Merck & Co., Inc. Q1 FY2026 earnings call

Advancing and delivering breakthrough science to address unmet medical needs is the foundation. Delivered year-over-year revenue growth. Achieved pipeline milestones like FDA approval of IDVYNSO, priority review for I-DXd. Initiated Phase IIb/III studies in ophthalmology. Introduced NUMELVI to US market. Planned acquisition of Terns Pharmaceuticals. Announced evolution of commercial operating structure, appointed new business unit leaders. Announced multiyear partnership with Google Cloud to scale AI capabilities

Total company revenues were $16.3 billion, an increase of 5% or 3% excluding the impact of foreign exchange. In Oncology, sales of KEYTRUDA family increased 8% to $8 billion. WELIREG sales increased 43% to $199 million. In Vaccines and Infectious Diseases, GARDASIL sales decreased 22%. CAPVAXIVE sales increased 31% to $142 million. In Cardiometabolic and Respiratory, WINREVAIR global sales $525 million. OHTUVAYRE sales $131 million. In Animal Health, sales increased 6%, livestock sales grew 8%, companion animal sales increased 4%. Gross margin was 81.9%, operating expenses increased to $15.2 billion including a $9 billion onetime charge, other expense increased to $318 million, tax provision $957 million, reported a loss of $1.28 per share

Narrowed range and raised midpoint of full year revenue and EPS guidance. Now expect revenue between $65.8 billion and $67 billion, growth 1% to 3%. Gross margin assumption ~82%, operating expenses between $36 billion and $36.8 billion, other expense ~$1.3 billion, tax rate 23.5% - 24.5%, EPS $5.04 to $5.16. Guidance doesn't include impact of proposed acquisition of Terns, which will result in onetime charge and impact EPS

Q: About pipeline on MK-3000, how thinking about dosing.

A: Initial focus on Q4 weeks, considering other frequencies.

Q: Update on WELIREG clinical update on LITESPARK-012.

A: Bullish on upcoming LITESPARK studies, cautious on read-through to other trials.

Q: On BD, where biggest gaps in portfolio.

A: Start with science, focus on $1B - $15B deal size, continue to pursue transactions.

Q: On Win Revere, thoughts on FDA discussions.

A: In good conversations with FDA, progressing well.

Q: On TL1A, role in immunology.

A: Focused on TL1A, but thinking of expanding and extending.

Q: On CADENCE study, competitiveness.

A: Patient population has unmet need, focus on Phase III models.

Q: On Terns deal, incremental information.

A: MMR achievement rate, but MMR north of 50% is compelling.

Q: Distinguish MK-6837 from sac-TMT, TL1A in immunology.

A: MK-6837 is another ADC, focused on TL1A but thinking of expansion.

Q: On HIV, competitive setup and strategic priority.

A: Profound interest in HIV program, islatravir has potential