Merck & Co., Inc. (MRK) Earnings Call Transcript & Summary

Thank you for standing by. Welcome to the Merck & Co., Inc. Rahway, New Jersey, USA, HIV Investor Event. [Operator Instructions] This call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the call over to Mr. Peter Dannenbaum, Senior Vice President, Investor Relations. Sir, you may begin.

Thank you, Shirley. Good morning, everyone. Welcome to Merck's HIV Investor Event, coinciding with the 13th International AIDS Society Conference on HIV Science. Before we get started, I'd 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 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 in 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 & Co., Inc. Rahway, New Jersey, USA, undertakes no obligation to publicly update any forward-looking statements. During today's call, slide presentation will accompany our speakers' prepared remarks. These slides in our SEC filings are posted to the Investor Relations section of our company's website. Speaking on today's call will be Dr. Eliav Barr, Senior Vice President, Head of Global Clinical Development and Chief Medical Officer; Dr. Liz Rhee, Vice President, Clinical Research Infectious Disease; and Chirfi Guindo, Chief Marketing Officer, Human Health. The full biographies of the speakers can be found in the appendix of the accompanying slide presentation. Now moving to the agenda. Eliav will start our prepared remarks with a strategy overview. Liz will then provide a research update across our broad HIV pipeline, and Chirfi will discuss the commercial opportunity. Eliav will then wrap up with closing remarks before we turn to Q&A. With that, let me turn it over to Eliav.

Thank you, Peter, and good morning, everyone. Thank you for joining us in today's event in conjunction with the International AIDS Society Meeting. Today, we'll provide an in-depth review of our HIV treatment and prevention pipeline as well as the opportunity that stands before us to help more people at risk for or living with HIV infection. Our commitment to HIV started at the very beginning of the AIDS epidemic. And over the years, we've been responsible for creation of the prototype of each of the potent antiretrovirals that are designated as anchor -- anchors of HIV treatment regimens. Now I joined Merck in 1995. At that time, Merck had just announced the results of the CRIXIVAN Phase III program that led to the licensure of this protease inhibitor anchor medicine within weeks of submission. The company had also discovered the first NNRTI, efavirenz, a drug that became the anchor medicine in ATRIPLA, the first single-tablet regimen for HIV treatment. After these successes, we continue to innovate. We discovered the integrated strand transfer inhibitor or InSTI class of anchor medicines, and we launched ISENTRESS, which is the prototype for this class. Iterations on ISENTRESS' profile led to development of InSTI that have become the most common anchors in HIV therapy regimens today. We've continued our innovation by ensuring availability of drugs for pediatrics even down to newborns. More recently, our goal has been to find new types of antiretrovirals with high barriers to resistance and potency to help enable reductions in the burden of HIV treatment and prevention regimens. With the in-licensing of islatravir from Yamasa, we introduced a new class of anchor medicine, the nucleoside reverse transcriptase translocation inhibitor, NRTTI. Doravirine/islatravir is a first investigation in regimen in the NRTTI era. Now Merck remains active in the field of HIV research because collectively, the HIV treatment and prevention community has yet to reach full control and prevention of HIV as defined by the UNAIDS 2030 goals. There still remains significant unmet need globally in HIV with currently approximately 40 million people living with HIV. An estimated 1.3 million people were infected with HIV in 2023, which equates to about 3,500 new infections per day. For these individuals, it has proven difficult to remove the stigma associated with HIV. We intend to be part of the solution for the continued unmet need in HIV treatment and prevention worldwide. So how are we going to do that? We aspire to be the first -- to be first-in-class and best-in-class with our NRTTIs, which we hope will serve as important -- in important roles in both treatment and PrEP or prevention. NRTTIs inhibit HIV reverse transcriptase through immediate and delayed chain termination after incorporation into viral DNA. These agents also block reverse transcriptase translocation preventing nucleotide incorporation. NRTTIs are potent and long-acting molecules. As exemplified by our candidate medicine for PrEP, which is being studied in a Phase III trial at 11 milligrams once monthly. Because of this, NRTTIs maybe appropriate for weekly, monthly and potentially even longer interval regimens. A longer dosing interval has the potential to reduce treatment failure due to noncompliance to offer additional treatment options and to reduce stigma. Our clinical trials have shown that at the appropriate doses, NRTTIs have had favorable efficacy, safety and drug-drug interaction profiles. Features especially important in older individuals and those people with comorbidities. Finally, our regimens are InSTI-free reserving this important class of therapies for later if needed. Now our current in-line portfolio includes the original InSTI, ISENTRESS as well as PIFELTRO or doravirine and DELSTRIGO, which is a fixed-dose combination of doravirine TDF and 3TC. Doravirine is an important part of the current portfolio, but it's also in our current investigational two-drug islatravir based regimens. It is an NNRTI with favorable efficacy and safety profile. In the near term, we will leverage our experience with doravirine to create a single tablet regimen with islatravir, our leading NRTTI candidate. Now Liz will review the data from this regimen. It's been filed in the U.S. and a PDUFA date has been set for April 28, 2026. We've also invested heavily in our once-weekly treatment regimens, which can reduce the burden of adherence to 1/7 compared with daily regimens. An advantage for individuals with busy or complicated lives. The first of these investigational weekly treatment regimens will combine islatravir with lenacapavir. And this is part of our ongoing collaboration with Gilead. This regimen leverages the potency of islatravir and the proven track record of lenacapavir to create a two-drug regimen. Our long-term expertise in NNRTIs has enabled us to discover several candidates with different pharmacologic profiles. One of these is ulonivirine which we are studying in combination with islatravir as a weekly single-tablet regimen. Islatravir/ULO has the potential to be the smallest tablet approved and one with a favorable DDI profile. Control of HIV transmission requires multiple PrEP options. We are very excited about the potential of MK-8527, which is being studied as a once monthly oral PrEP pill. It's a very small tablet that can be used easily and in a discrete manner, and we think it's going to be very important globally. We also have intensive research efforts to look at new therapies not only longer term, longer acting, longer half-life medicines within the classes we've talked about already, but also new classes of medicine. We've been at the forefront of developing anchor medicines in HIV with features to enable different attacks on the HIV virus. We believe theses opportunities -- those opportunities also exist in our preclinical and early clinical pipeline. As we move forward to the next period of future innovation in HIV, we'll be considering our ability to develop long-acting formulations, which include assets in the family of NRTTIs and also in the family of NNRTIs. These leverage our expertise in those classes of drugs. We also have collaborations with Gilead and a variety of options in both treatment and PrEP under development. We're also thinking hard about how we will leverage our expertise to bring forward either cure or long-term control or reset approaches. One of these approaches of interest is the RT-TACK mechanism of action. These are NNRTIs that have the additional feature of selectively killing HIV-infected cells. We are currently evaluating candidate medicines in early development. So with that, I'd like to turn the virtual podium over to Liz, who's going to be telling us more about the current pipeline, focusing on the results we presented recently at CROI as well as in IAS this week. Liz?

Thank you, Eliav. I am very excited today to be here with you to share more about our expansive HIV pipeline, which has continued to make great progress. Today, we'll be highlighting the four programs that are currently in late-stage development in our HIV pipeline. These programs are anchored on our NRTTI molecules and are leveraging the properties of this class. Each program has generated data that we think is really exciting and support the progression of these programs. We have three programs in development for treatment that are anchored by islatravir, including a once-daily oral treatment program with doravirine/islatravir, which has recently filed the initial NDA in the U.S. based on data in adult participants who are virologically stable. The PDUFA date for this filing is set for April in 2026. In addition, we have filed an application for doravirine/islatravir in Japan. Then we have our first weekly oral treatment with islatravir in combination with lenacapavir, which we are developing in partnership with Gilead and which is in Phase III development. We have a once monthly oral PrEP option with a new investigational NRTTI, MK-8527 which is on the cusp of starting Phase III. Finally, we have our wholly internal oral weekly treatment regimen candidate where islatravir is being combined with our new investigational NNRTI ulonivirine, which has recently started Phase II. With these four programs, we have the potential for 4 NDAs to be filed over the next few years. This is truly exciting for us as we see that each of these products can be a potentially important option for people living with HIV or people who are at risk of acquiring HIV. The NDA for doravirine/islatravir is currently under review by the FDA, and the basis for this filing was two pivotal studies in virologically suppressed adults who have no history of treatment failure. Importantly, in this program, this is the first set of Phase III studies where we were able to demonstrate that a two-drug regimen that does not contain an integrase inhibitor was non-inferior to a three-drug regimen containing an integrase inhibitor. The two Phase III trials, protocol 051 and Protocol 052 were conducted in virologically stable participants. In each trial, they were randomized to either continue on their baseline treatment or switch to doravirine/islatravir. In protocol 051, the baseline treatment was background antiretroviral therapy, which included different kinds of 2 and 3 drug regimens and in protocol 052, the comparator with bictegravir FTC/TAF. In both trials, we were able to demonstrate strong efficacy results. In both trials, the doravirine/islatravir was not inferior to the comparator as demonstrated by the primary endpoint results at week 48 based on people having RNA levels above 50 copies per ml. This is on the left of each of the figures. As you can see in the figures, the second bars--second set of bars on the right show that there were high rates of virologic suppression greater than 90% in both trials. Importantly, there was no treatment-emergent resistance to either doravirine or islatravir that was observed in either study. And the tolerability and safety profiles were comparable in each of these trials to the comparator. Also important to note is that we saw that total lymphocyte and CD4 count changes over the course of these studies was similar between doravirine/islatravir and the comparator regimens. These are very promising results because this is the first two drug regimen that does not contain integrase inhibitor that's demonstrated comparable efficacy with three-drug regimen containing an integrase inhibitor. Our filing in the U.S. was accepted for an indication in virologically suppressed adults. We have another study protocol 053 being conducted in treatment-naive adults, which has completed enrollment, and we expect that the week 48 data will read out by the end of this year and will be presented next year at a scientific meeting. We expect these data to support the initial application in the EU and to support a U.S. label expansion as well. In addition to a once-daily regimen, including islatravir, we are also developing two once-weekly two-drug oral treatment regimens, both containing islatravir. And we think that each of these will be an important option for patients who desire a weekly oral regimen as a way to shift away from daily treatment. We believe that once weekly oral regimens will help to address challenges around pill fatigue that people living with HIV often grapple with. Islatravir/lenacapavir, which we're developing with Gilead, our partner on this program is currently Phase III and recently completed enrollment for those studies. This combination is being studied in virologically suppressed adults and will include a loading dose strategy followed by a single tablet administered once weekly. We are excited that this has the potential to be the first weekly oral treatment regimen to market and the first complete long-acting oral treatment regimen for HIV. The islatravir/ulonivirine program has recently started Phase II and is currently being evaluated in adults who are virologically stable, but we also have plans to study this in adults who are treatment-naive. This regimen is differentiated from islatravir/lenacapavir by the inclusion of ulonivirine, which is an investigational NNRTI. It's being studied at a dose of 200 milligrams in combination with islatravir, which we think will have the potential for a more simplified regimen as a single tablet that has the potential to be smaller than the islatravir/lenacapavir tablet without requiring a loading dose. And we also believe importantly that this has a potential to have a favorable safety and DDI profile. For the islatravir/lenacapavir program, we've conducted a Phase II study to evaluate this combination and presented these data last year at CROI and at IDWeek. What's shown on this slide are the week 48 results that were presented at IDWeek. In this trial, as you can see, where the comparator was bictegravir FTC/TAF, islatravir/lenacapavir resulted in virologic suppression at high rates that were similar to what we're seeing in the comparator group. Importantly, there were no participants that were discontinued due to decreases in CD4, T-cell or lymphocyte counts and the overall lymphocyte and CD4 counts were similar across treatment groups. These are the data that gave us confidence to move this program into Phase III. And this program we're calling the ISLEND program. This was initiated at the end of last year and enrollment recently completed. ISLEND-1 and ISLEND-2 are being conducted in adults who are virologically suppressed and in ISLEND-1, the comparator is bictegravir FTC/TAF. This is a blinded -- double blinded randomized control trial. ISLEND-2, in contrast, is an open-label randomized trial, and here the comparator is baseline antiretroviral therapy, which can include different 2- and 3- drug regimens. Both of these trials are expected to read out the 48-week results in mid-2026, and we look forward to seeing these results. Ulonivirine or MK-8507, this is our novel investigational NNRTI, and we are moving this forward in development in combination with islatravir as part of our wholly internal Merck oral weekly treatment regimens. This week, we presented data from this program at IAS. Ulonivirine is a potent NNRTI. This was demonstrated in the Phase Ib proof-of-concept study, where we saw excellent virologic activity. We did conduct a prior Phase IIb study where we dose ranged ulonivirine in combination with a higher dose of islatravir. And this study, while stop early did provide helpful supporting data for the combination and for the selection of the ulonivirine dose. As shown on this slide, the predicted ulonivirine exposures with a 200 mg once-weekly dose met the PK threshold to cover wild-type and common NNRTI variance. We've also generated data to demonstrate that there's no clinically meaningful drug-drug interaction between islatravir and ulonivirine and that repeat dosing of ulonivirine has no adverse effect on total lymphocyte counts and CD4 counts. The Phase II study of the combination is currently enrolling, and we look forward to seeing the results next year for week 24 primary endpoint. So in addition to creating meaningful options for treatment, we believe it's really important as well to provide meaningful options for HIV PrEP. We are very excited that we have the opportunity with MK-8527 and that we've made progress in advancing this program. The concept of a once-monthly oral pill to prevent HIV infection has many potential benefits for people who are at high risk for HIV. MK-8527 is being uniquely developed only for PrEP, and we believe it can have a potential, very important impact on global public health. Based on the pharmacokinetic profile of this molecule, we anticipate a fast onset of protection so that within an hour of taking the first dose of MK-8527 people would be able to have a month of protection from HIV. There would also be no need for a loading dose. In addition, with the discretion that's allowed with a small once-monthly oral pill, we believe this will be easy to use and address concerns around stigma that are associated with taking a pill for PrEP every day. And this will also, we believe, offer different ways for implementation that may be more convenient for people compared to an injection that patients would have to go to a physician's office to receive. Importantly, based on the data seen so far MK-8527 has the potential to provide favorable efficacy, safety and DDI profile for those people who could benefit from using PrEP. This week at IAS, we've presented Phase II data for MK-8527, and these are the results that supported advancing this program to Phase III. MK-8527 is an NRTTI with the same mechanism of action as islatravir. It is also highly potent and has excellent resistance in vitro. The Phase II study results informed our selection of a dose for Phase III trials, which will be starting imminently. As you can see in the top figure, which shows the study schema, we conducted a Phase II dose-ranging study of MK-8527 compared to a placebo where we looked at three different doses of MK-8527. The study was conducted in people who are at low risk for HIV infection and evaluated safety, tolerability and pharmacokinetics. As you can see from the concentration over time figure, the pharmacokinetic results support monthly dosing of MK-8527 for PrEP. Based on the modeling that's been conducted from these data, we selected a dose of 11 milligrams to advance into the Phase III program. Importantly, all three doses were well tolerated and demonstrating the safety profile that was comparable across the different doses of MK-8527 and to the placebo group. So we are moving forward to initiate the Phase III EXPrESSIVE program for MK-8527 PrEP. This program is comprised of two Phase III trials, EXPrESSIVE-10 and EXPrESSIVE-11. EXPrESSIVE-10 is being conducted in adolescent girls and young women at greater likelihood of HIV exposure and our EXPrESSIVE-11 is being conducted in populations at greater risk of HIV exposure, which includes men who have sex with men and transgender individuals. Both of these trials are large studies evaluating MK-8527 once monthly against the daily oral comparator FTC/TDF. Off note, EXPrESSIVE-10 will include not only older adolescence, meaning 16 to 17 years old, but also women who become pregnant while on the trial may opt to stay on the study. So we anticipate data in pregnancy and lactation in this trial. EXPrESSIVE-10 is being conducted in partnership with the Gates Foundation and this is a collaboration that both the Gates Foundation, and we are very excited about. We do see the great potential here to bring forward a meaningful option for people around the world as well as an opportunity to impact the global epidemic in areas where there's still very high rates of [ this infection ] such as Sub-Saharan Africa. EXPrESSIVE-11 is slated to start any day now, and we anticipate the first participant will be involved in early August. And this study will be conducted globally. So we look forward to the initiation of the Phase III program and sharing the progress with you in the future. With that, I will turn this call over to Chirfi.

Thank you, Liz. Good morning, everyone. As we've mentioned before, Merck has a long and rich legacy in HIV. We have a track record dating back to the early 2000s of working in partnership with governments and global partners, such as the Gates Foundation to enable broad sustainable global access to our HIV innovations. I'm proud to have been part of several of these important access initiatives when I led global marketing for HIV at our company. And before that, when I served as Managing Director for Merck in South Africa. It is humbling to now be in a position to potentially bring forward four very important options for both treatment and PrEP in the near future. HIV is a large market that is anticipated to continue to grow rapidly, primarily driven by demand for PrEP. The treatment market is also expected to continue to grow to approximately $25 billion by the mid-2030s. As you heard from Eliav earlier in the presentation, high unmet needs remain in HIV. Up to 1 in every 5 people living with HIV switched their treatment regimens annually due to tolerability, resistance or the desire for simpler regimens. On the PrEP side, a substantial opportunity exists to bring new options into the market, including a monthly oral option like MK-8527. This is particularly exciting for people who are seeking flexibility and the discretion that comes with having a monthly pill that can protect against HIV. The HIV landscape -- next slide, the HIV landscape is continuing to evolve and the needs of the community are becoming more and more clear. We have done a lot of work in market research, interacting with patients, advocacy groups, providers and other members of the community. Four main insights have emerged from those interactions. First and foremost, people with HIV are aging. Currently, half of people living with HIV in the U.S. are 50 or older. Roughly 1/3 of people living with HIV have comorbidities. It is, therefore, important to bring forward suitable options for these individuals. The second insight is on the growing need for simplification and two-drug regimens in particular. People on treatment are wanting less drug, while enabling viral control and the efficacy that these regimens provide. The third insight is a need for additional options and choice because adherence challenges continue with many people living with HIV missing doses on their existing treatments. Finally, stigma continues to be a challenge. As Eliav noted, almost half of adults have discriminatory attitudes towards people living with HIV. It is important to be able to bring forward options that allow for discrete dosing and potentially have minimal interaction with the health care system. Approximately 1/3 of people when asked would prefer long-acting oral options for both treatment as well as for PrEP. This is precisely what we will offer as we continue to develop our exciting pipeline. On the treatment side, we have DOR/ISL as a potential daily oral regimen. ISL/LEN in collaboration with Gilead as a potential first oral weekly regimen and ISL/ULO as a wholly owned potential weekly oral regimen. For these options, these options provide virologically suppressed people living with HIV with a simpler two-drug regimen that do not contain an InSTI. This can be particularly meaningful for people who are getting older and for whom drug-drug interactions, cardiometabolic toxicities and other tolerability issues may be a concern. Our new treatment options may be able to offer choices for both switch as well as treatment-naive populations of people living with HIV. Importantly, they can reduce pill burden with weekly dosing for ISL/LEN and ISL/ULO. On the PrEP side, we're aiming to launch the first and only monthly tablet for HIV prevention with MK-8527, our investigational NRTTI that has been specifically developed for PrEP and PrEP only. This is important because there will be less concern about the potential for resistance when thinking about use of the same molecule for treatment and for PrEP. MK-8527 has the potential to enable fast onset of protection within 1 hour of intake with no loading dose needed. It would provide discrete monthly oral dosing to meet the preferences of many people seeking long-acting protection who do not want injections. We expect this program will be meaningful for public health on a global basis and we fully recognize the responsibility our company has to work with partners to address public health needs, both in high-income countries as well as in low and middle-income countries. We feel we are well positioned to drive important progress for people impacted by HIV around the world. Earlier this year, we laid out the components of our expansive, late-stage pipeline that comprise a potential revenue opportunity of over $50 billion by the mid-2030s, putting MFN aside. With that, we see an opportunity of greater than $5 billion for our late-stage HIV portfolio, which consists of four impactful new product launches anticipated over the next few years. The first of which is DOR/ISL for daily oral treatment. Last week, the FDA accepted for review the NDA of DOR/ISL and set a PDUFA date of April 28, 2026. This would be the first regimen containing an NRTTI to be approved by the FDA. It would also be the first complete two-drug regimen that does not contain an InSTI. Subsequently, we have a potential first long-acting oral treatment to be approved with ISL/LEN in partnership with Gilead, which is currently in Phase III and has primary completion days next year. Next, we have our potential once-monthly oral PrEP MK-8527, which will begin in Phase III imminently. Finally, we have ISL/ULO, which combined islatravir, with our investigational next-generation long-acting NNRTI ulonivirine with high barrier to resistance. ISL/ULO which is fully owned by Merck and currently in Phase II, has the potential to be the smallest pill approved for once weekly treatment, which also does not require loading dose. This greater than $5 billion opportunity on a non-risk-adjusted basis underlines our confidence in this pipeline of HIV treatment and prevention options. Our excitement to bring forward these innovations is matched by the enthusiasm of the community, as we heard this very weak at IAS. It identifies our important presence in HIV since day 1. We're eager to leverage our commercial engine and our global footprint to bring forward these great new options for people impacted by HIV around the world. And with that, I turn the call back to Eliav.

Thank you, Chirfi. From all that has been shared, it should be evident that we are highly interested in continuing to contribute to HIV treatment and prevention. We're confident in our ability to play an important role with these programs we have laid out. We are pioneering potentially novel options, including with NRTTI anchor medicine that has a unique mechanism of action, high potency, high barrier to resistance, favorable DDI profile and the capability for a longer-acting impacts in treatment and prevention regimens. We anticipate four new approvals in the near term, and we are working with speed to ensure that we can get these important medicines to people globally. We continue to work with the community to ensure that HIV treatment and prevention remains a top priority for public health officials. We want to make sure that people are not defined by their HIV. Firstly, by preventing infection; and secondly, by bringing forward regimens that enable people to control their HIV without having to think about it often. And with that, I'll hand the call back to Peter.

Thank you, Eliav. Surely, we're ready for Q&A. Before we get started, two things, please. First, Kathryn Hayward, Senior Vice President, U.S. Pharma will be available for questions. And secondly, if I could request that questioners please limit the subject matter today to the -- to our HIV program. Thank you.

[Operator Instructions] Our first question comes from Trung Huynh with UBS.

We've just got two on 8527. So I guess, first, what makes you confident that 8527 doesn't have the lymphocyte lowering issues when used at higher doses for the monthly combos. And then secondly, and perhaps linked to the first question, but is there a road map for injections for longer durations for this product like a four or six months or even resuming the implant development for 12 months which you previously had for islatravir or can you not push that dose higher because of those lymphocyte lowering issues?

Right. I'll take that. This is Eliav. We have had extensive de-risking program for MK-8527 that followed the same path that led to the successful de-risking of MK-8527 -- I'm sorry, MK-8591 or islatravir. We have the right models and the right clinical data that have given us that confidence. And equally, the data that we presented today or this week at IAS and also reviewed extensively with regulatory authorities has convinced them that we are on the right track here with a drug that has enormous potential. So we're very excited about that. With respect to your second question, we're exploring a variety of different injectable options. That work is in earlier stages of development and -- but we're confident that we'll be able to bring forward medicines that will allow for a whole variety of different durations of therapy and hopefully as long as possible.

Our next question comes from Mohit Bansal with Wells Fargo.

Just a couple of questions. One is that it does seem like market might shift to injectables if you -- in longer term for -- especially for the PrEP market. What does your market research suggest which makes you more confident around the monthly oral? Yes, it is monthly. And then number two, with the islatravir or ULO combo, you are combining two NRTTI. So is there any potential for added toxicity given that there are two similar mechanism and one of them did cause at higher doses lymphodepletion?

Yes. Let me start by the second with the correction. The islatravir/ULO are two actually -- two different mechanisms of action. Islatravir, I know that the letters are very similar, but they're completely -- they're different mechanism of action. Islatravir is an NRTTI and ulonivirine is NNRTI. There is a natural confusion, but they're different. So we don't expect any -- and we've actually de-risked those molecules pretty well including long duration dosing of ulonivirine monotherapy just to make sure it has absolutely no lymphocyte effect. So that combination I think, will be a very exciting one. With respect to the Q monthly, I'm going to turn that to Chirfi to answer.

Yes. No, thank you for the question, Mohit. So I think it's important to highlight that despite the availability of daily options for PrEP, availability of injectables, still 1.3 million people get infected on an annual basis. So clearly, more is needed to protect individuals who want to be -- who want to avoid HIV infection around the world. So we believe when we did the market research, we presented options to these individuals. About 1/3 of them have signaled a preference for a monthly oral option to protect themselves. And the reason for that is really the fact that it would be more convenient for them. It would give them the option of having a potent, rapid protection within an hour in the case of MK-8527, sorry. They could take this medicine in the comfort of their home. You could think about telemedicine in this context where individuals would not need to necessarily go to the doctor to get their injection. So we believe that this oral monthly PrEP option would actually expand access and facilitate access to many individuals in the United States and around the world. So we're excited about this opportunity, frankly. You should have been at IAS, you would have heard the community super enthusiastic about this monthly oral option.

Our next question comes from Evan Seigerman with BMO Capital Markets.

Malcolm Hoffman on for Evan. Thinking about MK-8527 again, can you talk about how Merck may be able to capture a greater opportunity in the lower-risk patients not exposed to HIV? Also I know this is not the majority of the market opportunity in this patient population, but could you maybe contextualize how you think about the opportunity for these patients?

Chirfi, why don't you take that?

Yes. So for us, I mean, the opportunity is so huge in the people who are at risk, as I mentioned, 1.3 million who are getting infected on an annual basis. So our studies were done specifically in those populations. And so this is really the opportunity that we're going to go after in the coming periods.

Our next question comes from Asad Haider with Goldman Sachs.

Two quick ones. First for PrEP. Can you maybe talk about how you'll position and what market share you think is possible versus generic daily orals? Gilead's DESCOVY will also be generic around the time you launch. And also against Gilead's lenacapavir where there will likely be the early injection formulation when you launch as well. And then second on treatment, how do you think about how much share you could build from BIKTARVY with the Gilead partnered weekly oral? And how might that compete with Gilead's wholly owned weekly oral both make it to market, recognizing of course with the latter is currently on a clinical hold.

Just -- this is Eliav. I'll just make a couple of general comments. I think it's really important in the PrEP space to have options that enable people to have discrete and low compliant -- low compliance burden options. When we talked to folks around the -- in both high- and middle- and low-income countries, the idea of having a monthly pill discrete at home, telemedicine or not having to go to a health care center to get an injection is a real home run winner for them. I think it's a very important one. And in terms of the treatment, again, they -- we have -- there'll be a lot of options needed for treatment. We have -- with our Q weekly. We have the power of working together with Gilead. We'll have our own-- wholly owned drug that will have some very unique properties and a broader label. In terms of looking at the opportunities, I'll turn it over to Chirfi for more contextualization.

Yes. So I would go back to what I said about PrEP to start with. And Eliav summarized it nicely in terms of what the community is wanting the options that the community is seeking for protection. I think the advantage of MK-8527 really is the fact that it is a small pill, it works very fast within an hour of intake. You get a full protection for a whole month and you even have forgiveness up to seven days beyond that. And you can take it with the discretion that Eliav talked about, and you don't have to go to the doctor and get a needle injection and so on and so forth. So we believe that many, many individuals will choose this option. And market research suggested about 1/3 of people would opt for this for their protection if it were available. And then on the treatment side, again, I agree with what Eliav said. We believe that our weekly options are going to be well positioned, and we will have a meaningful share for both ISL/LEN when approved as well as ISL/ULO when approved. These are very good options that provide differentiated benefits for patients going forward.

Our next question comes from Luisa Hector with Berenberg.

On MK-8527, I wonder if you could comment on the amount of data you have on drug-drug interactions, including perhaps recreational drug use. And then secondly, on your sales ambitions by therapy area, they do tend to arrive in $5 billion increments. So given the amount of data that you have in-house in HIV, could you comment on whether your over $5 billion sales potential has increased towards $10 billion and if not, why not?

Great. Well, maybe we'll start with the DDI question, and I'll ask Liz to comment on that.

Yes. Thank you, Eliav. So MK-8527's potential for drug-drug interactions is low. And this is based on the preclinical profiling that's been done for this compound as well as some Phase I dedicated studies that we've conducted. So we do think that overall, the potential for meaningful DDI is low with this compound.

And I'd just add to that, that these -- the NRTTIs are -- the metabolism and such that it has -- that the drug-drug interaction potential is really quite minor. Obviously, we can't do direct drug-drug interaction studies in people with recreational drugs, but we -- but based on our understanding of what -- of the metabolism of those drugs, we don't anticipate any drug-drug interactions there necessarily. Of course, there's a lot of impurities in these drugs, and we don't really know what might happen unfortunately, on an individual basis. When we -- let's talk about the commercial side.

Yes. I don't want to give -- we -- our confidence continues to be reinforced with respect to our HIV pipeline based on the data, obviously. One thing I would give to you is that we believe that DOR/ISL, which will be the first out of the gate is likely to be in fact the preferred switch option for many individuals who are going to be switched from their existing regimen which usually contains an InSTI, right? And so DOR/ISL being the first in a new class of NRTTIs, which provides robust viral control, high barrier to resistance and the convenience and the tolerability and the DDI benefits that we've talked about, we believe that -- and that is not -- importantly, does not include an InSTI. We believe that DOR/ISL would actually be the preferred switched option for those individuals. And just as we mentioned earlier, 1 in 5 patients treated with the HIV regimen will be switched on an annual basis. So this gives you an indication of how we are thinking about the opportunity for the first out of the gate. But similarly, we are equally excited about the weekly options going forward.

And Luisa, it's Peter. So when we're asked about what's underappreciated at Merck, one of the subjects that we typically lead with is HIV. So when we look at consensus estimates, there's not a lot in models for our HIV pipeline and portfolio, and that's one of the reasons why we did this call today. We're very confident in the $5 billion-plus opportunity that we've spoken about, and we're not going to update that today. But we look forward to continuing to see progress across this program and hopefully, today's event will help you understand why we're so confident.

Our next question comes from Courtney Breen with Bernstein.

This is Courtney. I just wanted to dig a little bit into the PrEP opportunity specifically. And one of the pieces that you've pointed out has been kind of the convenience and the ability to kind of dose a monthly oral at home. What we've learned with labeling update recently for YEZTUGO, the lenacapavir asset from Gilead is that another key component that requires doctor visits is actually testing to ensure that the patient doesn't have HIV. And so for the injectables today for YEZTUGO with the longer dosing interval of every six months, that's a six-month requirement. Whereas for DESCOVY, which is the daily oral, it's a three-monthly requirement for HIV testing to ensure that, that patient hasn't contracted the disease. Can you give us some context as to what we should expect for the monthly oral? Would this be a requirement for an HIV test every month, every three months or something even longer than that?

So it's Eliav, I'll turn it over to Liz in a second, but I'd just say we can't anticipate labeling. Obviously, that's something that we'll discuss with FDA. I'd point out that HIV testing can be done rather anonymously and also not necessarily through a visit to a hospital center. In terms of how we are doing it in the clinical trials, I'll turn it to Liz for her comments.

Yes. Thanks, Eliav. In the trials, we are testing for HIV status monthly actually in this trial. But this is not necessarily what we expect the position to be when we bring this product forward for regulatory submission. I mean I think that every three month frequency that's associated with the daily options is something that we think is probably more realistic.

Right. And although, again, we can't speculate on what FDA would or other agencies would say. But considering the standard of care in the field, the ability to get HIV testing, again, without having to visit a hospital center is relatively well established.

And I'll just add, the reason why we're checking HIV status monthly is to understand if we do see any infections when they happen. So this is really to enable us to collect the kind of data that we need to really fully characterize any infections that do occur in the treatment when participants are in treatment in this trial. So it's to answer a scientific question, but this is not what we expect in terms of how it would be used in the real world, how testing would be used.

Our next question comes from Geoff Meacham with Citibank.

I just have two. The first is in the treatment setting, I was curious how you guys think about resistance, especially as you develop doublets in HIV from what is three or four drug combos today? And then how would you compare the resistance of ISL or ULO versus, say, an integrase or a capsid? And then a second question, more of a commercial one on PrEP. It's been mostly a U.S.-based market, but what do you think is a tipping point for Europe or Asia more broadly adopting PrEP commercially?

Right. So with the first one on resistance, let me turn it over to Liz.

Yes. Thank you. So I think when you think about resistance in the context of multidrug HIV regimens, the number of compounds is not really what's driving the emergence of resistance. And if you think about this historically, we went from three-drug regimens being standard to now more recently, two-drug regimens showing really excellent efficacy. And so what's really key, I think, based on the last 20 years that we've learned is that you need to have at least one agent with a really strong barrier to resistance to protect the regimen. And I think this is often that's behind the concept of an anchor agent in an HIV treatment regimen. So with islatravir, one of the features that we -- that got us really excited about this molecule is the potency. So you need to make sure you've got adequate potency and levels with the doses that you pick. And then also the resistance profile, meaning that islatravir if you tested in vitro really takes a while to get resistance, associated mutations detected and the one that we do see is M184V, which is a fairly -- a relatively less problematic mutation. So this is why it's important when we're looking at our data in our Phase III doravirine/islatravir trials that we saw no emergence of resistance to either islatravir or doravirine. And this is why the concept of islatravir anchoring our treatment regimen is one that we've been talking about because we see this molecule as really bringing the potency and barrier to resistance that you need for a drug to anchor a regimen, whether it's a two-drug regimen or a three-drug regimen.

Right. And I just would add that this is why we've chosen these two-drug classes together there. They're actually quite complementary. One of the interesting things for islatravir is that it actually -- some mutations that are -- that occur to older medicines actually potentiate the effect of islatravir. And so that is an interesting biological plus that we see. In addition to that, I think that we've shown in our studies, which is actually the most important thing, the lack of emergence of resistance. And I'll turn it over to Chirfi to talk about the commercial elements.

Yes. So for PrEP outside of the U.S., you're quite right that today, the PrEP market is disproportionately a U.S. market. And so there are many reasons for that outside of the U.S. And I'm leaving aside the low-income countries in Sub-Saharan Africa and so forth, where there's actually quite a bit of PrEP use in the daily form and then going forward in the long acting as well. So if you look at other high-income countries, there's still a lack of perception of risk by many individuals, lower awareness of PrEP and concerns for side effects and the stigma associated with daily use of PrEP. And I think that by having Merck coming back with our global footprint, our commercial engine, we believe that we will actually have a -- make a meaningful difference in helping to develop the PrEP market in these other high-income countries. We have done this in other therapeutic areas. We know how to reach consumers in many of those markets, we've done that. And we believe that, that engine would help us really enhance the level of awareness. And the once-monthly oral option will help address many of those barriers that I just talked about. And finally, in terms of implementation, right? To have an option where you actually not -- you're not relying on going to the clinic, right, with all the challenges of having a nurse in the clinic in many of those countries, I think the monthly oral option will really help develop PrEP in those high-income countries outside of the U.S.