 13,311 Restructuring costs 151 - 151 - - Other (income) expense, net 172 (3) - 194 (19) GAAP Expense, EPS and Related Information Gross margin was 76.8% for the second quarter of 2024 compared with 73.2% for the second 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 amortization of intangible assets. Selling, general and administrative (SG&A) expenses were $2.7 billion in the second quarter of 2024, an increase of 1% compared with the second quarter of 2023. The increase was primarily due to higher administrative and promotional costs, largely offset by the favorable impact of foreign exchange and lower restructuring costs. Research and development (R&D) expenses were $3.5 billion in the second quarter of 2024 compared with $13.3 billion in the second quarter of 2023. The decrease was primarily due to a $10.2 billion charge in the second quarter of 2023 for the acquisition of Prometheus, partially offset by higher clinical development spending and increased compensation and benefit costs. Other (income) expense, net, was $42 million of expense in the second quarter of 2024 compared with $172 million of expense in the second quarter of 2023. The decrease was primarily due to income from investments in equity securities in 2024 compared with losses in 2023, partially offset by higher net interest expense in 2024. The effective tax rate of 9.1% for the second quarter of 2024 includes a 4.3 percentage point favorable impact 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. GAAP EPS was $2.14 for the second quarter of 2024 compared with GAAP loss per share of $2.35 for the second quarter of 2023. GAAP loss per share in the second quarter of 2023 includes a charge of $4.02 per share for the acquisition of Prometheus. Non-GAAP Expense, EPS and Related Information Non-GAAP gross margin was 80.9% for the second quarter of 2024 compared with 76.6% for the second 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 second quarter of 2024, an increase of 2% compared with the second quarter of 2023. The increase was primarily due to higher administrative and promotional costs, largely offset by the favorable impact of foreign exchange. Non-GAAP R&D expenses were $3.5 billion in the second quarter of 2024 compared with $13.3 billion in the second quarter of 2023. The decrease was primarily due to a $10.2 billion charge in the second quarter of 2023 for the acquisition of Prometheus, partially offset by higher clinical development spending and increased compensation and benefit costs. Non-GAAP other (income) expense, net, was $108 million of expense in the second quarter of 2024 compared with $19 million of income in the second quarter of 2023, primarily due to higher net interest expense. The non-GAAP effective tax rate was 14.1% for the second quarter of 2024. Non-GAAP EPS was $2.28 for the second quarter of 2024 compared with non-GAAP loss per share of $2.06 for the second quarter of 2023. Non-GAAP loss per share in the second quarter of 2023 includes a charge of $4.02 per share for the acquisition of Prometheus. A reconciliation of GAAP to non-GAAP net income (loss) and EPS is provided in the table that follows. Second Quarter $ in millions, except EPS amounts 2024 2023 EPS GAAP EPS $2.14 $(2.35) Difference 0.14 0.29 Non-GAAP EPS that excludes items listed below 2 $2.28 $(2.06) Net Income (Loss) GAAP net income (loss) 1 $5,455 $(5,975) Difference 354 755 Non-GAAP net income (loss) that excludes items listed below 1,2 $5,809 $(5,220) Excluded Items: Acquisition- and divestiture-related costs 3 $633 $498 Restructuring costs 177 236 (Income) loss from investments in equity securities (49) 194 Decrease to net income/increase to net loss before taxes 761 928 Income tax (benefit) expense 4 (407) (173) Decrease to net income/increase to net loss $354 $755 Pipeline and Portfolio Highlights In the second quarter, Merck demonstrated further progress in its strong and diverse pipeline, achieving multiple regulatory and clinical milestones. In vaccines, Merck recently received approval from the U.S. Food and Drug Administration (FDA) for CAPVAXIVE, now the first pneumococcal conjugate vaccine specifically designed to address the serotypes responsible for approximately 85% of invasive pneumococcal disease cases in adults age 65 and older, based on the U.S. Centers for Disease Control and Prevention (CDC) data from 2018-2021. The CDC’s Advisory Committee on Immunization Practices (ACIP) unanimously voted to recommend CAPVAXIVE for adults age 65 and older who have not received a pneumococcal conjugate vaccine or whose vaccination history is unknown, for adults 19 to 64 with certain risk conditions, and for adults 19 and older who have started their pneumococcal vaccine series with PCV13. Additionally, shared clinical decision-making is recommended for a supplemental dose of CAPVAXIVE for adults over 65 who completed their vaccine series with both PCV13 and PPSV23. The company also recently announced positive topline results from its Phase 2b/3 trial of clesrovimab (MK-1654), an investigational respiratory syncytial virus (RSV) preventative monoclonal antibody for infants, which met all primary safety and efficacy endpoints. In cardiometabolic disease, Merck continued to make progress in its launch of WINREVAIR in the U.S. As of the end of June, more than 1,000 patients have received WINREVAIR. The company also announced that the European Union’s (EU) Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion for WINREVAIR. If approved by the European Commission, WINREVAIR will be the first activin signaling inhibitor therapy for pulmonary arterial hypertension (PAH, World Health Organization [WHO] Group 1) to be approved in Europe, offering a new treatment option for certain adults with this rare, progressive disease. Additional worldwide regulatory filings for WINREVAIR are underway. In oncology, Merck received FDA approval for KEYTRUDA in combination with chemotherapy, followed by KEYTRUDA as a single agent, for the treatment of certain patients with endometrial carcinoma. This marks the 40 th indication for KEYTRUDA in the U.S., reinforcing its importance as a foundational therapy for certain types of cancer. At the 2024 American Society of Clinical Oncology Annual Meeting, new data were presented on four approved oncology medicines and four pipeline candidates in more than 25 types of cancer. In collaboration with Moderna, Inc., Merck announced encouraging three-year follow-up data for V940 (mRNA-4157) in combination with KEYTRUDA for the adjuvant treatment of patients with high-risk stage III and IV melanoma following complete resection. In addition, new Phase 3 data from a study conducted in China and independently led by Kelun-Biotech evaluating sacituzumab tirumotecan (MK-2870/SKB264), an investigational anti-TROP2 antibody-drug conjugate being developed by Merck in collaboration with Kelun-Biotech, were presented in previously treated patients with locally recurrent or metastatic TNBC. Merck Animal Health launched the 12-month injectable formulation of BRAVECTO for use in dogs in a number of markets in Europe for the treatment and persistent killing of fleas (Ctenocephalides felis and Ctenocephalides canis) and ticks (Rhipicephalus sanguineus, Ixodes ricinus, Ixodes hexagonus, and Dermacentor reticulatus). In addition, in July 2024, Merck completed the acquisition of the aqua business of Elanco Animal Health Incorporated. In July 2024, Merck also completed the acquisition of Eyebiotech Limited (EyeBio), which includes the lead candidate Restoret™/MK-3000 that is being evaluated for the treatment of patients with certain retinal diseases, including diabetic macular edema and neovascular age-related macular degeneration, as well as preclinical candidates. And, Merck and Orion Corporation announced the mutual exercise of an option to convert the companies’ ongoing co-development and co-commercialization agreement for opevesostat (MK-5684/ODM-208), an investigational CYP11A1 inhibitor, and other candidates, into an exclusive global license for Merck. Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows. Oncology FDA Approved KEYTRUDA Plus Carboplatin and Paclitaxel as Treatment for Adult Patients With Primary Advanced or Recurrent Endometrial Carcinoma, Based on Results From Phase 3 NRG-GY018/KEYNOTE-868 Trial (Read Announcement) FDA Granted Priority Review to Merck’s Application for KEYTRUDA Plus Chemotherapy as First-Line Treatment of Patients With Unresectable Advanced or Metastatic Malignant Pleural Mesothelioma, Based on Results From Phase 3 KEYNOTE-483 Trial; FDA Set Prescription Drug User Fee Act (PDUFA) Date of Sept. 25, 2024 (Read Announcement) Merck Received Positive EU CHMP Opinion for KEYTRUDA Plus Padcev as First-Line Treatment for Patients With Unresectable or Metastatic Urothelial Carcinoma, Based on Results From Phase 3 KEYNOTE-A39/EV-302 Trial (Read Announcement) Moderna and Merck Announced Three-Year Data for mRNA-4157 (V940) in Combination With KEYTRUDA Demonstrated Sustained Improvement in Recurrence-Free Survival and Distant Metastasis-Free Survival Versus KEYTRUDA in Patients With High-Risk Stage III/IV Melanoma Following Complete Resection (Read Announcement) Merck Announced Phase 3 KEYNOTE-522 Trial Met Its Overall Survival (OS) Endpoint in Patients With High-Risk Early-Stage TNBC (Read Announcement) Merck Announced Phase 3 KEYNOTE-811 Trial Met Dual Primary Endpoint of OS as First-Line Treatment in Patients With HER2-Positive Advanced Gastric or Gastroesophageal Junction Adenocarcinoma (Read Announcement) Patritumab Deruxtecan Biologics License Application Submission Received Complete Response Letter From FDA Due to Inspection Findings at Third-Party Manufacturer (Read Announcement) Vaccines FDA Approved CAPVAXIVE for Prevention of Invasive Pneumococcal Disease and Pneumococcal Pneumonia in Adults, Based on Results From Four Phase 3 Trials (Read Announcement) CDC’s ACIP Unanimously Recommended CAPVAXIVE for Pneumococcal Vaccination in Appropriate Adults (Read Announcement) Merck Announced Topline Results From Phase 2b/3 Trial of Clesrovimab (MK-1654), an Investigational RSV Preventative Monoclonal Antibody for Infants, Met All Primary Safety and Efficacy Endpoints (Read Announcement) Cardiometabolic Merck Received Positive EU CHMP Opinion for WINREVAIR (sotatercept) in PAH (Read Announcement) Full-Year 2024 Financial Outlook The following table summarizes the company’s full-year financial outlook. Full Year 2024 Updated Prior Sales * $63.4 to $64.4 billion $63.1 to $64.3 billion Non-GAAP Gross margin 2 Approximately 81% Approximately 81% Non-GAAP Operating expenses 2** $26.8 to $27.6 billion $25.2 to $26.1 billion Non-GAAP Other (income) expense, net 2 Approximately $350 million expense Approximately $250 million expense Non-GAAP Effective tax rate 2 15.5% to 16.5% 14.5% to 15.5% Non-GAAP EPS 2*** $7.94 to $8.04 $8.53 to $8.65 Share count (assuming dilution) Approximately 2.54 billion Approximately 2.55 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 and $1.3 billion for EyeBio acquisition. Outlook does not assume any additional significant potential business development transactions. ***Includes one-time charges totaling $0.77 per share for the Harpoon and EyeBio acquisitions. 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 global demand for key growth products, particularly in oncology, and despite impacts related to the lower sell out of GARDASIL from Zhifei Biological Products Co., Ltd. (the company’s distributor and commercialization partner in China) into the points of vaccination in the market during the quarter, Merck is raising and narrowing its full-year sales outlook. Merck now expects its full-year sales to be between $63.4 billion and $64.4 billion, including a negative impact of foreign exchange of approximately 3 percentage points, at mid-July 2024 exchange rates. Approximately 2 percentage points of the negative impact of foreign exchange is due to the devaluation of the Argentine peso, which the company expects will largely be 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 15.5% and 16.5%, which includes an unfavorable impact related to the one-time charge for the acquisition of EyeBio, which is not tax deductible. Merck now expects its full-year non-GAAP EPS to be between $7.94 and $8.04, including one-time charges of $0.26 and $0.51 per share for the acquisitions of Harpoon and EyeBio, respectively. The outlook includes a negative impact of foreign exchange of more than $0.30 per share. The negative impact of foreign exchange is primarily due to the devaluation of the Argentine peso, which the company expects will largely be offset by inflation-related price increases, consistent with practice in that market. This revised non-GAAP EPS range reflects the following items, which were not previously included in the outlook: A charge of $1.3 billion, or $0.51 per share, for the acquisition of EyeBio. Estimated 2024 expense of approximately $0.09 per share to be incurred to finance the EyeBio and Elanco aqua business acquisitions and to advance the acquired assets. 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. Earnings Conference Call Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Tuesday, July 30, 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) 779-0641 (U.S. and Canada Toll-Free) or (517) 308-9147 and using the access code 4761229. 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 ). 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 ) WELIREG ( belzutifan ) WINREVAIR (sotatercept-csrk) Animal Health BRAVECTO (fluralaner) _________________________ 1 Net income (loss) 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 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. 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, as well as a $259 million benefit in the second quarter of 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. MERCK & CO., INC. CONSOLIDATED STATEMENT OF OPERATIONS - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1 GAAP % Change GAAP % Change 2Q24 2Q23 June YTD 2024 June YTD 2023 Sales $ 16,112 $ 15,035 7 % $ 31,887 $ 29,522 8 % Costs, Expenses and Other Cost of sales 3,745 4,024 -7 % 7,285 7,951 -8 % Selling, general and administrative 2,739 2,702 1 % 5,221 5,182 1 % Research and development 3,500 13,321 -74 % 7,492 17,597 -57 % Restructuring costs 80 151 -47 % 202 218 -7 % Other (income) expense, net 42 172 -76 % 12 259 -95 % Income (Loss) Before Taxes 6,006 (5,335 ) * 11,675 (1,685 ) * Income Tax Provision 545 637 1,447 1,462 Net Income (Loss) 5,461 (5,972 ) * 10,228 (3,147 ) * Less: Net Income Attributable to Noncontrolling Interests 6 3 11 7 Net Income (Loss) Attributable to Merck & Co., Inc. $ 5,455 $ (5,975 ) * $ 10,217 $ (3,154 ) * Earnings (Loss) per Common Share Assuming Dilution (1) $ 2.14 $ (2.35 ) * $ 4.02 $ (1.24 ) * Average Shares Outstanding Assuming Dilution (1) 2,544 2,539 2,544 2,539 Tax Rate 9.1 % -11.9 % 12.4 % -86.8 % * 100% or greater (1) Because the company recorded a net loss in the second quarter and first six months 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 SIX MONTHS ENDED JUNE 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 Second Quarter Cost of sales $ 3,745 606 66 672 $ 3,073 Selling, general and administrative 2,739 24 31 55 2,684 Research and development 3,500 20 20 3,480 Restructuring costs 80 80 80 – Other (income) expense, net 42 (17 ) (49 ) (66 ) 108 Income Before Taxes 6,006 (633 ) (177 ) 49 (761 ) 6,767 Income Tax Provision (Benefit) 545 (129 ) (3) (30 ) (3) 11 (3) (259 ) (4) (407 ) 952 Net Income 5,461 (504 ) (147 ) 38 259 (354 ) 5,815 Net Income Attributable to Merck & Co., Inc. 5,455 (504 ) (147 ) 38 259 (354 ) 5,809 Earnings per Common Share Assuming Dilution $ 2.14 (0.20 ) (0.06 ) 0.02 0.10 (0.14 ) $ 2.28 Tax Rate 9.1 % 14.1 % June YTD Cost of sales $ 7,285 1,069 182 1,251 $ 6,034 Selling, general and administrative 5,221 45 36 81 5,140 Research and development 7,492 36 2 38 7,454 Restructuring costs 202 202 202 – Other (income) expense, net 12 (21 ) (165 ) (186 ) 198 Income Before Taxes 11,675 (1,129 ) (422 ) 165 (1,386 ) 13,061 Income Tax Provision (Benefit) 1,447 (221 ) (3) (72 ) (3) 36 (3) (259 ) (4) (516 ) 1,963 Net Income 10,228 (908 ) (350 ) 129 259 (870 ) 11,098 Net Income Attributable to Merck & Co., Inc. 10,217 (908 ) (350 ) 129 259 (870 ) 11,087 Earnings per Common Share Assuming Dilution $ 4.02 (0.35 ) (0.14 ) 0.05 0.10 (0.34 ) $ 4.36 Tax Rate 12.4 % 15.0 % 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. 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 and accelerated depreciation 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 2Q June YTD 1Q 2Q June YTD 1Q 2Q June YTD 3Q 4Q Full Year Nom % Ex-Exch % Nom % Ex-Exch % TOTAL SALES (1) $15,775 $16,112 $31,887 $14,487 $15,035 $29,522 $15,962 $14,630 $60,115 7 11 8 11 PHARMACEUTICAL 14,006 14,408 28,415 12,721 13,457 26,179 14,263 13,141 53,583 7 11 9 12 Oncology Keytruda 6,947 7,270 14,217 5,795 6,271 12,065 6,338 6,608 25,011 16 21 18 22 Alliance Revenue – Lynparza (2) 292 317 609 275 310 585 299 315 1,199 2 4 4 6 Alliance Revenue – Lenvima (2) 255 249 504 232 242 474 260 226 960 3 4 6 7 Welireg 85 126 211 42 50 92 54 72 218 150 150 128 128 Alliance Revenue – Reblozyl (3) 71 90 161 43 47 90 52 70 212 92 92 80 80 Vaccines (4) Gardasil/Gardasil 9 2,249 2,478 4,727 1,972 2,458 4,430 2,585 1,871 8,886 1 4 7 10 ProQuad/M-M-R II/Varivax 570 617 1,187 528 582 1,109 713 545 2,368 6 7 7 7 Vaxneuvance 219 189 408 106 168 274 214 176 665 13 16 49 51 RotaTeq 216 163 379 297 131 428 156 185 769 25 26 -11 -10 Pneumovax 23 61 59 120 96 92 188 140 85 412 -36 -32 -36 -32 Hospital Acute Care Bridion 440 455 895 487 502 989 424 429 1,842 -9 -8 -9 -8 Prevymis 174 188 362 129 143 273 157 175 605 31 35 33 37 Dificid 73 92 165 65 76 141 74 87 302 20 20 16 16 Zerbaxa 56 62 118 50 54 104 53 61 218 14 18 13 16 Noxafil 56 45 101 60 55 116 51 46 213 -20 -9 -13 -2 Cardiovascular Alliance Revenue - Adempas/Verquvo (5) 98 106 203 99 68 167 92 108 367 56 56 22 22 Adempas (6) 70 72 142 59 65 125 65 66 255 11 15 14 17 Winrevair 70 70 - - - - Virology Lagevrio 350 110 460 392 203 595 640 193 1,428 -46 -42 -23 -18 Isentress/Isentress HD 111 89 200 123 136 259 119 105 483 -35 -31 -23 -19 Delstrigo 56 60 116 44 50 94 54 54 201 19 23 23 26 Pifeltro 42 39 81 34 38 72 37 33 142 3 4 13 13 Neuroscience Belsomra 46 53 99 56 63 119 58 54 231 -16 -8 -17 -10 Immunology Simponi 184 172 356 180 180 359 179 171 710 -4 -2 -1 -1 Remicade 39 35 74 51 48 99 45 43 187 -27 -20 -25 -21 Diabetes (7) Januvia 419 405 824 551 511 1,062 581 547 2,189 -21 -16 -22 -19 Janumet 251 224 475 329 354 683 255 240 1,177 -37 -32 -30 -26 Other Pharmaceutical (8) 576 573 1,151 626 560 1,187 568 576 2,333 2 6 -3 -1 ANIMAL HEALTH 1,511 1,482 2,993 1,491 1,456 2,947 1,400 1,278 5,625 2 6 2 5 Livestock 850 837 1,686 849 807 1,656 874 808 3,337 4 11 2 7 Companion Animal 661 645 1,307 642 649 1,291 526 470 2,288 -1 1 1 3 Other Revenues (9) 258 222 479 275 122 396 299 211 907 82 53 21 24 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 and $3,656 million in the first and second quarter of 2024, respectively, and $3,133 million and $3,557 million in the first and second 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 and $715 million in the first and second quarter of 2024, respectively, and $950 million and $951 million in the first and second 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 and $15 million in the first and second quarter of 2024, respectively, and $51 million and $3 million in the first and second quarter of 2023, respectively.

Sales Reflect Continued Strong Growth in Oncology and Vaccines Total Worldwide Sales Were $15.8 Billion, an Increase of 9% From First Quarter 2023; Excluding the Impact of Foreign Exchange, Growth Was 12% KEYTRUDA Sales Grew 20% to $6.9 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 24% GARDASIL/GARDASIL 9 Sales Grew 14% to $2.2 Billion; Excluding the Impact of Foreign Exchange, Sales Grew 17% GAAP EPS Was $1.87; Non-GAAP EPS Was $2.07; GAAP and Non-GAAP EPS Include a Charge of $0.26 per Share for Acquisition of Harpoon Received FDA Approval of WINREVAIR, a First-in-Class Treatment for Adults With Pulmonary Arterial Hypertension (WHO Group 1) Made Meaningful Regulatory and Clinical Progress Across Other Therapeutic Areas, Including Oncology, Vaccines and Infectious Diseases Expanded Pipeline and Portfolio Through Business Development, Including Completed Acquisition of Harpoon and Proposed Acquisition of Elanco’s Aqua Business Full-Year 2024 Financial Outlook Raises and Narrows Expected Worldwide Sales Range To Be Between $63.1 Billion and $64.3 Billion Raises and Narrows Expected Non-GAAP EPS Range To Be Between $8.53 and $8.65 RAHWAY, N.J.--(BUSINESS WIRE)-- Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the first quarter of 2024. “Merck has begun 2024 with continuing momentum in our business. We are harnessing the power of innovation to advance our deep pipeline and are maximizing the impact of our broad commercial portfolio for the benefit of patients,” said Robert M. Davis, chairman and chief executive officer, Merck. “We drove strong growth across key therapeutic areas, executed strategic business development, and in the U.S., we are now launching WINREVAIR, a significant new product in the cardiometabolic space for adults with pulmonary arterial hypertension, a progressive and debilitating disease. We have important opportunities ahead of us across all areas of our business, and we are highly focused on realizing them.” Financial Summary $ in millions, except EPS amounts First Quarter 2024 2023 Change Change Ex- Exchange Sales $15,775 $14,487 9% 12% GAAP net income1 4,762 2,821 69% 76% Non-GAAP net income that excludes certain items1,2* 5,279 3,564 48% 54% GAAP EPS 1.87 1.11 68% 76% Non-GAAP EPS that excludes certain items2* 2.07 1.40 48% 54% *Refer to table on page 6. Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.87 for the first quarter of 2024. Non-GAAP EPS was $2.07 for the first quarter of 2024. GAAP and non-GAAP EPS in the first quarter of 2024 include a charge of $0.26 per share for the acquisition of Harpoon Therapeutics, Inc. (Harpoon). GAAP and non-GAAP EPS in the first quarter of 2023 include charges of $0.52 per share related to the acquisition of Imago BioSciences, Inc. (Imago) and a collaboration and licensing agreement with Kelun-Biotech. Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, as well as income and losses from investments in equity securities. Non-GAAP EPS for the first quarter of 2023 also excludes a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation. First-Quarter Sales Performance The following table reflects sales of the company’s top products and significant performance drivers. First Quarter $ in millions 2024 2023 Change Change Ex-Exchange Commentary Total Sales $15,775 $14,487 9% 12% Approximately 2% 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 14,006 12,721 10% 13% Increase driven by growth in oncology and vaccines, partially offset by a decline in diabetes. KEYTRUDA 6,947 5,795 20% 24% Growth driven by increased global uptake in earlier-stage indications, including triple-negative breast cancer and renal cell carcinoma, as well as non-small cell lung cancer (NSCLC) in the U.S., and continued strong global demand from metastatic indications. Substantially all of the 4% negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases. GARDASIL/GARDASIL 9 2,249 1,972 14% 17% Growth due to strong demand, particularly in China, which also benefited from timing of shipments, as well as public-sector buying patterns in the U.S., and higher pricing. JANUVIA/JANUMET 670 880 -24% -21% Decline primarily due to lower pricing and demand in the U.S., as well as ongoing generic competition in many international markets, particularly in Europe, Canada and the Asia Pacific region. PROQUAD, M-M-R II and VARIVAX 570 528 8% 8% Growth largely from higher pricing in the U.S., as well as higher sales in Latin America, due in part to timing of government tenders. BRIDION 440 487 -10% -8% Decline primarily due to generic competition in certain ex-U.S. markets, particularly in Europe, partially offset by higher demand in the U.S. LAGEVRIO 350 392 -11% -5% Decline due to lower demand in certain markets in the Asia Pacific region, partially offset by higher demand in Japan and the U.S. Lynparza* 292 275 6% 7% Growth driven primarily by higher demand in certain international markets, particularly in Latin America. Lenvima* 255 232 10% 10% Growth primarily from higher demand in the U.S. VAXNEUVANCE 219 106 106% 106% Growth largely driven by continued uptake for pediatric indication in the U.S. and launches in Europe. Sales growth in the U.S. also benefited from public-sector buying patterns. ROTATEQ 216 297 -27% -27% Decline primarily due to timing of shipments in China and public-sector buying patterns in the U.S. Animal Health 1,511 1,491 1% 4% Growth primarily driven by higher pricing in both Livestock and Companion Animal product portfolios, partially offset by lower volumes. Approximately 2% of the negative impact of foreign exchange was due to devaluation of Argentine peso, which was largely offset by inflation-related price increases. Livestock 850 849 0% 4% Sales were flat reflecting higher pricing across product portfolio, as well as higher demand for swine and poultry products, partially offset by lower demand for ruminant products. Companion Animal 661 642 3% 4% Growth due to higher pricing across product portfolio. Sales of BRAVECTO were $332 million and $314 million in current and prior-year quarters, respectively, which represented growth of 6%, or 7% excluding impact of foreign exchange. Other Revenues** 258 275 -6% 11% Decline due to impact of revenue hedging activities. *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. First-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 Certain Other Items Non- GAAP2 First Quarter 2024 Cost of sales $3,540 $463 $116 $- $- $2,961 Selling, general and administrative 2,483 21 5 - - 2,457 Research and development 3,992 16 2 - - 3,974 Restructuring costs 123 - 123 - - - Other (income) expense, net (33) (4) - (116) - 87 First Quarter 2023 Cost of sales $3,926 $545 $29 $- $- $3,352 Selling, general and administrative 2,479 20 1 - - 2,458 Research and development 4,276 10 - - - 4,266 Restructuring costs 67 - 67 - - - Other (income) expense, net 89 15 - (429) 573 (70) GAAP Expense, EPS and Related Information Gross margin was 77.6% for the first quarter of 2024 compared with 72.9% for the first quarter of 2023. The increase was primarily due to the favorable impacts of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9), foreign exchange and lower amortization of intangible assets, partially offset by higher restructuring costs and inventory write-offs. Selling, general and administrative (SG&A) expenses were $2.5 billion in both the first quarters of 2024 and 2023, primarily due to higher administrative costs, offset by lower promotional costs, reflecting the prioritization of spending on key growth products, and the favorable impact of foreign exchange. Research and development (R&D) expenses were $4.0 billion in the first quarter of 2024 compared with $4.3 billion in the first quarter of 2023. The decrease was primarily due to lower charges for business development activity, which included a $656 million charge for the acquisition of Harpoon in the first quarter of 2024, compared with charges of $1.2 billion for the acquisition of Imago and $175 million for a license and collaboration agreement with Kelun-Biotech in the first quarter of 2023. The decline was partially offset by increased compensation and benefit costs, higher clinical development spending, as well as higher investments in discovery research and early drug development in the first quarter of 2024. Other (income) expense, net, was $33 million of income in the first quarter of 2024 compared with $89 million of expense in the first quarter of 2023. The favorability primarily reflects a $572.5 million charge in 2023 related to settlements with certain plaintiffs in the Zetia antitrust litigation, largely offset by lower income from investments in equity securities and higher net interest expense in 2024. The effective tax rate was 15.9% for the first quarter of 2024 (which includes a 1.6 percentage point unfavorable impact for the acquisition of Harpoon), compared with 22.6% in the first quarter of 2023 (which includes a 5.5 percentage point unfavorable impact for the acquisition of Imago). GAAP EPS was $1.87 for the first quarter of 2024 compared with $1.11 for the first quarter of 2023. Non-GAAP Expense, EPS and Related Information Non-GAAP gross margin was 81.2% for the first quarter of 2024 compared with 76.9% for the first quarter of 2023. The increase was primarily due to the favorable impacts of product mix (including lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9) and foreign exchange, partially offset by higher inventory write-offs. Non-GAAP SG&A expenses were $2.5 billion for both the first quarters of 2024 and 2023, primarily due to higher administrative costs, offset by lower promotional costs, reflecting the prioritization of spending on key growth products, and the favorable impact of foreign exchange. Non-GAAP R&D expenses were $4.0 billion in the first quarter of 2024 compared with $4.3 billion in the first quarter of 2023. The decrease was primarily due to lower charges for business development activity, which included a $656 million charge for the acquisition of Harpoon in the first quarter of 2024, compared with charges of $1.2 billion for the acquisition of Imago and $175 million for a license and collaboration agreement with Kelun-Biotech in the first quarter of 2023. The decline was partially offset by increased compensation and benefit costs, higher clinical development spending, as well as higher investments in discovery research and early drug development in the first quarter of 2024. Non-GAAP other (income) expense, net, was $87 million of expense in the first quarter of 2024 compared with $70 million of income in the first quarter of 2023, primarily due to higher net interest expense. The non-GAAP effective tax rate was 16.1% for the first quarter of 2024 (which includes a 1.5 percentage point unfavorable impact for the acquisition of Harpoon), compared with 20.4% in the first quarter of 2023 (which includes a 4.3 percentage point unfavorable impact for the acquisition of Imago). Non-GAAP EPS was $2.07 for the first quarter of 2024 compared with $1.40 for the first quarter of 2023. A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows. First Quarter $ in millions, except EPS amounts 2024 2023 EPS GAAP EPS $1.87 $1.11 Difference 0.20 0.29 Non-GAAP EPS that excludes items listed below2 $2.07 $1.40 Net Income GAAP net income1 $4,762 $2,821 Difference 517 743 Non-GAAP net income that excludes items listed below1,2 $5,279 $3,564 Excluded Items: Acquisition- and divestiture-related costs3 $496 $590 Restructuring costs 246 97 Income from investments in equity securities (116) (429) Charge for Zetia antitrust litigation settlements - 573 Net decrease in income before taxes 626 831 Estimated income tax (benefit) expense (109) (88) Decrease in net income $517 $743 Pipeline and Portfolio Highlights Merck continued to achieve key regulatory and clinical milestones across therapeutic areas in the first quarter. In cardiometabolic disease, Merck received approval from the U.S. Food and Drug Administration (FDA) for WINREVAIR (sotatercept-csrk) for the treatment of adults with pulmonary arterial hypertension (PAH, World Health Organization [WHO] Group 1) to increase exercise capacity, improve WHO functional class, and reduce the risk of clinical worsening events. WINREVAIR is a breakthrough biologic and the first FDA-approved activin signaling inhibitor therapy for PAH, a rare, progressive disease. WINREVAIR is currently under review in the European Union and is being evaluated in ongoing Phase 3 trials in additional PAH patient populations. In oncology, KEYTRUDA continued to demonstrate its role as a foundational therapy for certain types of cancers, receiving the first approval in Europe for an anti-PD-1/L1 therapy as part of a treatment regimen for adult patients with resectable NSCLC at high risk of recurrence. In addition, the FDA granted Priority Review to a new supplemental Biologics License Application (sBLA) that would establish KEYTRUDA as the first immunotherapy indicated for the frontline treatment of advanced endometrial cancer regardless of DNA mismatch repair status. Merck also made meaningful progress in its clinical development programs, including initiating a Phase 3 trial for MK-1084, its investigational oral selective KRAS G12C inhibitor, in combination with KEYTRUDA for the first-line treatment of certain patients with metastatic NSCLC. And, in collaboration with Daiichi Sankyo, the company initiated the REJOICE-OVARIAN01 Phase 2/3 trial evaluating the efficacy and safety of investigational raludotatug deruxtecan (R-DXd) in patients with platinum-resistant ovarian cancer. In vaccines, Merck shared positive data from multiple Phase 3 studies evaluating V116, the company’s investigational, 21-valent pneumococcal conjugate vaccine designed for adults. If approved, V116 would be the first pneumococcal conjugate vaccine designed to address the serotypes responsible for approximately 83% of invasive pneumococcal disease in adults 65 and older. Merck also announced plans to initiate clinical development of a new investigational, multi-valent HPV vaccine designed to provide broader protection against certain cancers and diseases caused by additional HPV types, as well as plans to conduct clinical trials in both females and males (16-26 years old) to evaluate the efficacy and safety of a single-dose regimen of GARDASIL 9. In infectious diseases, Merck presented new data from its HIV development programs at the 31st Conference on Retroviruses and Opportunistic Infections in March, demonstrating significant momentum within the HIV pipeline. These data included the Phase 2 study evaluating a once-weekly oral combination regimen of islatravir, the company’s investigational nucleoside reverse transcriptase translocation inhibitor (NRTTI), and Gilead Sciences, Inc.’s lenacapavir, a first-in-class capsid inhibitor, for the treatment of adults living with HIV. And, for the first time, Merck presented data for MK-8527, the company's novel NRTTI that is being developed as an oral once-monthly agent for HIV-1 pre-exposure prophylaxis (PrEP), which recently entered Phase 2 development. Merck has the following three Prescription Drug User Fee Act (PDUFA), or target action, dates set by the FDA in the second quarter of 2024: V116 (June 17), KEYTRUDA plus chemotherapy as treatment for primary advanced or recurrent endometrial carcinoma (June 21) and, in collaboration with Daiichi Sankyo, patritumab deruxtecan (HER3-DXd) for the treatment of certain patients with previously treated locally advanced or metastatic EGFR-mutated NSCLC (June 26). Merck continued to expand and complement its pipeline and product portfolio through business development. Merck completed the acquisition of Harpoon, expanding its oncology pipeline with novel T-cell engagers, including MK-6070, an investigational delta-like ligand 3 targeting T-cell engager. The company also entered into a definitive agreement to acquire the aqua business of Elanco Animal Health Incorporated (Elanco), which will broaden its aqua portfolio with new products. Notable recent news releases on Merck’s pipeline and portfolio are provided in the table that follows. Cardiometabolic FDA Approved Merck’s WINREVAIR, a First-in-Class Treatment for Adults With PAH, Based on Results From Phase 3 STELLAR Trial (Read Announcement) Oncology European Commission Approved Merck’s KEYTRUDA Plus Chemotherapy as Neoadjuvant Treatment, Then Continued as Monotherapy as Adjuvant Treatment, for Resectable NSCLC at High Risk of Recurrence in Adults, Based on Results From Phase 3 KEYNOTE-671 Trial (Read Announcement) FDA Granted Priority Review to Merck’s Application for KEYTRUDA Plus Chemotherapy as Treatment for Primary Advanced or Recurrent Endometrial Carcinoma, Based on Results From Phase 3 NRG-GY018 Trial (Read Announcement) KEYTRUDA Plus Chemoradiotherapy (CRT) Significantly Improved Overall Survival Versus CRT Alone in Patients With Newly Diagnosed High-Risk Locally Advanced Cervical Cancer, Based on Results From Phase 3 KEYNOTE-A18 Trial (Read Announcement) Merck and Daiichi Sankyo Initiated REJOICE-Ovarian01 Phase 2/3 Trial of Raludotatug Deruxtecan in Patients With Platinum-Resistant Ovarian Cancer (Read Announcement) Merck Initiated Phase 3 Clinical Trial of MK-1084, an Investigational Oral KRAS G12C Inhibitor, in Combination With KEYTRUDA for First-Line Treatment of Certain Patients With Metastatic NSCLC (Read Announcement) Vaccines Merck Announced Positive Data on V116, an Investigational, 21-Valent Pneumococcal Conjugate Vaccine Specifically Designed for Adults, Demonstrated Immune Responses in Adults, Based on Results From Multiple Phase 3 Trials (Read Announcement) Merck Announced Plans to Conduct Clinical Trials of a Novel Investigational Multi-Valent HPV and Single-Dose Regimen for GARDASIL 9 (Read Announcement) Infectious Diseases Merck and Gilead Announced Phase 2 Data Showing an Investigational Oral Once-Weekly Combination Regimen of Islatravir and Lenacapavir Maintained Viral Suppression at Week 24 (Read Announcement) Upcoming Investor Event Merck will host an Oncology Investor Event to coincide with the American Society for Clinical Oncology Annual Meeting on Monday, June 3, 2024, 6 p.m. CT, at which senior management will provide an update on the company’s oncology strategy and program. The event will take place in Chicago, Ill., and will be accessible via live audio webcast at this weblink. Full-Year 2024 Financial Outlook The following table summarizes the company’s full-year financial outlook. Full Year 2024 Updated Prior Sales* $63.1 to $64.3 billion $62.7 to $64.2 billion Non-GAAP Gross margin2 Approximately 81% Approximately 80.5% Non-GAAP Operating expenses2** $25.2 to $26.1 billion $25.1 to $26.1 billion Non-GAAP Other (income) expense, net2 Approximately $250 million expense Approximately $200 million expense Non-GAAP Effective tax rate2 14.5% to 15.5% 14.5% to 15.5% Non-GAAP EPS2*** $8.53 to $8.65 $8.44 to $8.59 Share count (assuming dilution) Approximately 2.55 billion Approximately 2.54 billion *The company does not have any non-GAAP adjustments to sales. **Includes a one-time R&D charge of $656 million related to the Harpoon acquisition. Outlook does not assume any additional significant potential business development transactions. ***Includes a one-time charge of $0.26 per share related to the Harpoon acquisition. 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 global demand for key growth products in oncology and vaccines. Consequently, Merck is raising and narrowing its full-year outlook ranges for sales and non-GAAP EPS. Merck now expects its full-year 2024 sales to be between $63.1 billion and $64.3 billion, including a negative impact of foreign exchange of approximately 3% at mid-April 2024 exchange rates. Approximately 2% of the negative impact of foreign exchange is due to the devaluation of the Argentine peso, which the company expects will largely be offset by inflation-related price increases, consistent with practice in that market. Merck continues to expect its full-year non-GAAP effective income tax rate to be between 14.5% and 15.5%. Merck now expects its full-year non-GAAP EPS to be between $8.53 and $8.65, including a charge of $0.26 per share for the acquisition of Harpoon that closed in the first quarter of 2024 and 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 the company expects will largely be offset by inflation-related price increases, consistent with practice in that market. Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions. Full-year 2023 non-GAAP EPS of $1.51 was negatively impacted by charges of $6.21 per share related to certain acquisitions and collaboration agreements. Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, income and losses from investments in equity securities, and a previously disclosed charge related to settlements with certain plaintiffs in the Zetia antitrust litigation. Earnings Conference Call Investors, journalists and the general public may access a live audio webcast of the earnings conference call on Thursday, April 25, 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 . All participants may join the call by dialing (888) 847-9708 (U.S. and Canada Toll-Free) or (630) 395-0358 and using the access code 4164932. 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 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 ( ). Appendix Generic product names are provided below. Pharmaceutical BRIDION (sugammadex) 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) 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) WINREVAIR (sotatercept-csrk) Animal Health BRAVECTO (fluralaner) ________________________________ 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 Includes expenses for the amortization of intangible assets recognized as a result of acquisitions of businesses, 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. MERCK & CO., INC. CONSOLIDATED STATEMENT OF INCOME - GAAP (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 1 GAAP % Change 1Q24 1Q23 Sales $ 15,775 $ 14,487 9 % Costs, Expenses and Other Cost of sales 3,540 3,926 -10 % Selling, general and administrative 2,483 2,479 0 % Research and development 3,992 4,276 -7 % Restructuring costs 123 67 84 % Other (income) expense, net (33 ) 89 * Income Before Taxes 5,670 3,650 55 % Income Tax Provision 903 825 Net Income 4,767 2,825 69 % Less: Net Income Attributable to Noncontrolling Interests 5 4 Net Income Attributable to Merck & Co., Inc. $ 4,762 $ 2,821 69 % Earnings per Common Share Assuming Dilution $ 1.87 $ 1.11 68 % Average Shares Outstanding Assuming Dilution 2,544 2,551 Tax Rate 15.9 % 22.6 % * 100% or greater MERCK & CO., INC. FIRST QUARTER 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 Adjustment Subtotal Non-GAAP First Quarter Cost of sales $ 3,540 463 116 579 $ 2,961 Selling, general and administrative 2,483 21 5 26 2,457 Research and development 3,992 16 2 18 3,974 Restructuring costs 123 123 123 – Other (income) expense, net (33 ) (4 ) (116 ) (120 ) 87 Income Before Taxes 5,670 (496 ) (246 ) 116 (626 ) 6,296 Income Tax Provision (Benefit) 903 (92 ) (3 ) (42 ) (3 ) 25 (3 ) (109 ) 1,012 Net Income 4,767 (404 ) (204 ) 91 (517 ) 5,284 Net Income Attributable to Merck & Co., Inc. 4,762 (404 ) (204 ) 91 (517 ) 5,279 Earnings per Common Share Assuming Dilution $ 1.87 (0.16 ) (0.08 ) 0.04 (0.20 ) $ 2.07 Tax Rate 15.9 % 16.1 % 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. 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 and accelerated depreciation 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. MERCK & CO., INC. FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS) (UNAUDITED) Table 3 2024 2023 1Q 1Q 1Q 2Q 3Q 4Q Full Year Nom % Ex-Exch % TOTAL SALES (1) $ 15,775 $ 14,487 $ 15,035 $ 15,962 $ 14,630 $ 60,115 9 12 PHARMACEUTICAL 14,006 12,721 13,457 14,263 13,141 53,583 10 13 Oncology Keytruda 6,947 5,795 6,271 6,338 6,608 25,011 20 24 Alliance Revenue – Lynparza (2) 292 275 310 299 315 1,199 6 7 Alliance Revenue – Lenvima (2) 255 232 242 260 226 960 10 10 Welireg 85 42 50 54 72 218 102 102 Alliance Revenue – Reblozyl (3) 71 43 47 52 70 212 66 66 Vaccines (4) Gardasil/Gardasil 9 2,249 1,972 2,458 2,585 1,871 8,886 14 17 ProQuad/M-M-R II/Varivax 570 528 582 713 545 2,368 8 8 Vaxneuvance 219 106 168 214 176 665 106 106 RotaTeq 216 297 131 156 185 769 -27 -27 Pneumovax 23 61 96 92 140 85 412 -36 -33 Hospital Acute Care Bridion 440 487 502 424 429 1,842 -10 -8 Prevymis 174 129 143 157 175 605 35 39 Dificid 73 65 76 74 87 302 12 12 Zerbaxa 56 50 54 53 61 218 13 15 Noxafil 56 60 55 51 46 213 -7 4 Cardiovascular Alliance Revenue - Adempas/Verquvo (5) 98 99 68 92 108 367 -1 -1 Adempas (6) 70 59 65 65 66 255 18 18 Virology Lagevrio 350 392 203 640 193 1,428 -11 -5 Isentress/Isentress HD 111 123 136 119 105 483 -10 -7 Delstrigo 56 44 50 54 54 201 28 30 Pifeltro 42 34 38 37 33 142 23 23 Neuroscience Belsomra 46 56 63 58 54 231 -17 -11 Immunology Simponi 184 180 180 179 171 710 2 1 Remicade 39 51 48 45 43 187 -24 -21 Diabetes (7) Januvia 419 551 511 581 547 2,189 -24 -21 Janumet 251 329 354 255 240 1,177 -24 -20 Other Pharmaceutical (8) 576 626 560 568 576 2,333 -8 -6 ANIMAL HEALTH 1,511 1,491 1,456 1,400 1,278 5,625 1 4 Livestock 850 849 807 874 808 3,337 - 4 Companion Animal 661 642 649 526 470 2,288 3 4 Other Revenues (9) 258 275 122 299 211 907 -6 11 *200% or greater 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 in the first quarter of 2024 and $3,133 million in the first quarter 2023. (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 in the first quarter of 2024 and $950 million in the first quarter of 2023. (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 in the first quarter of 2024 and $51 million in the first quarter of 2023. View source version on businesswire.com: Contacts Media Contacts: Robert Josephson (203) 914-2372 robert.josephson@merck.com Michael Levey (215) 872-1462 michael.levey@merck.com Investor Contacts: Peter Dannenbaum (732) 594-1579 peter.dannenbaum@merck.com Steven Graziano (732) 594-1583 steven.graziano@merck.com Source: Merck & Co., Inc. View this news release online at: