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

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Gave us rock-solid evidence that we can move on to Phase III. We think this is really going to be a -- we look forward to seeing the results being presented in upcoming meetings so that everyone can assess it. Our steering committee has been super happy about it, and we're going to head to Phase III in 2026.

Got it. So is this a launch which is post 2030?

I can't -- I don't know. And the reason why I don't -- I don't mean to not answer the question, it's just we have to figure out what the primary endpoint is going to be for Phase III, and that requires discussions with our steering committee, our regulatory agencies and so on.

I see. I see. Is it fair to say that there is a signal on time to clinical worsening?

We didn't -- we haven't disclosed other endpoints, but I would tell you that we're confident that we can move to Phase III.

Got it. When I did some checks on this, one of the feedbacks I was hearing quite often was part of the reason Phase II took so long to recruit was because the inclusion was very restrictive on the [indiscernible] units involved more than 4. Would Merck look to relax that?

One of the axioms that I've learned through bidder experience is don't get a Phase III signal that looks really good and then go ahead in Phase III and change everything, because that just doesn't make sense, particularly when you have a new biology like the story here. I actually think that the reason why enrollment took so long to begin with is because no one looks for these patients at present because there's nothing to give them. And I recall back in my days with hepatitis C, the moment we started to see patients with -- to see the promise of the new therapies, everyone came out of the woodwork to be retested and be ready. I see this as a similar sort of thing. Once you start -- once you have something that you can offer to people, then people are testing, will test for it. And for me, we saw that at the -- in the last months of enrollment. All of a sudden there is a lot of interest once they saw the results of ZENITH, in STELLAR. They said, hmm, maybe this is good for my patient. And all of a sudden, patients showed up. So we had a big acceleration of enrollment. So I see Phase III enrolling quickly even with this...

Got it. Chirfi, maybe just taking that enrollment to the commercial side, I guess one thing that confused me on CADENCE was it was about 160 patients, but it took 120 sites to deliver 160 patients. Does that form a very tough commercial uplift? Or do you think it will be very different once the data are out there?

Yes. So the CpcPH population we estimate to be roughly the same size as PAH. So you're thinking about -- you're looking at 50,000 to 60,000 in the United States. But as Eliav mentioned, the diagnosis rate is lower because physicians have not been looking for it. And so we think that, again, post-Phase III data, once people start to see the presentation next year of the Phase II, right, more physicians will be sensitized and look [indiscernible] patients. So we don't anticipate a different commercial model to what we have with PAH, and we will be able to execute this.

Got it. Your confidence on WINREVAIR sotatercept trajectory right now remains good. I know there were some questions a couple of quarters ago on whether rate of patient adds was slowing, but it sounds like things are pretty smooth. .

Absolutely. And then our confidence is growing because the data with ZENITH and HYPERION now, what you're seeing is, in the U.S., just to stick to the U.S. for a moment, the majority of our patients have come from the more severe PAH cases, right? So about 75% of those patients on WINREVAIR in the U.S. And so those are triple therapy patients. But we're seeing an increasing willingness by physicians to treat the less severe patients. And so the data from HYPERION, in particular, is giving confidence. So we are going to see a steady growth, 500 to 600 patients steady every month coming into treatment with WINREVAIR. And then we're launching outside of the U.S. We're very encouraged by the early signals from Japan, and we're going through the reimbursement process, in Europe, you know that it takes longer typically. But the feedback has been tremendous across.

Fantastic. Which takes me then to another important launch from Merck next year, PCSK9. I think Peter would tell you, the Street has a lot of questions on this one in terms of is this a real launch or not. Obviously, the Merck opinion is very different than the Street opinion on this. So maybe this is a question first for you, Chirfi. I'm sure Rob has a number out there for you to deliver on this. But is the feedback you're hearing from AHA consistent with sort of the perception that the broader organization has?

We are not surprised by the feedback. I was at...

Which one. The investor feedback or?

AHA.

Doctor feedback. Okay.

Thanks for clarifying. I mean we're really excited about the opportunity [ of enlicitide]. I mean this is potentially a game changer, right? There's a cardiovascular epidemic going on, right? So despite all the tools that are available, the injectable PCSK9s have not really had the kind of impact that was anticipated, given how powerful they are really. The whole mechanism is just such an incredible. So to be able to deliver a PCSK9 antibody efficacy in a pill form, right, and I summarize it as 60, 50, 50 30, when you think about the efficacy of [ enlicitide]. 60% reduction in LDL cholesterol, 50% reduction in non-HDL cholesterol, 50% reduction in ApoB and 30% reduction in LPWA. I mean that's the profile that was presented at AHA. And that was really surprising to the scientific community. And so not to us, but to the scientific community certainly. And then the AE profile, comparable to placebo. So think about that. And that's a really, really big deal. We think that we now have a tool that will allow us to democratize access, and so to really, really drive LDL lowering in the U.S. and around the world.

So I want to come back to access because I've been getting questions on it lately as well. But just before that, the feedback on food effect, feedback on sort of drug-drugs, you can't take multiple drugs together. Like how...

Yes. So no, thanks for the question. So drug-drug interaction does not appear to be...

Yes. Can you take other meds with it, like the blood thinners and all that?

So that's a big deal. That's a big deal.

No issues there.

That's a big deal. And then the food effect in the study, and Eliav can talk to it, but 97% of patients in the program were able to follow the regime. You take it in the morning, 30 minutes later you go about your breakfast, not an issue at all. And so again, the scientific community was ecstatic.

For us, what was really interesting was the lack of any -- it was kind of let's talk about how we're going to implement as opposed to worry about this sort of things. The lack of [indiscernible], lack of DDI, consistency of effect that was really exciting for people.

Got it. What -- Peter, I think there was a comment shared on the transcript recently, and I'm not sure if you could chime in as well, on access. There's this perception that you guys are looking to come in below where the current PCSK9 unbranded pricings are. I just want to make sure I understand exactly what you guys are doing.

Yes. We've not been that specific. We've just said we're going to price for access for broad access. And we've not been specific with respect to what that means in terms of gross or net prices.

I see.

We do not anticipate price to be a barrier. I mean we are going to price appropriately for value and for access. We really want to drive rapid access. I mean just to be clear, I mean, we are going to need guidelines to be updated, right? And so as you think about the models that we are working through internally, we're going to need to activate the inertia that exists in the space, I'm sure that guidelines are updated, so that more patients can benefit from the power of enlicitide.

And interestingly, the [ Visalia ] study results are, I think we're a major recipient of benefit of that, being able to show tremendous reduction in cardiovascular outcomes in patients who are higher -- or primary prevention patients is going to be very, very useful. It's the place where cholesterol management is done. And I think that that's going to be very useful for...

There's another oral cholesterol launch next year as well. Is that factoring into your expectations somewhere? Do both of these launches just do well, both new cholesterol offerings? I realize that's a different mechanism, but a lot of LDL reduction from New Amsterdam.

Yes. So I mean, obviously, as you said, it's a different mechanism of action. I think the excitement really is around oral PCSK9. It's such a powerful -- we believe we'll have the most powerful LDL-lowering oral agent either on the market or in development, period. So we'll be well differentiated.

Okay. Fantastic. Maybe perhaps then moving on to some of the other programs, I want to start to get into oncology a little bit. TROP2-ADC, your expectations in the EGFR mutant lung and HR-positive breast, especially in light of some of the underwhelming findings from the Gilead side in both those indications, just in lung broadly as well as HR-positive breast as well.

Sure. So ADCs are very unique. Each one of them is different. They're different in every element of the -- so with Gilead, of course, the antibody is the same, but we have a very different linker, we have a different dosing strategy, a very different development approach, et cetera. So I don't think you can read through positively or negatively from one to another. We've chosen a very specific dosing strategy and a specific approach that leverages the reliable efficacy and the easy to detect and treat safety profile of sac-TMT. The idea here is to have a workhorse drug that's available for both the [ NCI cancer center ] and the community practitioner oncologist. That's why we have a broader spectrum of diseases that we're evaluating. That's why we're putting a lot of things with pembro. That's why we are very GYN forward, maintenance forward, et cetera. So I think that that -- all this is a very differentiated profile. So I wouldn't read too much on what Gilead has done to address what we have in our pipeline. What I would though say...

But the payload doesn't matter in your opinion, lung setting?

We have -- our payload is really quite effective in lung. And how I know that, I know that because there's 2 studies now that are [ floridly ] nicely positive with [ Killen ] in China. The first is [ OptoTrope-4 ], which was actually presented and is published. And then very recently, [ Optiro 5 ], which was presented top line results by [ Kelun ] -- and to me, is a very significant -- that study is a very significant study because it's sac-TMT plus pembro. And I think that these data really validate why we think sac-TMT is different. And the right -- that right sweet spot for patients with good activity, in some cases, biomarker-defined, a safety profile that's easily manageable, long durations of therapy, and again, it allows us to -- it will -- and settings where that benefit is not clouded by having to go up against platinum chemotherapy, which is really great. It's good chemotherapy, and on the background of pembro.

Fantastic. Fantastic. Is there a possibility that we get some sort of an interim look on your EGFR mutant lung study and/or perhaps even the HR-positive breast study next year?

So we don't share when -- we always have interim analysis in all of our studies. The PCD dates are the most -- are the ones that investors typically look at. We do have interim analyses, will be event driven, so I really can't say exactly when and where. But remember, we've got 15 Phase III studies that are ongoing, 10 of which are novel settings. They're all enrolling like nobody's business, which is always a leading indicator, for me, a leading indicator of enthusiasm. And so they'll come when they come.

Right. Fair to say there haven't been any interims passed on those, because it's too early for that.

It's early. We do things like futility, but that's not really an efficacy. Like those are easy-peasy ones.

Okay. Got it. But that would have been a big surprise if there was a futility.

Yes.

Okay. Eliav, I know I've talked about this with you a couple of years now. The BTK inhibitor. Lilly is on the market now. Merck is going to market at some point. I guess, when would that be? Could there be some sort of readout possible in '26? CLL?

Yes, what we've done with [ nemtubrutinib ] is gone for that long path that's going to just get us to the touch down earlier than everyone else. But what I mean by that is to take everything and put it on the frontline.

Okay. [indiscernible] the refractory.

We have refractory, but it's -- it will come right at the same time. The front line -- because that's where the action is, right? That's where patients will get benefit. You want to be able to give people a drug that you can use for long periods of time and you won't get mutations. So [ nativrutinib ] has got the highest barrier to resistance because it's got a little bit of other non-BTK activity. And what we've chosen to do is to take it right into the front line. And unlike the other studies which is frontline plus, so not really front line, and not designed for the hard endpoints, we have a much larger study that's enrolled and now we are following patients up. And it's going to be mostly against [ dacalabrutinib], very little like ibrutinib. And so it's going to be a very straight up comparison. So we'll see what happens. But I'm confident that [ nimta ] will be -- that we'll be able to see the results and be able to show benefit. If our hypothesis is right, we'll be able to demonstrate noninferiority and potentially superiority and lack of resistance. I think that's the key. [ Purato ] have shown some data on what the resistant profile is. And we looked at our data and we saw that our drug would have been able to overcome resistances, where [ Puratos ] resistant, doesn't -- it remains -- I mean, it becomes inactive.

Got it. I guess how do you think this trial could differentiate over Lilly's [ partabrutinib ], 313?

Because it's straightforward first line. I mean it's not a -- and it's -- the endpoints are different. We start with noninferiority, but then we go to superiority and then we go to...

Could there be a clinical profile difference?

Yes, maybe. We'll see. That depends on the Phase III trial. I really can't -- I mean, we put all of our efforts into doing that with the idea that there would be a different clinical profile. We chose something a little dirtier because we thought that -- when I say a little dirtier, I mean a little more -- other receptors that it binds, tyrosine kinase inhibitors that it also inhibits, with the idea of having a little extra efficacy. Now the trade-off is whether there's going to be a safety profile difference. We don't know. But the data looked pretty good so far in blinded fashion.

Got it. But just so I'm clear, the [ bruin ] 313 for [ partubrutinib], that was a clean first-line study, no?

Not exactly. It was a smaller study, it didn't have the long-term outcomes.

You mean on OS.

Yes. Right.

Got it. Excellent. So maybe moving on to a program everybody cares about a lot, which is PD-1 VEGF. What's the -- I guess, let me ask you this. If it shows what the other PD-1 VEGFs have shown, which is about a 50% to 60% response rate, given what we know on overall survival data for the rest of the programs, is Merck going right into some sort of Phase II registrational? Or is this going to be more slower than that?

So the challenge with PD-1 VEGF is to show that PFS translates to OS. It's the age-old question. We've had a little initial possibility in China. We'll see if that's really true. The issue with that is that the delta between the PFS hazard ratio and the OS hazard ratio was pretty gargantuan. Europe, something at 0.5, and then something like 0.78, which was kind of you under why. And so we have to wait and see. So for us, it's a disciplined approach. We have MK-2010 that's from [ Lenovo]. It's very active. It looks good. ORR is a good marker for choosing dose, but it's not -- doesn't -- won't tell you if you're going to ultimately improve overall survival. And that's where the discipline comes in. And you'll see some of those a propos of sacTMT, it'd be very interesting for investors to look when [ Kelun ] finally presents the results of [ Optitro 05 ] to compare that to [ HARMONY II ] and ask the question, how does that -- how do the 2 compare? And what does that mean? And so -- but we're interested in PD-1 VEGF, and we're interested in it in a disciplined way. And I think it's -- we have to say the proof is in the pudding, and not fall into the pitfall that we fell in. Because I can tell you, it's me, I was the one that invested in [ pembro-lenvaad], had a success rate that wouldn't get me anywhere near the big leagues.

So it sounds like you're much more guarded on PD-1 VEGFs this year than...

No, no. Just -- yes.

Has it always been like that, or do you feel like that even more after...

It's always been that way, but...

You're more open about it now.

Just I feel like I'm waiting all the time. It's -- no. No not quite.

Can I ask you a controversial question then?

Yes.

There's an IO-IO combo, which had a second interim OS of 0.81. And we know PD-1 VEGFs have second interim OS of 0.78. That first IO-IO of 0.81 was PD-1 [ TIGIT ] and the 0.78 is PD-1 VEGF. But the perception from the Street is very different between those 2 combos. I guess, how do you think about that?

Beware.

Okay. Okay. And let me take it to another extreme then. Is it possible that these PD-1 VEGFs are just a high-dose PD-1?

Possible, but they -- well, not quite because they also have the AEs profile of VEGF, some...

But my point is, is the efficacy simply the higher PD-1 driving adverse...

I'd ask the other question -- a little different question. I'd say, if you take KEYTRUDA and you add Avastin, and then you compare it to PD-1 VEGF, is there any difference in efficacy? That would be an interesting question. Because the concept is that by somehow having it on the same molecule, you've done something really biologically different. There is a daisy-chain concept that people are talking about. There's the increased internalization. There's the being able to intensify the immune modulation, or something of that nature. And yet there's been studies that have looked at PD-1 and VEGF, and you see PFS benefit. We just don't see much of an OS benefit, is all.

Got it. So it sounds like you want to see a definitive OS signal before you commit any significant resources here.

We're going to commit it in a stage way. I'm not -- I don't want to talk through all the different if-thens. Some of it has to do with the drug, some of it has to do with the drug plus other drugs that we have in our pipeline.

Got it. And Eliav, could you remind me the trial that Lenovo was running, was, I think, 200-plus patients, but it got cut into half right ahead of their sale, what happened there?

Because we took out the drugs that were -- the combos with drugs that they -- with drugs that we didn't buy from them. There are arms with other Lenovo products, and then so -- and then we didn't need that. And so -- and we're going to globalize after this trial.

Got it. Do you have a U.S. IND on this drug?

Not yet, but it's coming.

Okay. And why the delay? Because it sounds like there's enough data to warrant it.

Because it's -- we've got a lot of stuff that we're able to do in China. Right now, our -- we have a pretty vast footprint there, and Phase I data, hopefully, the U.S. will change its point of view, make Phase I easier in the United States. But China is easy to work with.

Got it. So this is a question for Chirfi then. If the Summit [ Akeso ] programs have an overall survival of, let's say, 0.84 final OS, do you think that type of profile warrants a potential KEYTRUDA life cycle management within Merck where you could do a big switch over to an internal program? Is that to breach threshold enough to do that?

It's very difficult to comment. I mean you have to look at specific tumor types. You have to look at the standard of care per tumor type. And really, the bar has been set in each one of those. I mean that's what will drive adoption ultimately. So it's difficult to give you...

Okay. So it's -- but like let's say lung in particular, if there's like a 0.84 hazard ratio, could a Merck's in-house PD-1 VEGF effectively replace KEYTRUDA in lung with that type of hazard ratio? Or is that not enough? .

I would -- again, I would reserve my answer on this one. I would not...

So the base case plan for the company is not to sort of plan some sort of switch internally to an incremental program?

Yes. Not a wholesale switch. This would have to be really tumor dependent.

I see. Peter, I think you were going to say something on this?

No.

Okay. Okay. Great. One more on an IND topic we discussed last year, the oral GLP from China. I feel like that's been in the preclinical for a while. It looks like there wasn't enough preclinical done on the Chinese side before it was brought in. So I'm just curious...

Hold on. It's coming.

Okay. All right. I always get a sense sometimes when I listen to Dean that the interest is much more on making acyclic peptide, which is a true sort of oral synthetic peptide rather than a small molecule. So this may not be the top priority for all GLPs. Is that true or...

No, I don't think that that's necessarily true. I think what Dean is talking about is the power of macrocyclics to be able to have antibody-like effects like what we've seen with [ enlicitide]. I think he's really excited about the technology. Now we wouldn't have bought MK-4082 if we weren't interested in MK-4082.

Got it. I want to transition to ophthalmology franchise, and then I want to talk about immunology as well. John Reed is in the audience, so we'll talk about J&J pipeline. Competitive feedback. But let me start with EyeBio for a quick second. Chirfi, how big an indication is that? And with 2 shots in the eye, like can you just frame that for us?

Yes. So we're really excited about the EyeBio acquisition, and the program is advancing really, really rapidly, which as Eliav mentioned earlier, is always a sign of enthusiasm in the community when you are enrolling very rapidly. So just for context, obviously, anti-VEGFs are the standard of care in DME as well as wet AMD. But we have -- the insights we're getting from the community is that up to 40% of patients are really not well controlled or not responding at all to anti-VEGFs standard of care. So there is an unmet medical need here. And so there's a need for new MOAs. And so this is what really the EyeBio acquisition affords us. MK-3000 is a [indiscernible] agonist, a new MOA. And then you have Tiespectus, which is a bispecific of type 2 and VEGF. And so the combination of those 2 really will address this high unmet medical need that I just talked about. And...

But docs are comfortable with 2 separate shots in the DME setting?

So there is a trend in this community towards personalizing the treatment, right? So this is, as you do your programs, as you do your studies, you typically have your more frequent injections. And then over time, we've seen that with all the retinal disease, all the launches in retina over the past number of years, over time, with additional data, the frequency of administration goes down in the real world. So the same will happen here for MK-3000 and tiespectus. At the end of the day, it's about the efficacy. It's about the new MOA that we're bringing to market. And really, really exciting.

Is this a multibillion opportunity?

Totally. Yes.

Just real quickly. We're talking about 1 injection. We're not talking about...

No, the VEGF still happen, no?