Merck & Co. Aktie

All right. We're just about at time. So let's keep moving with our next session with Merck. I'm very excited to have Rob Davis, CEO; and Dean Li, EVP Research Labs. Thank you both for being with us today.

Rob, maybe before we begin, I want to just give you the opportunity to level set us, big picture, on how things are going, sort of, midpoint of the year, how are things tracking towards the derisking of the commercial targets that you said that you'd achieve at least half of by the end of this year. So high-level comments on...

Yes. No, happy to do it. Well, one, thank you for having us. Good afternoon, everyone. If you look at where we're at, it's already been a very eventful year for us so far. And I would say our transformation is well underway.

If you look at the readouts we've had, it's pretty much hitting every area of our portfolio, whether it's Oncology, some important readouts coming from ASCO. HIV, news came out yesterday of our approval of islatravir plus lenacapavir. Ophthalmology, things are moving. Across the board, we feel very good about what's happening in the pipeline. And as I think about proof points, you're starting to see them and they're accelerating, and that's very important.

We're well on track to our goal. You mentioned the 50% of the $70 billion by the end of this year. We're actually ahead of schedule. You saw we had important readouts for sac-TMT, I-DXd, actually about a year ahead of what we thought. So as I sit here today, whether it's that, what we're doing with business development, bringing in Terns, which is another important asset. Our Animal Health business continues to do incredibly well, growing strongly on a new product portfolio strategy, very similar to the Human Health business.

Across all those fronts, what I'm probably most pleased about is it feels like people are starting to dig in and get a real sense and confidence in the breadth and depth of our portfolio and more there, but the fact that you're starting to see investors start to appreciate that, makes me very happy.

And I would just close by saying, as I think about where we sit today, my confidence that we are positioned for good growth coming out of the LOE is as high as it's ever been. It was already high. It just gets better. We're going to keep doing what we're doing. We're never satisfied, but we're operating now from a position of strength, and I think that's probably most important. And credit to Dean, to our MRL colleagues, how they've transformed the pipeline in the last 4 years is frankly quite amazing.

And there's a lot to talk about the pipeline transformation, which we're going to get to. But maybe before we do that, Rob, I just want to stick big picture for a bit. You touched on this briefly, BD, and I apologize in advance for asking you this question again because you've been asked in so many different ways. But I think everyone is always interested in hearing about your latest framing on the M&A lever. Just given the confidence that you're expressing on the pillars that you've already put in place for the transformation of this company that now seem well underway. So what are the gaps that are left to fill? Level set us on size, TAs, et cetera?

Yes. If I was going to summarize it, I would say we are going to continue to execute the exact strategy we've been doing over the last 4.5 or 5 years. And it starts with always asking the question, where is there important science that is happening, addressing an unmet need? Where we see that, we look at the portfolio and we try to think strategically about the portfolio.

And as I think about your question of where we are, I don't know if I see gaps at the moment, I see opportunities. Where I would see further opportunities, oncology. We want and intend to be a leader in broad-based oncology. And I think we now have the portfolio to do that. And we have strength to leverage by adding to it. So we'll continue to focus on oncology. Cardiometabolic is a space we're interested in. Immunology is a place where we're interested in. But we're going to continue to do that. And as you think about it, where we see the science aligned with our portfolio and if we can see value, we will move. We have been operating under a one pipeline strategy since Dean and I really came into our roles. And that means we want to bring in the best, whether it's internal or external.

So this isn't -- we're not doing business development to fill a gap to -- and so there's never a finish. It is just part of an ongoing strategy of how we develop a sustainable growth model that is going to take us not into 2030, not into 2035, but 2040 and beyond. And that's why from a size perspective, that $1 billion to $15 billion, which has been the sweet spot we've been operating in, that continues to be where we operate. We've said consistently that we would go bigger, but it has to be something where we see an important scientific opportunity and we have to see value creation. And obviously, the bar as you go bigger gets harder because it reduces your opportunities to do other things.

So that sweet spot, $1 billion to $15 billion is where we'll continue to focus. You look at what we've done, Verona, Cidara, Terns, those are the type of deals. I think you should continue to expect to see more of that.

Excellent. So before we kind of start drilling into some of the science, with Dean. On one more high-level question, Rob, that we're actually asking all of our management teams is -- and that's on the external environment and the operating external environment for the industry. You've got the midterms coming up. You've got some regulatory uncertainty with FDA leadership vacuum. You've got attempts to codify MFN that's set to expire in about 3 years. So what are you paying the most close attention to? Where are the banana peels that you could run into either on the drug pricing side or on the MFN side or anything else that we should be aware of?

If I look at where the FDA is and what's happening, I would start by saying we need a steady, stable, predictable FDA. That's very important. If you look back over the last couple of years where they've been focused, I do think they were making moves in the right direction, and I hope they continue under whoever comes in now to take over. And that's around how do we move better into the Phase I first-in-human studies. The question always is, why are we looking? Why do so many companies go to China, as an example. Well, it's because you can go faster and cheaper. So why don't we try to make the U.S. [Audio Gap] by addressing and simplifying our Phase I clinical processes that [Audio Gap] we want to see that focus. We want to continue to see a focus on AI. So those are the things we are promoting from an FDA perspective.

From a macro perspective, the push to try to continue to get reforms around PBM insurance, now 340B, I still believe that if you look at total drug spend, it's only 15% of the total on the innovative drugs. 90% of all drugs prescribed are generic. Generic prices in the United States are the lowest in the world. So that is a highly efficient model. So why not focus where the real challenge is, it is the $0.50 that goes into the middle. Why do we lose $0.50 of every dollar when you're not a part of the development, not taking any of the risk, not having to manufacture. We need to address that macro system.

And as an industry, both as Merck and now as Chairman of PhRMA for this year, that's where I'm pushing. How do we continue to work with the administration and with Congress to address those fundamental infrastructure issues but -- that I think are real opportunity. So if we can continue to drive for stability and predictability in the FDA, focus on making our system more efficient and address some of these macro challenges, we're positioned to be the world leader for a long time, but we need to make those moves to do it, and that's where I'm focused.

Okay. So maybe with that, and I have a couple of other big picture questions, we'll come back to those because I want to bring Dean -- I want to bring you into the conversation.

Let's maybe start the discussions coming off of ASCO. But before we get into some of the updates you saw there, I want to just address the EVOKE trial that you and Gilead announced the discontinuation of last night, where the KEYTRUDA plus TRODELVY combination was being tested in first-line metastatic non-small cell lung, PD-L1 high patients. So how should we think about the implications of that for sac-TMT in that indication? What, if anything, should be the read-through there?

Yes. So I [Audio Gap] comparison. And so one has to be a little bit thoughtful on how one does it. But this is in the PD-L1 high. It is looking at the addition of a TROP2 ADC with PD-1. It's very similar to a trial that we discussed at ASCO, where there was impressive data. And in the data that we just had a discussion where we actually put the headline out yesterday with our other partner, Gilead, it didn't meet the bar.

So the way that we look at it is not all TROP2 ADCs might not be the same and that we're very focused on our partnership with Kelun on their unique TROP2 ADC, sac-TMT, which we think is differentiated in the molecular design, and we're very interested in replicating the data that you saw at ASCO in relationship to the China trial and doing it globally. So we think that the opportunity for that potentially is greater, and our job is to bring that through.

So I guess that's a great segue into maybe unpacking that a little bit, arguably, the OptiTROP-Lung05 trial, which I think you were referring to is stronger validating data for sac-TMT than what you saw last night. So really no read-through there despite those both being TROP2 ADCs.

So maybe talk a little bit about the OptiTROP-Lung05 trial. What did you learn and what didn't you fully learn from that program? What are the most important gating points in terms of just trials? And what would you like to see before taking the next steps in the -- for the development of this program in the KEYNOTE-189 population, which has clearly set a very high bar.

Yes. So the first thing is when we brought in sac-TMT, the TROP2 ADC, we were very clear. We thought that this was a differentiated molecule and that there was enormous opportunity outside of lung and breast. So when you see the 17 Phase III trials we have, we've highlighted 13 of them are in tumor types and indications where we're the first movers. What we said in breast and lung is that there will be TROP2 ADCs before us, and we need to highlight the differentiation. And I think we're beginning to do that in lung. And I think there's also data that probably will come out in the next year or so in relationship to breast.

In relationship to lung specifically in KEYNOTE-189, the concept is you have pembro plus chemo in all-comers in non-small cell lung cancer. And the question is, at what point would you take sac-TMT and put pembro in that sort of place. We've decided to do PD-L1 greater than 50%, and that's clearly been a useful strategy.

But the broader thing as to when would you "blow-out" the program within lung. We're already blowing out the program without talking about lung. One of the questions that we always asked ourselves is, will there be innovations on the PD-1 side that we should take into account. And so that's something that we're looking at carefully now with important data coming from Akeso in China. And so we're studying that. deeply. But we've already "blown-out" the sac-TMT program. We're focusing in one component -- part, which is lung.

And I guess the lens for that program on the Kelun side is now starting to shift to the OptiTROP-Lung06 6 trial.

Correct.

So give us some high-level framing on what you would consider to be a successful outcome for that trial? And how does that trial add to your knowledge base around sac-TMT activity across the spectrum of non-small cell lung, including in the less than 1%...

I think that will be an important trial because it will tell you how much weight sac-TMT can hold in the challenging of KEYNOTE-189 and whether or not it would be -- it holds it well enough or would it be better if it held it with another alternative to a PD-1. And I think that's what it will teach us.

And we work very closely with our partners in Kelun. I mean they've just been excellent partners. And so we have -- using their data, almost like a sentinel, allows us to reshape the global trial. So we're very eager to see that data as we decide how broadly we take sac-TMT and whether or not the combination partner should be a PD-1 or something else.

Let's maybe unpack the -- another big theme coming out of ASCO, which you were very much at the center of as well, which is the progress on the PD-1-VEGF bispecific class. So I guess, first, Dean, externally on the HARMONi-6 data that you saw from Akeso. I'd just love to get your thoughts on the issues that were raised by the discussant on the stage after the data was presented that fueled some substantial discussion and debate among investors. I mean, are these really substantial concerns around this global translatability in terms of differences and age? Or is this just skeptics trying to poke holes in the data?

So I think everything the discussant said is legitimate, and we take them seriously. I think the person who spoke was very clear of the things one has to think through. But just stepping back, one of the things that's been very clear when you add PD-1 and VEGF, whatever the VEGF part has been, has been you can hit PFS, but it's been hard to hit OS. That's been a constant sort of theme. We've seen it in our own pipeline. Other people have seen it in their pipeline as well. But you need to step back and sit there and say, is this a clean PFS to OS? You'd have to say that it's clean in relationship to the OS appear to hold.

There are all the other caveats that one has to think about. And so one has to be very thoughtful how one advances it. And so when we look at that data, we sit there and go, on one hand, there haven't been many things that have translated into PFS and OS, and this one is. So we do not -- we think that's an important contribution. But I think the caveats that the discussant said, informs us as to how do we think to move it forward and in what partner should we move it forward and in precisely what indications we would move it forward.

Clearly, if you look at PD-1s and VEGFs, there are opportunities in lung, but it's not just in lung. It's an HCC, it's an RCC, it's in cervical, it's in ovarian. There's many places where a PD-1 and a VEGF works. So we're doing the hard work to sort of sort out where and when we should target those different indications. But equally important for us is not just where we put the PD-1, VEGF, but what's the combination partner? Should it be chemo, should it be Sac-TMT, should it be a different ADC, should it be a different molecule.

So let's unpack that a little bit more. At ASCO, just regarding your own PD-1-VEGF program that you alluded to a little bit right now. You noted that it was Phase III ready, which was intriguing and suggest it's moving potentially at a more rapid speed than certainly, I think a lot of us had thought. So I guess we'll just ask the question, like what data are you waiting for externally or internally before you get comfortable, in your words, to let the dogs out? I think you phrased it...

I'm going to have to live that one down a little bit. But...

What indications can be...

Yes. So clearly, we work extremely closely with Kelun. So us understanding where some of the other agents are will be really important because it's not just around the PD-1, VEGF. We believe that PD-1, VEGF could be an accelerant to other novel molecules, whether they're antibody drug conjugates, whether they're precision targeting.

So it is about PD-1, VEGF. There is more information that will be coming out. But equally important, it's the combination partner that you put in, in a specific tumor indication. So for example, you've talked about the OptiTROP. How that OptiTROP plays out will inform us as to when or whether we should -- how we would advance that sac-TMT in lung and who the IO partner would be.

Okay. Very clear. Another big theme out of ASCO that obviously got a lot of attention was RAS. And you discussed Merck's KRAS programs at your own ASCO event. So how do you see the applicability to lung cancer? And what are the tumor types you see rationale to target? And how is Merck approaching development very broadly?

Yes. So when you think about the RAS, you think of 2 major tumor types, there's many more. But you think of lung, you think of pancreas and you think of CRC. What we have the ambition to do is to displace KEYNOTE-189, not with a PD-L1 VEGF necessarily or Sac-TMT, but in those patients who have RAS mutations that you take a PD-1 and a RAS inhibitor and you don't take any chemo. And you see that in our G12C programs that are advancing, and there's many programs in relationship, not just in metastatic but earlier. We also believe that in CRC, it's very important. There, the combination partner is not PD-1, it's cetuximab. How well can your compound compete in that combination.

And then we've also said that we have a non-G12C RAS molecule, 4716, that one could imagine that whatever we see with our G12C, one would begin to replicate with our non-G12C in lung and CRC. We give enormous credit to RevMed. They've really made an important contribution for pancreas. I think many people will drive to pancreas, and we will make the decision when or whether to drive into pancreas, depending on how we look at where we can do the most good. I do think that many people will enter the field targeting pancreas given the important data of RevMed.

Okay. I have one more oncology question, and then we're going to keep moving because there's so much to talk about in the pipeline, which is a great thing, Rob, as you alluded to earlier.

Just at the ASCO event, Dean, you noted the historic nature of the INT program, partnered with Moderna. So just remind us on your technology, how the technology approach is differentiated there? What have you learned now in terms of what's been derisked in melanoma? And what's the path forward there as you look to expand into other indications and turning this asset into a scalable platform business?

Yes. So I have to give enormous credit to our partners. Previously, I talked about Kelun, but I must talk about Moderna. Their technology is differentiated. And the fundamental issue for cancer "vaccine" or individualized neoantigen therapy is people have done this for 30 to 40 years. And they've had to pick a single neoantigen. That's very difficult in solid tumor. What the Moderna technology allows us to do is to make a spread bet. We don't have to pick one. It's 20-plus, right? We can pick 30, and that's critically important. And so the ability to pick so many neoantigens and put it in a vaccine is important.

We have focused where IO has worked. We have focused where KEYTRUDA works. We have focused where KEYTRUDA works in earlier stage. And so that's where we are focused. And the melanoma data that we saw in Phase II, I think, is thought-provoking. And if we can repeat that in the Phase III, I think it will move the field in a substantial way.

One of the things that you also notice is that when you think about mRNA, sometimes people worry about durability. But for the melanoma, the 5-year data, I mean that's pretty durable, right? There was no more injections. It was pretty durable. That confidence led us to open up additional trials and even earlier stage in lung as well.

So as that moves forward, [Audio Gap] where you see KEYTRUDA at a minimum [Audio Gap] you could see us be very interested in moving INT in that form. We would also look at other people who are doing it in non-IO sensitive tumors and metastatic. And if they get positive readouts, we would react to that as well.

Okay. Let's keep moving. Dean, let's move to cardiometabolic. Enlicitide, just has the filing been made? And if not, what are the remaining gating factors? And you have this CNPV program. Any impact on that from Makary's departure?

Yes. So I can tell you that I actually had a meeting because after the Makary departure, the FDA wanted to make very clear to us this is on. And so we have every indication that the national priority voucher given for enlicitide is moving forward.

In relationship to how it's done, you -- it's almost like a rolling submission. And once they're satisfied, they send you a letter and then they say the PDUFA date is going to be this time. Whenever we receive that letter, that's when we will make it public. But now in the CNPV program, when you get that letter, that PDUFA date is really fast upon. It's no longer 6 months or 9 months. It could be within 2 months. So we believe that's moving forward, and we're very eager to move that.

And we think it's going to lower LDL in a substantial way. And the -- the point that I would also make out is the AHA and ACC has done a tremendous work in changing the guidelines. It used to be, hey, take a statin and call me later for the last 12, 13 years. And what they said is we're going to give you hard targets that you need to meet. And I think what that will do is it will increase the need for having patients not just on statins, but other mechanisms like PCSK9 and both the antibodies and our small molecule. I believe that the expansion will not be what percent of the PCSK market who gets. I think that there could be a substantial increase in the PCSK9 market.

And I guess as we think about the development of the enlicitide program more broadly and you think about combinations and particularly including with GLP-1s potentially, just what are you paying the most attention to in terms of market developments? And Rob, I actually want to bring you into this conversation as well to talk a little bit about just obesity and how strategic that is to you. So maybe starting with you.

So I would just say enlicitide is really important for that patient population. Clearly, GLPs are really important. I think people know that we have a GLP-1. We've been very focused on being very clear that we're not going to be playing in the peptide injectable or the peptide oral. We want to play in the small molecule GLP, and we want to play in the small molecule combination space. Those programs are moving very fast within our program, but in relationship to the markets of both obesity but also enlicitide. Rob?

Yes. No, I think Dean said it, I mean, we are interested in looking at the broader obesity space, but less about obesity than it is the comorbidities. So it is more broad in the way we think, and that's where the combination strategy comes in. And as he said, it is about oral small molecules and how we can combine that is the focus area.

So that's kind of where we're focusing. And you'll probably see more from us in that space coming out into the early 2030s. But there's a lot of work to be done with enlicitide in the interim period, not only as a mono agent, but also with our fixed-dose combination potentially in combination with Lp(a). So there's a much broader portfolio that we're thinking about across the broader cardiometabolic space.

Okay. Maybe just on WINREVAIR, Dean, just any update there, too, on FDA discussions on the Phase III trial design, feedback on time to clinical worsening as a primary endpoint and just timing on next updates there.

Yes. I don't want to get ahead of the FDA, but the time to clinical worsening to me is like really important. That's the most meaningful thing to the patient and to the provider. So I just want to make sure that to me has to be a prominent part.

I mean just to sort of step back in PAH, I think PAH, I think sotatercept/WINREVAIR and activin signaling inhibitors has changed how we talk about that field. And the question is, in a patient population that has HFpEF and has PH physiology, which is one of the hardest patient populations, can we make the same contribution. And so we're very eager to do that and move that forward with the FDA and increasingly with the community because they recognize in this patient population, they largely have nothing.

Okay. Let's maybe move to immunology, TL1A, tulisokibart, we're approaching the pivotal Phase III ulcerative colitis readout, I believe, in August, September. So I guess, how should we be thinking about the bar for that pivotal? What would constitute a positive trial? I mean your Phase II data set a really high bar already.

Yes. So I would just step back and what do we hope? What do we hope is that TLA -- TL1A, which is a member of the TNF superfamily gets talked about, no different than TNF is talked about, no different than IL-23. We want this to be a node that is really important. The second point that I want to make out is we think we want to make it not just a node because of its efficacy, but also because its AE profile is so low, so it opens up combinability. And the third thing that we think is really important is that we think that there's a narrative about immunofibrosis. Those other agents are really important and an important node, but they're not -- people view them as immunology agents, not fibrosis agents.

So although we're doing ulcerative colitis and Crohn's disease, what you see our clinical development is quite extensive. And in comparison to others, much more extensive. We have it in HS, we have it in psoriatic arthritis, we have it in rheumatoid arthritis, we have it in SSc-ILD. And we are hoping that as we see data from this, can those different indications make that concept of immunofibrosis come alive. And if it does, then it gives us a beachhead to expand, deepen and extend with other biomarkers and other combinations, all being different depending on what the indication is.

Okay. Maybe just moving on to your HIV program.

Thank you.

Do you want to comment on the data from yesterday? I'll leave that as an open-ended question for you.

So we're very pleased. We have talked about islatravir and that family as an NRTI next generation with translocation inhibition. But what we've always said is this could be a new anchor medicine. And you see it in isl-dor, which is a once a day with non-integrase, 2-drug regimen, first 2-drug regimen without an integrase. We're launching dor-isl. We have both naive as well as switch data. You have this isl-len now, q week. We have positive data. We'll be talking to the FDA with our partners, Gilead. They're the ones who have the market authorization, but this could be the first q-week treatment, a 2-drug q-week treatment with 2 novel mechanisms with no integrase.

And then you also have our own islatravir-ulo, which is, again, trying to show everyone islatravir can be that base. and another q week. And then the fourth thing is it's not islatravir, but it's islatravir like, MK-8527. Can we be the first compound that can make a prep that's q-month oral. I mean, to us, that's that excitement. So we laid out 4. One is getting launched, one, we have positive data and hopefully, 3, 4 fall into place as we hope.

I'm very excited about that program, too. It's great to see the enthusiasm. Let's talk about ophthalmology and retinal disease. You've got the BRUNELLO study is reading out the Phase IIIs in DME, I guess, third quarter, fourth quarter. So just level set us on how we should be thinking about the program because as I look across consensus models, there's not a lot reflected for that.

Yes. So I would just step back and say our ambition here is within the company, and Rob and I -- is palpable. What we're hoping to do is to put 2 mechanisms in retinal vascular disease, [Audio Gap] which is a Wnt agonist. And the concept is, could this be the [Audio Gap] vascular endothelial growth factor pathway molecule, an agonist that could treat in diabetic macular edema. So all the other sort of drugs in diabetic macular edema and age-related macular degeneration are vascular endothelial growth factor based. This would be the first non-VEGF.

The reason why that's important is that VEGFs have transformed the field, but there are many patients who don't respond well with VEGF immediately or with time. So we hope that we can be the first non-VEGF mechanism of action moving to that field.

But I also want to make sure that we also think that we want to be the best VEGF mechanism as well. So we have MK-8748. It is differentiated from Vabysmo in the fact that like Vabysmo, it has an anti-VEGF arm. But differentiated for VEGF, we have a component that agonizes, that activates Tie2, and we are very bullish about that. So what we're hoping to do is provide the retinal field, can we really have an excellent anti-VEGF offering in MK-8748 that is differentiated. And can we also provide them with the first non-VEGF pathway in MK-3000. If we can do both of those, then we believe that we can actually advance this field. And I think Rob can speak about the commercial. When you look at the commercial opportunity in eye, it's not insubstantial.

Yes. I mean it's worth pointing out just to kind of size this between DME and AMD, it's about a $15 billion market. As Dean said, 40% of patients will either -- show today either partial or no response to VEGF therapy. So there's a lot of switching that happens in this space, a lot of unmet need. And if we have now 2 agents that can [Audio Gap] we think that's a meaningful opportunity. We're talking about the Wnt, which we will see positive -- or we will see the data readouts coming. But we also accelerated our Tie2 into Phase III faster than people had expected. That's moving now in AMD. So you've got now our Tie2 moving in AMD. We've got the Wnt moving in DME. And so our ability to have a meaningful impact, probably bigger than people expect and sooner than people expect, is real.

Great. Great to see the progress in that program, too. I guess in the last couple of minutes, quick maybe rapid-fire, Dean, what's in the invisible pipeline that Rob talked about that excites you the most?

I think it's invisible. But I would just sit there, I go, you look at our pipeline, we are laying out new beachheads. And when we think about those beachheads, we can expand, deepen and extend. There becomes incredible opportunity to add on other mechanisms to the ones that are in the visible pipeline. So much of it is this.

But I'll just lay out at ASCO, I, for example, for antibody drug conjugates, everyone was so focused on Sac-TMT. I need to remind them, I've got 3 with Daiichi Sankyo. But the other thing is I've got one in heme, and I've got like 4 or 5 heme assets moving, maybe 3 of them with readouts in '28, '29. And also, we laid out there, there's like 2 or 3 other Kelun antibody drug conjugates that we haven't declared that will be very important as we, with Kelun, decide when to make that reveal depending on their data and our data. So there's a lot, but some of the "invisible" is kind of visible. It was on a chart at ASCO.

Great. Great framing. Rob, any closing comments in the last few minutes?

No. I think the hardest thing here is the -- we have so many opportunities. The breadth of our pipeline is so impressive, not only in the late phase, greater than 20 assets driving over $70 billion, all either now launching or will be launching very soon. 70% will be completely derisked by the time we get to 2027 from a clinical perspective. But we have an equally exciting Phase I pipeline as well. You can think about macrocyclic peptides, you can think about antibody drug conjugates and others. So our sustainability as a growth engine is real, and you're going to see it increasingly play itself out as it already has through the proof points we put on the board so far.

Well, great to see all the progress. Thank you so much as always for being with us. I really appreciate the update.

Great. Thank you.

Good morning, everyone. My name is Akash Tewari. I head our pharma and biotech efforts here on the research side for Jefferies. Joining us is Merck, a company that really global company with focus on multiple disease areas. But we have Marjorie, who heads their oncology efforts, and Merck is certainly a leader there, and we're fresh from coming from ASCO. So I'm really excited for this conversation.

Marjorie, maybe I'll hand it off to you for some opening remarks, and we'll get to going.

Yes. No, great. Thanks so much. ASCO was an exciting time for Merck and for us. Our partners, Kelun Biotech presented data from OptiTROP-Lung05, which is a Phase III global study looking in non-small cell lung cancer at the combination of sac-TMT combined with KEYTRUDA versus KEYTRUDA alone, showing clinically meaningful improvements in progression-free survival and a trend noting immature data and overall survival for those people who had non-small cell lung cancer with a TPS of greater than 1%. We also had updated data sets from KEYNOTE-942, which is a combination of pembrolizumab and INT, an individualized neoantigen therapy as treatment of people with certain melanoma Stage II and III, and that 5-year durability data was quite compelling.

We also had compelling data from the 5-year update from KEYNOTE-522, looking at people who have triple receptor-negative breast cancer as well as other updates across the oncology portfolio. So it's a great meeting for Merck. And there was a lot of really exciting external data as well, which made it on time and helps us to be excited about our continued path forward.

Understood. And I certainly agree. It was definitely a good ASCO for Merck. I wanted to start on lung, and I'll take it from a different angle, which is the question we often get from investors, and frankly, I've asked on investor calls as well. Why hasn't every study in lung started yet? And I can sense that your team has been consistently very diligent, and you mentioned data-driven, I think that's right. But there's a dynamic on this, which I don't think is well appreciated, which is pembro in lung may actually end up having a much more diversified revenue stream than I think people appreciate. People think about KEYNOTE-189 as a massive driver, but you guys have run adjuvant studies and maintenance studies. And so this idea that frontline lung in that traditional sense is the be all and all may not actually end up being the case. Could you give some color on that in terms of when we think about pembro's revenue drivers today in lung, how diversified is it in the United States?

Yes. I am not the best person to speak to this. So I apologize already, but I should have these numbers, and I do not. It is not the #1 revenue generator for Merck. I can't speak to where that comes from. But you're right, we now have multiple studies in the adjuvant setting, including 6 that have overall survival and more of the revenue, particularly future-looking revenue coming from KEYTRUDA Qlex and we anticipate in those settings, less so with the 189 regimen.

Understood. Now maybe going into ASCO and I'd love to give -- you obviously have a PD-1/VEGF in development that's Phase II-ready. And your team has been very prudent in terms of where you want to develop that asset. But I'd love to get your take because you've said, we want to get more data from the field externally before we figure out our own development program. Obviously, we've got some important data sets from HARMONi-6, the ROSETTA data from BioNTech and then also the lack of a PFS on HARMONi-3. How is Merck's view on where PD-1/VEGFs fit a role, particularly in lung, changed post-ASCO?

This is such an interesting development for all of us as we think about how to optimize therapy for people with different kinds of malignancies. Through the KEYTRUDA program, we have more than 20 studies that we have done with different combinations of KEYTRUDA with VEGF inhibitors, including bevacizumab, where we have 2 approvals, lenvatinib, where we've seen some compelling data in endometrial cancer as well as in renal cell, and other VEGF TKIs. And so we've learned a great deal about the combinations over time. And historically, it's not been a one-size-fits-all approach for these kinds of combinations.

And what has really been the question, and I think people are more excited after ASCO is could the bispecific of putting these 2 together and potentially improving the therapeutic index by putting them together because the safety appears to be a little more tolerable and maybe you can increase the efficacy actually of the PD-1 as well by the structure. Is that going to be what it takes to open up VEGF more broadly across multiple tumor types.

And I think we're still left with more questions than answers. So HARMONi-6 was great data. I want to congratulate Akeso, the investigators. It is clinically compelling information. It's the first Phase III randomized data set we've seen with the bispecific that shows consistency between PFS and OS. But open questions remain regarding the translatability into global studies, the translatability into different subsets of non-small cell lung cancer, referring back to what you said with you even look at HARMONi and you look at HARMONi-2, where you didn't necessarily see that same correlation between PFS and OS.

There are also open questions about -- in that particular HARMONi-6 study about the differences in age that was seen, where you saw most of the benefit for those people who were less than 65. And in a different magnitude, people keep talking about 407 and KEYNOTE-407. And I'd like to point out that, that study, the control arm, there was 60% crossover. I don't know if people remember that, 60% of the control arm crossed over to pembrolizumab. And the age hazard ratios, there was a small difference, definitely between those who were less than 65 and those who are older, but the magnitude of difference was not the same that was seen in HARMONi-6.

And so I'm excited because the curves separated and they stayed separated. Will they continue that way? I don't know the answer to that. When we look at the HARMONi -- HARMONi-2. They didn't seem to do that from the data we know to date. So I'm curious, and it's an area where we want to continue to develop and explore. But how these agents will combine in different tumor types is to be determined. So we're always -- as you said, we're data-driven. We're very disciplined, and we will go where there's opportunity where we think the science and the clinical need makes sense.

Great answer. And there's a few threads I want to kind of pull on. I mean, a, you mentioned in 407 because I think there is this perception, well, squamous is slightly easier than non-squamous. But you mentioned there's a lot of -- there was actually a lot of crossover in the 407 study. So maybe just generally, this idea that pembro chemo in non-squamous versus pembro chemo and squamous, there's a difference in terms of how difficult it would be to beat that regimen. It sounds like you're saying that's not actually the case. Both are going to be equally difficult to surpass. Is that maybe the right?

I think that people -- KEYNOTE-189 has set a really high bar, and that's great news for patients. It's set a very high bar. And the other thing that we know is over time, clinicians get better and better at keeping people on therapies as they learn how to identify who best benefits from treatment, how to modulate side effects, so dose intensity gets better. It's doing a really good job for patients. There's still a huge unmet need, so you want to develop things. I don't know that I would say that it's -- the bar is different as a barrier to entry for squamous versus non-squamous. They're different biologic subtypes.

Generally, the effects are somewhat similar for a checkpoint inhibitor between the 2 histologies, the huge meta-analyses. There are more neoantigens in squamous, and so you might get a little more robust response there. So that may be why you're seeing the barrier to entry. The other aspect is that non-squamous, there's more division of that histology into subgroups such as RAS mutations are more present in those who have adenocarcinomas. And so it's more about how does the biology and the current therapy and thinking where the future is going, how then do you want to develop in these different spaces. And so again, we still have more questions than we actually have answers at this time.

Understood. Now one of the data sets that I think I sense is going to be incredibly important. I'm curious if you share the view is I think Kelun has an 06 trial with sac-TMT in less than 1% NSCLC. You got the 1% to 49% data from 05. And my view was it did look incredibly strong. But it sounds like the less than 1% is an important part of that puzzle. Why is that, right? What are you going to learn from that 06 trial and you're hoping to see with sac-TMT and NSCLC?

There are a couple of questions there. The first question is related to does the PD-L1 expression level have any influence on the activity of sac-TMT. And there's not a biologic reason to expect that to happen. I think is when you look at high PD-L1 expression tumor scores, that KEYTRUDA does better and better and other checkpoint inhibitors improve their activity as you get higher PD-L1 expression. And so the bar to beat and improve upon that is higher. So the magnitude of benefit tends to be a little bit less.

The question that is going to come from this is related to can you increase the benefit of the combination there where people do use KEYTRUDA for the less than 1%, but it's not uniform. And we have a lot of data showing that there is benefit in this population. So can you enhance that from an ADC combination. I think is one of the questions. We've seen some suggestions on tumor receptor-negative breast cancer that, that could happen that using an antibody drug conjugate. We've seen it in bladder cancer as well with a different antibody drug conjugate class. And so that to me is the question that I'm most curious about is, do you think that you can get something that is at least additive, if not better, by that combination? And that's what I'm hoping to see.

That is a fascinating answer because I will say, even talking to Kelun, they strongly believe that there is an inherent synergy between pembro and sac-TMT. And then there's also this dynamic of versus just traditional chemotherapy, you have a better durability of effect. So that's quite interesting, which kind of leads me to another perspective, which is KEYNOTE-189 was such a transformative trial because not only did you give great patient outcomes, but it was also the simplicity. I mean there's no QCS, there's no TMB. This is something that every doctor, it's histology, people understand this, and it can get used.

And you've talked about this concept of workhorse regimens. What's interesting to me is when I look at the OptiTROP-Lung05 data, I see a consistency of response. When I asked you about less than 1%, you're saying, I hope I see a consistency of response. And when I even look at the development strategy you had with Kelun, a lot of times, you ran studies in subpopulations, but you're ultimately actually running trials pretty much everywhere.

So to me, the read is actually we went conservative, but then we're seeing this drug is actually working more broadly. So that kind of brings me to ultimately what your strategy could be in lung. Could it be that it's not separate trials in different sub-cohorts, but it actually could be another KEYNOTE-189 regimen where whether it's a PD-1 VEGF or pembro that you could have a broad-based improvement across lines of therapy, and that's really ultimately where this is headed. I'm curious.

When we started the global program with sac-TMT, we tried to think ahead 3 to 5 years from starting these Phase IIIs, what was the therapeutic landscape going to look like? What was the clinical unmet need and where could we add the greatest value? And that explains where we are today. So for those who normally get pembrolizumab as a monotherapy, often these are older people who are not healthy, you don't want to give them chemotherapy for very specific reasons, sac-TMT is a cytotoxic therapy. It's an antibody drug conjugate, but it still has cytotoxic activity. So can you improve the efficacy because people unfortunately relapse and die in that population because they have metastatic disease, and so can that help? So that's that study.

The KEYNOTE-189 regimen, when you look at, you've got people who have squamous carcinoma and the biggest unmet need we saw was for a maintenance approach there. There isn't a maintenance therapy. There are different ways you could consider that population. It was you could add on to chemotherapy and KEYTRUDA, and often you compromise on the chemotherapy dose or the antibody drug conjugate dose or both, where the benefit is probably from the maintenance approach and that also can make it more tolerable. So we think sac-TMT is a tolerable regimen that could be given for long periods of time in combination with KEYTRUDA.

And then when you think about the adenocarcinoma population, we were thinking ahead, we knew that RAS was coming into this space. That segment is getting more and more subdivided. I think that the data from OptiTROP-Lung05 and then like you said, for 06 does raise the question of, is there the possibility that you will see some kind of sac-TMT combination across all of these subgroups. And so we don't have studies that we've talked about fully in all of the different populations. But I think we've got a very diverse portfolio, and you can look at the data from ASCO and you can make your own estimates about what we might do there.

Understood. Maybe just ending on sac-TMT, and you mentioned something that I think is incredibly important is it's a tolerable drug. And one of the things that I noticed with the 05 data was that the duration on treatment, which is to me incredibly important, was double that of pembro monotherapy, which is unusual. Usually, you wouldn't think the more cytotoxic combo regimen has that.

So a couple of things. Can you talk about really how you optimize the dose of sac-TMT and Kelun to their credit, too, when they started at 5 and 5.5 to then going to 4 , which seems like a Goldilocks dose, how you guys have learned to keep patients on therapy? How much of an improvement have you seen even from the early studies with sac-TMT to now the trials are running now? And how you expect that to translate into your own global Phase IIIs? Should we expect this durability of response to carry out that might actually be even better than some of the early trials we've seen out of China?

There's a lot wrapped up in that question. So let me think about how to approach this. From the dosing perspective, antibody drug conjugates, they do have cytotoxic payloads. And so there is usually a dose response you see with chemotherapy. And so you do see this with sac-TMT is that the higher the dose, you tend to get increased efficacy. You also get increasing toxicity, too. So we're trying to look for that best optimal activity versus tolerability when we were choosing doses. We also wanted to have one dose for combination as well as monotherapy. And we have multiple studies where we're using sac-TMT as maintenance.

And so going with the highest dose that is tolerable doesn't always make sense in combinations because combinations increase toxicity. They always do, whether it's a KEYTRUDA combination or any other kind of combination, side effects get worse. And the PK between 5 milligrams per kilogram and 4 milligrams per kilogram heavily overlap. And so it's the totality of data, and we see very consistent sort of durations of response, PFS in the Phase I and Phase II data sets that led us to choosing this. And that's why you saw 4 milligrams per kilogram combined with pembrolizumab in the OptiTROP-Lung05 study. So that's how we ended up with the dosing regimen that we so thinking about this is I'm not going to call it a workhorse or I'm going to call it a cornerstone ADC is that for the clinicians out there, having one dose and monitoring combination makes their lives a lot easier. It really does. And so that way, you don't have to think about it is in your pathways. You don't have to really question it. You just can't prescribe it.

The AE management, I talked about this in regards to 189. Doctors get better managing toxicities over time. And the opportunity we had here with our partnership with Helen is they were running studies ahead of us. And so we could learn from what they were doing. So an example of this is stomatitis care. TROP2 is expressed in the intestine. All of the TROP2 ADCs have some GI toxicity. And for an example, in the Kelun studies, they do not routinely use steroid mouthwashes. We use them in our Phase III data sets, and we have increased the use of it. We also use much more aggressive secondary growth factor prophylaxis because of the hematologic toxicity, and it also helps recovery of the intestine. And so we've been much more prescriptive about that. And these are AE managements that oncologists are very used to giving in their daily practice and don't add significant burden to patients.

So if you're able to make the experience tolerable, then that's where you get the benefit. How this will translate in global studies is to be determined. Global studies inherently are different than single region studies, whether they're China studies or a U.S.-only study. There's going to be variability there. And so we are teaching physicians in real time as they are getting used to these drugs. And so my hope is we have learned a great deal, thanks to our partnership and our very large Phase I/II program that we've done to date, and we continue to iterate and evolve what we're doing in Phase III programs. I'm encouraged by the endometrial readout, which you haven't seen the data yet, I have, very exciting. And so having positive PFS and OS is the first ADC in a Phase III data set endometrial, I think, supports that we are on the right path.

Understood. Now last one on just PD-1/VEGF and then I actually want to go broader. The [ Lenvima ] asset, I think the term Merck adopted was we're Phase III ready at ASCO. I will say the one question I think I've certainly thought of, and I've heard this from investors as well is like it's unusual for Merck to present unconfirmed responses. I mean you guys are very straight and narrow. You give confirmed responses, you give proper durability. And at AACR, I think both in the poster and in the abstract, it was kind of the same data cutoff.

And so the question I've always had is really how did that data mature over time? Really encouraging 55% response rate, but it was unconfirmed. Is there any qualitative color you can give us in terms of as you've given that therapy for longer duration because that's really what you have internally, how that profile has evolved over time?

I don't like to talk about data that's not public yet in any kind of form. And so we have confidence in the data that we presented. Otherwise, you wouldn't have seen us present information like that. And so we wouldn't call an asset Phase III ready unless we thought that what you would see is what you would get.

Understood. That's helpful in and of itself. Now maybe stepping back and hitting on also CML. And you guys just did some external BD there. I was happy. I actually, I covered Terns. So it's always great. But there's been -- I think to me, it has been kind of frustrating because there's this idea like, oh, I read the deal documents and the response rate changed and this is not the asset we think it is. And I'd love to give you an opportunity to kind of -- what is your perspective when you saw the 701 molecule in terms of, a, safety and durability of response. But b, I really want to hit on efficacy, right? I remember talking with Amy at Terns and she was saying, we have the opportunity to maybe run a head-to-head study against Scemblix or run a study that where we feel like we could be superior against standard of care, which is something Scemblix never showed. So specifically on the efficacy front, what is your view of that molecule and what it can deliver?

We're really excited about the acquisition of Terns and TERN-701, which I think we've now renamed MK-4208, but we're calling it 7013. And this drug, we really appreciated that we think that they have improved the therapeutic index. And that's -- it's -- the way that they have presented data is very consistent. When you look back at the original Scemblix Phase II data sets and Phase I data sets and the other second-generation TKIs, they use the same terminology. So that way was an apples-and-apples indirect -- so that's where the data set is. We were able in diligence to look at patient level data and look at every single patient, including the ones that weren't presented at ASH last year and look broader. And so when we made the statements that the efficacy, you've got incredibly fast kinetics of time to response.

We were able to independently verify and look at each patient and verify that. When we say that MMR is around 2x what you would expect to see from more recent assets. We have verified that information and DMR 2 to 3x similar direct comparisons, again, all of the caveats and limitations there. All of that is very accurate information. And so we think this is something that is -- does have the opportunity, as Amy had said, when she was CEO of the company, of being able to really improve outcomes, not only in this sort of relapsed/refractory population where it's originally studied, but I think a lot about the first-line setting because clinicians still worry.

Thankfully, the transformation in acute leukemia has dropped dramatically. And so it's less than about 10% right now. It's really come down. But what you want to see is that very fast response. They do get better over time. I think there was updated data presented at ASCO on Scemblix that's showing over time, things get better. But you really want that deep, deep response and then you want the durability of it because it opens up the potential for potential for some people to go off therapy. And this is a chronic disease. And after several years of therapy, if you keep someone very suppressed, you might be able to stop their therapy and give them a break.

This goes into the tolerability as well is that most of the significant toxicities that have been reported in this class have occurred in the first 6 months. And so I think that, that's definitely there are class effect side effects that you are going to see that all of them are going to have. But it's the magnitude of them, the frequency and how you manage it that improves that therapeutic index. And I think Terns has done a really nice job there. So we're excited. We're continuing on with the program and the progress. We're about a month into the acquisition and the integration, and we really are excited about the potential opportunity in the future with this asset.

Understood. And maybe just a final point on that. In terms of the design, I know it's early in terms of a Phase III. I think quite an important part about deep molecular response and that could be curative. Could you run head-to-head studies? Could you run or a trial where it's more traditional to what Scemblix did, which is in kind of frontline against standard of care. Is there a discussion internally for your team to take the more aggressive approach? Or will more traditional.

So we're some month in. So give us a little time.

That makes sense. Now maybe stepping back, the ADCs you don't get asked a lot about are the Daiichi ones. And that at the time...

Because they're great.

Okay. So -- and that's incredibly important because, again, one of the largest pharma partnerships ever, I think probably the largest at the time of the deal. But I think there's been mixed headlines. There's -- it's a really competitive landscape. And there's always this question of, well, which one of these assets is Merck right now most excited about. I'd love to kind of give you a chance to refresh in terms of the data that you have internally because you're running these kind of dynamic Phase II/III trials, larger Phase II studies. So there's a lot of data you have internally that maybe is not public yet. Of the 3 assets, which one do you feel like since you've acquired it, you've gotten much more excited about as you've gotten more clinical data?

This is always hard because it's like asking what your favorite child is or -- so what is it that you like to do? The IR team will laugh because if i get asked a question, I always like to mention one specific drug is my favorite drug because they're also different and special. They each have fantastic potential. And that's what I think is -- we saw that initially when we did the diligence and we started initial discussions.

And as we're seeing data come out, if you look at I-DXd, we've got a PDUFA date in October for small cell lung cancer, where there's tremendous unmet need, about 4% survival at 5 years for this horrible malignancy and very compelling efficacy from the Phase II data set, we have ongoing Phase III study and potential for combinations also with MK-6070, which is our DLL3. We have ongoing Phase III studies looking at I-DXd in esophageal cancer as well as in prostate cancer, which they're all exciting to me. And I think the continued data that we're seeing keeps me excited about this asset and the potential. And we have other Phase II studies ongoing, which we've not publicly disclosed.

If I move to R-DXd, another one where it's, again, exciting and compelling data. It is -- you see very marked responses in platinum-resistant ovarian cancer. So we have Phase III studies ongoing in the platinum-resistant setting. We have large Phase II data sets and more Phase IIIs soon to follow in this indication. We are also looking at R-DXd in other tumor types. And so we're waiting for emerging data to help inform where else this drug could potentially go.

And then with P-DXd, we started a Phase III in breast cancer. And so HER3 is really important in breast cancer in a way but I think is not always appreciated. And so we've started one where in hormone receptor positive breast cancer, including a combination with KEYTRUDA, where normally you don't give KEYTRUDA. And it's partly what you mentioned earlier about the ADC combination, -- can it improve the likelihood of benefit to a checkpoint inhibitor because of increased antigen exposure. Is there something there that makes that happen?

And with this, we also -- in the study, in HER2 is allowed in the control arm because it does have very, very, very low HER2 levels in there, and we know that there is expression response with ADCs generally across the board. We also are doing Phase II studies, and this is public information, looking at HER2-positive because HER3 is particularly important in HER2-positive disease. And HER2 has done an amazing job. I'm a former breast oncologist, I'm now drug developer. And for me as a breast oncologist, HER2 has been transformative in HER2-positive disease, but there's still a ton of unmet need and people diagnosed with de novo breast cancer. So opportunities for multiple different kind of combinations to innovate there.

And a quick one on that, de novo. I mean, this question, I think Lilly presented some data with her Nectin-4. And there's -- to me, this is like -- this is a huge problem. You have all these TOPO ADCs. They're all going frontline. You're going to have this issue in ovarian. And I think there is early signs that if you retreated with TOPO, you're not getting a response at all. It is regardless of even changing the target. So when you talk about HER3 for breast, is that -- what's your confidence that you can retreat with the topotoxin and get a response? Or is it more we're trying to go to populations where Enhertu really hasn't gone?

I think to be determined. And so there are multiple different data sets. It's -- well, if I take a step back and just talk about chemotherapy, and so I'll go back to my history as a breast oncologist, we even would never treat someone with paclitaxel to go to docetaxel. We would never treat someone with Adriamycin to go to Doxil. You don't do them sequentially like that. And so there have been data sets presented that have shown that if you do ADC A with the TOPO and the ADC B with the TOPO, you don't see a lot of activity. That doesn't surprise me.

The big question is at what treatment-free interval do you get sensitivity back and does that happen? Because you can retreat with taxanes in breast cancer if you have a period of time between them and get quite robust activity. Same thing is true with anthracyclines. You can retreat with Doxil if you had Adriamycin and get quite robust activity. So I think it's to be determined. If the mechanisms of resistance are different with the TOPOs, you can get topoisomerase 1 mutations and you also can get change in efflux pumps. And probably, it may be that specific TOPO payload that could make a difference on whether or not there's response to. So a lot for us to learn and think about moving forward.

Understood. I have a little break on my next meeting, so I'm selfishly going to ask one more question. She's giving me a scalp, but it's fine. On the Moderna INT partnership, and I say this is -- I'm probably -- I was more skeptical than anyone else. I was like, there's all these LAG-3 studies in adjuvant and they've all failed actually. And you continue to present really interesting data regardless of PD-1 expression of a durable response, which I think is quite interesting. I want you to talk about the signal you've seen in melanoma and how it might apply to lung. Have you -- has your confidence in that program increased? And what are you learning about the biology of these personalized cancer vaccines that maybe we don't appreciate?

So for those who are not familiar, 942 is a study looking in Stage II and III melanoma of pembrolizumab versus pembrolizumab combined with INT, 5-year follow-up information, you saw that there is almost a 50% reduction of distant metastasis as well as relapse-free survival. So I'm rounding up one number rounding down another number. So really compelling activity that's prolonged. They also have exploratory data showing T cell clonal expansion that was maintained even though the INT was stopped and it wasn't continued on, no boosters were given.

So the question that you're asking is how do we take that and apply it to non-small cell lung cancer. The reason why we started Phase III is we just opened up one in Stage I lung cancer -- non-small cell lung cancer relates to the TMB levels and the neoantigens, the similarities that you see between non-small cell lung cancer and melanoma. The underlying biology of what makes something immunosensitive is the most similar between these two diseases, which is why we started our Phase III programs. We have multiple Phase II studies looking more broadly, for example, renal cell, which is IO sensitive, has less neoantigens. And so will something like INT be effective there. And then other studies which are IO-sensitive like bladder cancer, we have Phase II studies ongoing to really understand that as well. So more to follow.

More to follow indeed. Thank you so much. I really do appreciate.

Thank you for standing by. Welcome to the Merck & Company Inc. New Jersey USA investor events at the American Society of Clinical Oncology Annual Meeting. [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, Ivy, and good evening, everyone. Welcome to Merck's Investor event at the American Society of Clinical Oncology Annual Meeting. Thank you to all of you who've made the effort to be with us here in Chicago. It's great to see such a great crowd here tonight, and thank you for those that are tuning in via the webcast.

So we're excited to have this opportunity to speak to you about Merck's oncology program. During today's call, a slide presentation will accompany our speakers' prepared remarks and has been posted to the Investor Relations section of Merck's website.

Before we get started, we'd like to remind you that some of the statements that we make during today's call 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. Please reference this slide in our presentation and our 2025 10-K, which identifies certain risk factors and cautionary statements.

So our agenda tonight will start with Dr. Dean Li, President, Merck Research Laboratories, who will make a few opening remarks. Dr. Marjorie Green, Senior Vice President and Head of Oncology, Global Clinical Development, will provide an overview of our oncology strategy and key progress across the portfolio, including important clinical data updates. Next, Jannie Oosthuizen, Executive Vice President and President, Oncology and MSD International will speak to the commercial landscape and the opportunity we see to further impact patient lives. Dean will then provide closing remarks before we get to Q&A. Sophie Opdyke is sitting here in the front row, Senior Vice President of Global Oncology Marketing, and she will also be available for Q&A.

So with that, I'd like to turn it over to Dean.

Good evening. It's a pleasure to see so many of you here in Chicago. One of the things, I think, is important is we're trying to create a cadence of what our strategy is and try to define what it is and hold ourselves to be predictable in saying that in 2021, we outlined 2 clear objectives: To sustain durable leadership in oncology, we wanted to maximize the positive impact of KEYTRUDA especially in earlier stages of disease; and to diversify our pipeline with novel mechanisms. And then since then, we have made steady and important progress in demonstrating the benefit of KEYTRUDA in improving patient outcomes, especially in the earlier-stage setting. Last year, we also introduced KEYTRUDA QLEX, a subcutaneous injection of pembrolizumab plus berahyaluronidase alfa, allowing the administration in as little as 1 minute when given every 3 weeks. And we have leveraged the data and insights gained from KEYTRUDA to advance a broad and diverse pipeline of innovative candidates and novel mechanism of actions. And I think Marjorie will speak to a few of them, but we use our experience with KEYTRUDA and what it can combine with in how we look at these novel mechanism of actions. And we also look where KEYTRUDA doesn't work so well and where we want new mechanism of actions as well. And then over the course of the last few years, these 2 objectives have been our guiding principles. And this evening, you will see some significant progress we have made in executing against them.

So let me put our progress in context because where KEYTRUDA goes allows us to figure out where other things should go and gives us a leveraging point in relationship than that.

So KEYTRUDA has now received FDA approvals for 44 indications across 19 tumor types as well as 2 tumor-agnostic approvals, and clinical programs continue to generate evidence with the potential to further transform cancer care. In 2021, we also felt that our ambition would be that 25% of KEYTRUDA sales would transition to go much more in the earlier stage indication by the end of 2025, and we've achieved that ambition. That ambition is important as we think in the future about our pipeline, but also setting up were subcut KEYTRUDA can go, KEYTRUDA QLEX can go.

And so today, KEYTRUDA-based regimens have received FDA approval for 11 indications in the earlier setting, of which 6 studies have demonstrated an overall survival benefit -- the gold standard for oncology trials. So KEYTRUDA continues to raise the bar in treating earlier stages of disease and improving patient outcomes and laying a road map for us to follow.

We have advanced our foundational position with KEYTRUDA to create a diverse pipeline by executing on 3 pillars that we think is important. Immuno-oncology, and you've seen KEYTRUDA, we've talked about KEYTRUDA QLEX, but it is around PD-1 VEGF. It is around INT as well. Precision molecular targeting that many -- some of the programs that Marjorie and also a very robust tissue targeting candidates in the ADCs, both internally but also with robust partnerships with Daiichi Sankyo and especially with QLEX. In total, we now have approximately 60 Phase III oncology trials, of which 40 are across novel pipeline candidates including our suite of antibody drug conjugates, T cell engagers, small molecules and individualized neoantigen therapy. These diverse candidates are being developed as monotherapy as well as in combination with KEYTRUDA or KEYTRUDA QLEX. And the culmination of the late-phase studies is a result of years of disciplined pipeline diversification, both through internal discovery and strategic business development. We believe that we are well positioned to deliver a steady stream or cadence of meaningful data readout over the coming years and further the impact on patients with cancer.

And with that, I will turn it over to Marjorie.

Thank you so much, Dean. If you think about the portfolio and Dean set up how we think about drug development and the assets in our organization, we think about 3 pillars of biology. And we do that because of the underlying mechanisms of growth and resistance of different cancers and being able to have drugs that can target specific biological pillars, and they can be combined together.

So our immuno-oncology medicines are designed to stimulate anticancer immune responses. These include KEYTRUDA QLEX, our investigational INT candidate and our PD-1 VEGF bispecific. Precision-targeting agents are designed to impact pathways that can derive cancer growth. This includes caldorasib, our investigational KRAS G12C inhibitor, which recently received breakthrough therapy designation in the first-line non-small cell lung cancer setting; as well as several agents from our growing hematologic portfolio, which I'll further touch upon later in the presentation. Finally, tissue targeting, which includes antibody drug conjugates as well as T cell engagers. These are designed to target chemotherapy and immune cell activation to tumors while attempting to mitigate effects on normal tissues.

The reason we've organized around these goes directly to our strategy. And so to have the maximum benefit for patients and meeting the needs of these patients as well as clinicians and society is we know that the best outcomes in oncology how when you give multiple drugs together or are the different mechanisms resistance for the heterogeneity that exists in most cancers combinations have had the best outcomes long term. And we've seen that for many of our KEYTRUDA studies with multiple diseases and multiple combinations. And so we want multiple mechanisms to have the best benefit.

We also want to develop agents, therefore, that have single agent activity that are active in and of themselves and that are combinable because that will give us the best opportunity to help the most patients with a specific kind of malignancy or a subtype of a malignancy. And we can have diversified regimens also that potentially can go across multiple tumor types depending upon the targets and the mechanisms of action.

We also want to improve the therapeutic index of our medications. That is to be able to help a physician and a patient understand for a specific tumor that a person might have, is there a biomarker that could predict benefit of therapy because every time someone is treated, a physician can tell someone, we'll hear the odds that someone like you might benefit from a therapy. But knowing for that individual sitting in the chair in front of you, it's often very difficult. We're talking about statistics. And as a person who sees a physician, that's really uncomfortable place to be. So if we can develop targeted therapy diagnostics, that will be really helpful to find those patients most likely to respond.

And critically, we want to bring these drugs into earlier stages of disease, as Dean talked about with what we've done with KEYTRUDA. And it's because we can have the greatest impact there. We can help the most number of people with cancer if we can treat the disease as early as possible, whether it is in the first line or second line setting in a metastatic disease or if it's in the potentially curative setting in the adjuvant or perioperative space.

So we take these 3 pillars, and we created diversified regimens that can be delivered generally across multiple tumor types. And so I'm going to start the update with one of the drugs that can do just what I talked about, which is a sac-TMT. It is one of our broadest programs in our pipeline. This is an antibody drug conjugate that we brought in through our partnership with Kelun Biotech. It's a differentiated Trop-2 antibody drug conjugate with a belotecan-derived hopizomaras1 inhibitor payload.

What we're particularly excited about is the bifunctional linker technology that's proprietary and is quite unique for the Trop-2 ADCs that are currently in clinical studies. This linker is designed with the intent to maximize payload delivery due to its very stable irreversible connection to the antibody. This is intended to prevent the payload for breaking off the circulation. There is a pH-sensitive connection that ensures intracellular payload release in tumor cells. There also is the allowance of the structure for bystander effect. The stability of the linker also enables a drug-to-antibody ratio of somewhere between 7 to 8, we say 7.4 to be very precise. But it's a very -- for the stability of the linker, this is a very high DAR when you look at other antibody drug conjugates. And so based upon its design and the compelling data generated so far, by our partners at Kelum, this has the potential to be a cornerstone antibody drug conjugate across a variety of different cancers.

So one such data set was the data you've seen at ASCO this year from OptiTROP-Lung05. This is a Phase III study conducted by our partners in China. And the study enrolled people who have non-small cell lung cancer, it could have been an adenocarcinoma or squamous cell carcinoma, with expression of PD-L1, 1% or higher, locally advanced, better as inoperable or metastatic non-small cell disease. These are people who had no prior systemic antitumor therapy, and they were randomized to receive monotherapy pembrolizumab or the combination of sac-TMT and pembrolizumab. The combination of sac-TMT and pembrolizumab provided a clinically meaningful and statistically significant improvement in progression-free survival by blinded investigator, blinded central radiology review in the overall study population.

This benefit was very consistent across subgroups. We're including those who had PD-L1 high expression, those with lower PD-L1 expression, squamous histology, non-squamous histology, age across all of the different categories, there was consistent benefit. And the intent-to-treat population, noting that this is very immature follow-up at this time, there is an OS trend observed noting again, it's very immature. And so no definitive conclusions can be made about that data.

But it's really exciting. It is. And particularly, we consider other Phase III data sets coming out of China and similar populations. It helps to demonstrate the promise of sac-TMT combined with pembrolizumab in our global trophuse 007 program, particularly trophus 007, we are conducting for participants who have non-small cell lung cancer whose tumors have a TPS score of greater than 50%.

We have other global Phase III studies in non-small cell lung cancer underway. The OptiTROP-Lung05 study adds to the growing body of data generated by Kelun Phase III studies. You're now seeing multiple proof points across well-conducted, randomized clinical data sets in multiple tumor types, including lung and in breast cancer. Most recently, Kelun announced positive results from OptiTROP-Breast03 study in the first-line triple receptor negative breast cancer space a few weeks ago.

Many of these proof points tie directly into studies that we have ongoing in our global TroFuse program. It is this collaboration we have a Kelun that allows us to expand and go into so many tumor types with confidence.

Our TroFuse development program is broad, and we think it's differentiated. TROP2 is highly expressed across multiple tumor types. And we've designed Phase III studies in tumors where there's an opportunity for us to meaningfully impact cancer care either with a differentiated development profile or where we can be a first mover.

As you see, we are advancing studies across gynecologic, breast, lung, gastric and bladder cancer spanning from mid- to late line in some settings, but mostly in the earlier stages of disease. We are also pursuing maintenance regimens in several of our studies. And many of these indications, these are first-mover opportunities in the way that we have developed our Phase III program.

In keeping with our strategy to improve the therapeutic index of our assets, we have a robust biomarker strategy in place for sac-TMT. We have a broad development plan; not every tumor may benefit from enrichment. The data that we've seen with our biomarker development conducted during our extensive Phase I/II studies in collaboration with our partners in China, has guided the implementation of biomarkers into our Phase III program.

I'm very pleased to share that TroFuse-005 is the first positive global Phase III for sac-TMT that has been conducted by Merck. This study demonstrated a statistically significant and clinically meaningful improvement in both progression-free and overall survival of certain patients with endometrial cancer. This is the first TROP2 ADC to show improvement in overall survival and progression-free survival compared with chemotherapy in certain patients with advanced or recurrent endometrial cancer and is the first ADC to have randomized Phase III data in this setting.

Endometrial cancer is the sixth most common cancer in women and it's increasing in incidence. There's significant morbidity and mortality, particularly in late-line settings, and there is no standard of care in majority of patients whose cancer progresses despite the use of I-O therapy like KEYTRUDA and chemotherapy. This builds upon our expertise in the disease where we have 2 -- we have innovated with therapies, including with KEYTRUDA. And we're excited about these results. We will be talking to health authorities, and you'll see the data at an upcoming scientific presentation in the near future.

sac-TMT is one of the 8 antibody drug conjugates that we are excited about and having clinical development today. We have one of the largest and broadest ADC portfolios in late-stage development and covering important cancers. Our ADC pipeline brings a diversity of targets, bispecifics and linker payloads. This provides potential opportunities to improve outcomes for patients and create unique combinations.

Now I want to move on to another important part of our portfolio, which is MK-2010. In addition to building upon tissue targeting therapies such as sac-TMT, where over half of our studies are being done in combination with IO therapy with KEYTRUDA, we are also building out immuno-oncology with MK-2010, which is our PD-1 VEGF bispecific antibody.

We publicly presented data for the first time from a collaboration study that was initiated by LaNova, and this was presented at AACR this year. The study demonstrated clinically meaningful data for MK-2010 as treatment for certain patients with advanced non-small cell lung cancer. For those in the first-line treatment-naive setting, the unconfirmed objective response rate was 55% among 11 previously untreated patients with PD-L1 positive non-small cell lung cancer at the 20-milligram per kilogram dose.

And what I like to look at is the waterfall. The majority of patients show tumor control or shrinkage. The safety profile of MK-2010 is consistent with what's observed with this new class of assets and allows us to be able to develop this drug potentially both as monotherapy and importantly, in combination with other drugs in our portfolio. We believe we are uniquely advantaged to fully explore the potential of the PD-1 VEGF access. While KEYTRUDA is central to our experience, much of what we have learned comes from combining it with different therapies and different mechanisms of action, including VEGF inhibitors. Although we are not sharing specific development plans today, as Dean noted, we are operating from a position of strength given the breadth of the studies we've conducted across multiple therapeutic classes.

In addition to the external knowledge about VEGF inhibitors and as emerging data comes about bispecifics, we have meaningful experience of our own. We have conducted multiple studies of KEYTRUDA combined with VEGF inhibitors, including Avastin combinations that have led to approvals beyond our own experience with a portfolio of novel agents that offer combination opportunities oriented towards combinations of the future rather than adding on to today's current standard, including ADCs like sac-TMT. Together, our experience plus our portfolio provides a strong foundation as we plan MK-2010 development across multiple tumor types in a rapidly evolving oncology landscape.

So now let me turn to our innovative hematology portfolio. You have seen our recent announcement about the acquisition of Terns Pharmaceutical, which brings us TERN-701. This asset further expands the portfolio in hematology despite multiple approved tyrosine kinase inhibitor, significant unmet need remains for improved efficacy safety and convenience for certain patients with CML. The team at Terns did a fantastic job of developing a highly selective, potent oral allosteric BCR-able tyrosine kinase inhibitor designed to improve upon prior generation TKIs. It's high target selectivity potentially enables higher dosing while limiting side effects supporting improved therapeutic index.

In a Phase I study, TERN701 demonstrated major molecular responses that are approximately 2x and deep molecular responses that are approximately 2 to 3x of those approved -- those compared to approved TKIs and historical data sets. We are very excited about this asset and look forward to advancing it into late phase development.

With TERN 701, our hematologic oncology portfolio now includes 5 assets that may be used across a variety of different hematologic malignancies in keeping with what our strategy is for Merck Oncology. Nemtabrutinib is a potent noncovalent BTK inhibitor designed not only to bind reversibly to BTK. But it also had activity against other kinases and is designed to help prevent some of the common resistance mutations that occur with covalent BTK inhibitors.

Bomedemstat is an LSD1 inhibitor. This is a mechanistically exciting drug with potentially disease-modifying effects in chronic diseases like essential thrombocythemia and polycythemia vera.

Zolibertimab vedotin is a ROR1 ADC currently ongoing in Phase III trials in diffuse large B-cell lymphoma, including a head-to-head study against Polivy. We have seen activity in GCB and non-GCB tumor cells and diffuse large B-cell lymphoma. We also have seen activity of ZB both as monotherapy and combination, and we are excited about the progress of this program.

MK-1045 is a CD19 T-cell engager potential utility not only in ALL, but across other hematologic malignancies.

And then TERN 701 rounds out our portfolio.

So again, thinking back to our strategy, the same principles apply here. We have created and curated a hematology pipeline of drugs that have great potential as a single agent and combination.

And then finally, let me provide you a forward look at the readouts you can expect from our innovative pipeline. We're excited about the portfolio. We have assets with compelling activity that have led to approximately 60 Phase III studies in our late-stage portfolio. That excitement and commitment to patients is leading to a series of readouts you've already started to see starting with TroFuse-005 in endometrial cancer. And we have a PDUFA date in October for IDXD, an extensive stage small cell lung cancer. There is a steady cadence of readouts extending through '27, '28, '29 across 10 new assets, reflecting the diversity of the portfolio and the broad reach we have.

I will now turn it over to Jannie to talk about the commercial opportunity.

Thank you, Marjorie. It's a pleasure to be here I have the privilege of addressing you in my new role as President of our Oncology business unit and Human Health International markets at a time of significant progress across our oncology portfolio. Our dedicated teams have established a leading franchise around the world. We continue to execute with excellence across multiple tumor types, driving patient impact and access to our important cancer therapies in over 100 markets. We have reached more than 4 million patients worldwide with our oncology medicines. Our suite of oncology products is approved in 58 indications across 25 tumor types, including 2 tumor-agnostic indications.

This portfolio provides a strong foundation for the broad range of opportunities Dean and Marjorie outlined. Our research colleagues continue to deliver compelling clinical advances, and we are excited by the reach and competitive pipeline. Importantly, the commercial organization, both in the U.S. and globally, is in place to deliver on that opportunity and further improve outcomes for patients. Today, I'll focus on the near-term programs, we're advancing with the same discipline and urgency that help establish Merck as a leading oncology company. I'll close with our long-term commercial aspirations for our broad and diverse late-stage pipeline.

We remain confident in the outlook for KEYTRUDA, supported by continued momentum in earlier stage indications and ongoing strength in metastatic settings. Sales from early-stage indications represented more than 25% of total revenue in 2025 and are expected to increase further. Indications approved in the last year, including in certain head and neck, ovarian and -- bladder cancers will drive a large portion of growth. And there remains potential opportunity for additional new indications both in earlier stage and metastatic disease.

We have built a strong presence in GU and women's cancers underpinned by the robust data KEYTRUDA continues to generate. By 2028, we anticipate that roughly half of KEYTRUDA's revenue will come from women's cancers and GU, reflecting the breadth of our clinical program spanning TNBC, multiple gynecologic cancers, RCC and bladder cancer.

Our commitment to innovation and addressing the unique needs of patients and health care systems extends to KEYTRUDA QLEX, our subcutaneous pembrolizumab with berahyaluronidase alfa. The launch is off to a strong start. In the U.S., we have seen a good acceleration in adoption since the establishment of the permanent J code on April 1. The adoption rate exiting the first quarter was in the mid-single digits, supporting our confidence that we are on track to achieve 30% to 40% peak adoption by the end of 2027. As expected, the majority of adoption is in patients who are on monotherapy regimens or combinations with other oral therapies.

A recent U.S. label update includes data evaluating patients' preferences between subcutaneous administration of KEYTRUDA and IV KEYTRUDA. Results showed 65% of patients preferred KEYTRUDA QLEX over KEYTRUDA IV where the most common reason being less time spent in the clinic. Outside of the United States, we have received approvals in the EU and U.K. and some other markets. We have made good progress in certain markets and expect launches in additional markets later this year. We anticipate 30% to 40% peak adoption on average globally, with peak penetration varying by market. We continue to be pleased with the impact we are having on certain patients with RCC and other VHL-associated tumors with WELIREG. We look forward to launching 2 additional indications for WELIREG later this year. The first one is LITESPARK-022, the combination of WELIREG with KEYTRUDA in adjuvant RCC, and it has a PDUFA date of June 19 this year. This builds on the foundation set by KEYTRUDA monotherapy based on the KEYNOTE-564 study, and if approved, would be the potential first IO combination treatment option in the adjuvant RCC setting. The study demonstrated meaningful improvement in disease-free survival.

The second one is LITESPARK, the combination of WELIREG with LENVIMA in certain previously treated advanced RCC, and it has a PDUFA date of October 4 this year. This is the potential first and only HIF2 alpha inhibitor plus a VEGF TKI regimen for patients whose disease progressed following anti-PD-1, PD-L1 therapy, and a demonstrated superior PFS versus a modern TKI with improved duration of response.

With these new opportunities in RCC as well as the future potential in combination with zanzalitinib, we believe WELIREG has multibillion-dollar peak commercial potential.

Next is IDXD, our B7-H3-directed ADC in collaboration with Daiichi Sankyo. IDXD has the potential to address unmet need for patients starting in extensive stage small cell lung cancer. Small cell lung cancer is a deadly, rapidly progressive cancer with high unmet need and very poor prognosis. Approximately 10% to 15% of all lung cancers are small cell, and about 70% of patients are diagnosed with extensive-stage disease. Unfortunately, the 5-year survival rate remains just 4% for those with distant metastases.

The FDA has granted priority review for IDXD in certain adults with previously treated extensive stage small cell lung cancer and set a PDUFA date of October 10 this year. This marks an important step for this potential first-in-class therapy.

Beyond extensive stage small cell lung cancer, we have ongoing registrational trials in second-line esophageal squamous cell carcinoma and metastatic castration-resistant prostate cancer, which represents a much larger patient opportunity. We're also exploring the combination of IDXD with [ galgatamine ], our T cell engager, also in collaboration with Daiichi Sankyo in small cell lung cancer.

As Marjorie described, our development program for sac-TMT is extensive and primarily focused on populations where we aim to be first-in-class. We are also exploring opportunities where we will be competitively advantaged due to the differentiated clinical profile of sac-TMT. Here, we outline the patient opportunity for each -- for each potential indication. The breadth of this program underscores why we believe sac-TMT has the potential to be a cornerstone ADC across a variety of different cancers. sac-TMT is being evaluated in the broadest range of disease and treatment settings of any TROP2-directed ADC with studies across early to late-stage disease in more than 7 tumor types, representing up to approximately 200,000 patients in the U.S., EU and Japan.

Building on Marjorie's comments, I want to emphasize the significance of the TroFuse-005 results. Patients with metastatic endometrial cancer have a medium overall survival of less than 1 year after progression on platinum chemotherapy, and there is no standard of care for the majority of patients whose disease progresses following IO and chemotherapy. sac-TMT is the first and only TROP2 ADC to demonstrate an overall survival benefit in endometrial cancer compared to chemotherapy in these patients with advanced or recurrent endometrial cancer. An approval would further built on our deep expertise in gynecologic cancers, we already have multiple indications and reinforce sac-TMT's role as a potential transformational therapy in this space.

We are building from a strong foundation as we advance the next wave of oncology innovation. We continue to see greater than $25 billion in nonrisk-adjusted commercial opportunity from our oncology late-stage pipeline alone by the mid-2030s. Importantly, this does not include the recent acquisition of Terns Pharmaceuticals, which has multibillion [indiscernible] commercial potential on its own. Over the coming years, we have the opportunity to bring 14 new products to market for the treatment of cancer across more than 80 new indications. As our product mix diversifies, we expect to establish a meaningful presence in hematology, building on our leadership position today in solid tumors.

In summary, we are highly confident in our oncology position and believe our strong presence will extend well into the next decade. With that, I'll turn it over to Dean for closing remarks.

So thank you so much for your attention here. This evening, we spoke to how we have executed on our oncology strategy, building on our strong foundation with KEYTRUDA while advancing an increasingly diversified pipeline of oncology candidates. In total, as you've heard, we have approximately 60 ongoing Phase III trials at this moment. I would imagine more will be opened. The broad impact of KEYTRUDA right to road map for the future as we develop molecules spanning 3 pillars of biology, immuno-oncology, precision targeting as well as tissue targeting, especially with ADCs.

Now we're deploying these candidates with the goal of maximizing benefit risk and convenience to patients while providing exceptional value for payers. Hopefully, today's presentation has contextualized our strategy and how we prosecute clinical trials. We believe that we are in a strong position to further improve patient outcomes in oncology.

I just want to emphasize that we're here at ASCO, and we're focusing on diversifying in oncology. But we've also said in 2021 that not only do we need to diversify oncology, we have expanded in other therapeutic areas. And I just would emphasize the cadence of readouts that you've just shown, especially what Jannie showed in the last is happening in the other therapeutic areas as well, in cardiometabolic with WINREVAIR otovir and the potential approval of elicitide and the follow-on compounds that follow that in immunology with tolasocopart as well as other immunology assets moving forward, especially in ophthalmology, where we have 2 assets moving fast. And in HIV, we've increasingly shown islatravir as a backbone. So I think this concept of us diversifying and expanding our pipeline since 2021 is important and relevant, not just for oncology, but also across other therapeutic areas and spanning multiple modalities, including small molecules and vaccines, macrocyclic peptide and complex and conjugated biologics.

And with that, I will turn it over to Peter for questions and answers.

All right. Very happy to take your questions. If you could state your name and your firm when asking your question, that would be helpful. So maybe Chris Schott to start.

Great. Just maybe a 2-parter on VEGF PD-1. Maybe just first, if you can just provide some context of your view on the data we saw at this conference and how that informs your approach as you consider development programs for 2110.

And then just when we think about that development program, do you think we've had enough derisking of the mechanism where we should think about Merck running a broad set of studies in a wide range of indications similar to what you do with TROP2? Or is this an approach where we could think about maybe a more gradual approach? I'm just -- I know you're not disclosing it, but how to think about that.

Loss of clinical development speak to that Marjorie.

No, no. Thanks so much for the question. I think we are all eagerly awaiting the data presentation of the HARMONY 6 data. And I want to congratulate the investigators and so for running a well-conducted study. With this -- the impact it has is that -- I think it's increased excitement, but also has left a lot of questions still remaining. And that's what I think your question is getting at.

So what was impactful to see was that I think that the hazard ratio for PFS have been 0.6. And unlike the other VEGF checkpoint inhibitor historic studies of chemotherapy combining with IO VEGF, the hazard ratio here was very close to the PFS hazard ratio. And this would actually include HARMONY 2, which had both squamous and nonsquamous in there that hazard ratio that had a much larger drop than you saw here.

The other thing that stands out is the AE profile was what was expected generally for adding in another mechanism, chemotherapy plus a checkpoint inhibitor, now will have a little bit more toxicity than the chemotherapy alone or a checkpoint inhibitor alone. And then you're adding a VEGF inhibitor on top of that, albeit the therapeutic index for safety does appear to have improved a bit with this particular kind of structure and formatting.

So the AE profile is what's expected. It was tolerable, had low rates of discontinuations and no surprising adverse events were noted.

They were very careful in how they talked about patient selection for this because of the historical challenges Avastin had in this space. So particularly in talking about cavitation, about blood vessel involvement. There also was an age cap of over 75. And we know that this is not a disease squamous cell -- non-small cell lung cancer is not a disease of young people. It's a disease of people who have been smoking heavily in their life and often older. I think in the United States, the median age for this might be around 70.

So there -- and when you look at the hazard ratios, for both PFS and for OS, they are not comparable by age. So I think it's clinically compelling. The curves. There's -- they overlap, then they separate.

Open questions. Does this translate into an older population? What is the reason that you have differences in outcomes and robust sample sizes for those younger than 65 and those older. Is there an AE profile? What's going on there? Is this sort of a random chance? It's not known. And the median follow-up is before that really -- you don't know what the OS is going to end up being because of the amount of censoring. It's still fairly early. So are those curves going to stay apart? Or are they going to start to come back together with time? And that's always been this open question when you look historically at the majority of studies that have been conducted with VEGF inhibitors and checkpoint inhibitors in non-small cell lung cancer.

So I dissected it, and the question is sort of what does that mean. And I think what it shows is that there are likely situations where the PFS will translate into a clinically meaningful overall survival. I would like to see this replicated in a global study. There -- the Chinese investigators do an amazing job of running really clean studies. And so I want to see this in a global study and what the data will look like.

The other open questions, you still have heterogeneity results and other tumor types. As far as the -- even in non-small cell lung cancer, if you think about the different HARMONY studies and the shapes of the curves and the hazard ratios, they're not as consistent as this. So to me, that means that there's still open questions about, is this something that will truly unlock benefit everywhere you have seen a VEGF inhibitor work and a checkpoint inhibitor work. And I think the answer is still we don't know.

But this is a positive finding, I think, it's great for patients in China, as I discuss and said. And for us, we've always in all of our studies and everything we do, including our sac-TMT program, we have a disciplined and very data-driven development program. And so we use all of those studies that you saw us flash up looking at all of our knowledge about VEGF inhibitors and checkpoint inhibitor KEYTRUDA combinations, we look at the emerging data. And then we're also thinking about the future because we're very excited, for example, about the OptiTROP-Lung05 data. We're excited about our KRASG12C program. We're thinking about what therapy is going to be looking like in a couple of years, not what it looks like today as we're developing our plan. We have a Phase III-ready asset with MK 2010.

Daina?

Daina Graybosch from Leerink Partners. In the -- in Kelun's OptiTROP-Lung05, I thought sac-TMT plus pembro looked pretty competitive when you compared it indirectly the pembro plus platinum-based chemo, both in 407 and 189. And I wonder what's holding Merck back from starting a head-to-head study with sac-TMT versus 189 and 407 beyond maintenance for 407?

So I'm going to turn this to Marjorie, but I will comment about many of my interactions with many of you over the last 2 to 3 years. And I would just sit there and I just would remind that when we first moved in sac-TMT, I think many questions were asked of why are you coming in to TROP2 ADC when there's 2 ahead of you. And I think what we said there is we don't think all the TROP2 ADCs are the same, just like we don't think all the HER2 ADCs are the same.

I think the other sort of thing that were remarked to us is that we thought that if you could get it right, you could be first in lots of tumors outside of breast and lung. And I think the endometrial data suggests that, that may be possible.

Now the question is because people said, well, you guys blew this out in 17. I've actually gotten questions of why did you blow it out so much. And now I understand your question is, why aren't you blowing it out further? Is that what I understand?

So with that, I'll turn it over to Marjorie.

Yes. No, thanks for the question. And I said our strategy, we are always looking to where we think cancer therapy is going to be. And so thinking back to when we started our program, we recognized from data in 507 and 189 from emerging therapies, and just biologically, we know that lung cancer is not one disease. And there is going to be increasing fragmentation of non-small cell lung cancer, including those who are eligible for KEYNOTE-189. And so we tried to think about where could we add the greatest value, considering that those who have non-squamous cell lung cancer have -- often have the RAS mutations, and that's going to be more subdivided into different therapies. There was the biggest opportunity for those who had squamous carcinoma and needed something to help give them long durable remission. That's what's led to that program.

The other one, TroFuse 007 was based upon -- there are people who don't want to give chemotherapy necessarily to everyone because they're not certain it's going to add benefit and high expresser PD-L1 scores. And so we wanted to show that, yes, we could do that. And again, further help to characterize different opportunities for clinicians and patients of how you could use this drug.

We didn't have the OptiTROP-Lung05 data when we were designing our program. And so we get had to think about how is the clinical practice going to change and recognizing where peer companies were how do you want to develop.

The other thing to consider is that there can be approaches where you combine ADCs and chemotherapy together. So if you're going to do a 189 head-to-head and try and take these populations together and to sort of replace, it is that you want to ensure that you've got really robust efficacy and some people have taken, let's combine chemotherapy in the ADC together. And there is one potential replacement study that's out there. But the combinations of therapy, when you look at other ADC chemotherapy combinations and some of the ones done in lung cancer, the response rates have not increased, suggesting the benefit may actually be the maintenance approach.

So are you going to get more toxicity? Are you going to impact the doses of either the ADC or the chemotherapy by combining them together and then adding a checkpoint inhibitor. And so I think our maintenance approach is where we think the biggest benefit is going to be there from what we knew when we started that study.

I don't speak to the future too much because it's a highly competitive environment as Angus who's in the room talked about in his Veropharm article. But I do think that it is important for us to look at our portfolio and look at

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the data generated in China to what we get in the global study. And I think one of the things I'll say is someone who's worked on antibody drug conjugates in 3 different companies is they are fairly consistent when you look at response rate, duration response and that translates into overall survival often. And so I can't forecast, as Dean said, what the TroFuse-005 study looks like. You'll have to wait until we're presenting it publicly, but it's compelling data that we think that we were able to have confidence in from the Phase II data enough to start the Phase III.

Great. Thanks, Steve. Michael Yee.

Michael Yee from UBS. With sac-TMT, it would seem to me that, obviously, you have the potential to also combine with a PD-1 VEGF. To what extent are you generating data either with 2010 that you are observing? Or that your partner Kelun in China is also generating data with sac-TMT with other novel agents including other PD-1 VEGFs that could be generating data that you could be learning from?

Yes, it actually gets a little bit to -- I think it was Courtney's question, is when you ask us what future looks like, one of the things that we ask ourselves is what will the future look like for a PD-1 in relationship to sac-TMT. And so that's something that, clearly, has been on our minds and clearly on the minds of our partner, Kelun, as well. But with that, I'll just ask Marjorie any comments you wanted to make?

I think that we have not publicly talked about our plans of sac-TMT in 2010. And so I'm going to keep that to myself at this moment. The same thing, Kelun's got their own stuff that they're doing as well. And so there's no public information available this time. Stay tuned.

Great. Thanks, Michael. Maybe in the back, Trung.

Trung Huynh from UBS. So some of your VEGF PD-1 competitors, they're optimistic for PFS-based approvals in first-line lung cancer. If you have a look at all of your TroFuse lung studies, they use OS as the primary endpoint. Is there a mechanistic nuance here? Does the FDA view ADCs differently than IO bispecifics for approval just based on PFS?

And then does HARMONY 6 make you want to move faster? Slower? Or does it not change your Phase III development time lines for this class? I know you mentioned you're not going to share your development time lines, but could we be sat here next year knowing what that Phase III program is? Your peers are accelerating quickly.

I love how the questions come. What I'll first say about the FDA is the FDA in the fields have been reasonably consistent. OS is a really important endpoint. And I would just emphasize, it's not just important for the FDA and regulatory agents fees, the payer who's being asked to pay for antibody-drug conjugates over chemo, they have some say in this. And so we think it's very important to keep that in mind, but I don't know how you want to dance around the rest of his question.

Well, I think the question PFS is a clinically meaningful endpoint across multiple diseases. It really is. And lung cancer, unfortunately, has been a disease where there have not been many really remarkable advances until maybe the last 10 to 15 years. And so people have wanted to see overall survival improvement. As outcomes get better and better, it becomes more difficult to actually demonstrate overall survival. And so there may be a future where PFS could be considered in the United States as the only endpoint needed as long as you can show lack of detriment. You're not hurting people with the OS and that people are getting some benefit there. I don't know that we're there today.

And if you think about antibody drug conjugates, they are much more potent cytotoxics that are given directly to the cancer cells than IV chemotherapy, and you would expect a profound PFS benefit that, hopefully, would translate into overall survival. And so I think that there our differences and studies and endpoint somewhat based upon the timing and the initiation of the studies rather than a fundamental belief in the mechanistic action of different drugs.

And as to your second question of how excited I am or the speed at which I'm going there, we are -- we have a Phase III-ready asset. We are data-driven. We are disciplined. We have a great portfolio that can be combined with and you'll have to stay tuned.

Carter?

Carter Gould, Cantor Fitzgerald. Dr. Green, you alluded to your biomarker strategy for, I believe, for your TROP2. Can you provide any further detail there and how you're thinking about deploying that? There's additional work that needs to be done before we see that rolled out? And any details particularly around differentiating versus some of your competitor approaches with their -- there were biomarker strategies in the space.

Yes. So I'll just say something and I'll hand it to Marjorie. I think it's important that we have -- that one has a biomarker plan and a biomarker ability, but that biomarker ability can be broadly distributed, especially in the United States and Europe and other places. But the other sort of thing I just want to emphasize what Marjorie said is that just because you have a biomarker, it doesn't mean that you're going to use that biomarker in every indication. But with that, Marjorie?

Yes. No, no. Thank you. We haven't been as public about our biomarker plan as some peer companies have been in talking about what they're doing. And we have extensive IHC capabilities that through the very large development program that we've done with our partners in China, you also might have seen some of the digital pathology information that has come out at ASCO this year that we are working on. And so as Dean said, it is not a one-size-fits-all approach. And I think it underlies the mechanism of antibody direct conjugates and how you're trying to predict response because there are multiple pieces that go in. And each company's drug is different, the ADCs are different and how you might approach selections difference as the antibody against the target, how well does it internalize, what does the linker payload do? What is the expression level on different tumor cells? How effective is the bystander effect? How much efflux pump is there in a particular tumor type? All of those can change response and therefore, prediction of response may vary tremendously based upon the ADC. So I can say is that, that probably gives you -- I can't tell you because the drugs are different. The biomarkers are different. The tumors are different. The settings are different. And so it depends that we are well set up in our ongoing Phase III studies.

Courtney?

Courtney Breen. Just a question on the heme portfolio that you characterized on the slides today. This hasn't necessarily been an area that Merck has been in commercial markets with in the past. And certainly, you've done some deals recently that perhaps others had stepped away from. And so I would love to understand kind of why is now the right time for Merck to succeed in this space? And why are these assets going to set you up for success here, particularly given kind of some others have accelerated past you, thinking about Lilly with potabritinib and some of the others as well. So I would love to just hear a little bit about why you believe now is the right time for Merck?

I'll let her -- Marjorie touch on the different assets, especially the ones that you mentioned. And then I'll make some comments in relationship to our ambition to move into heme, especially after -- we felt that it was a really important place for us to make a good foray in because it's such an important part of oncology.

Yes. No, thanks for the question. Each of the assets, we think, is compelling and the -- has the ability to make a meaningful benefit for people with different hematologic diseases. And many of these diseases are ones that are often chronic in nature. And so thinking about different assets such as like [indiscernible], this is a drug because it has a slightly broader kinase activity and it also has a bit of a flexible binding that can adapt to different mutations. Preclinical studies have demonstrated that there are low rates of development of resistance in the target over time when compared to other laboratory animal model studies of other assets and what's been published, for example, in [indiscernible] 1. And so it's that kind of what can you get from that is potentially people do not develop resistance. And with the mutations of the binding site that then allows for treatment across multiple lines or the preserved ability to continue to use a drug like nertinib. And so that was what was really interesting to us about it.

I think that our studies also were done to truly because this is a disease where people have been using sometimes the same therapy since the first-generation drugs for a long, long time, and they haven't moved off of them, to really make sure that we are comparing against what is a first-line standard of care. We didn't combine multiple populations into a study and try to sort of say this works. So we really took a very different development approach to reflect the practice of physicians and the needs of the patient. So that's why we're excited about [indiscernible] and why we've developed there.

Very similar considerations have gone into the other assets. So I talked about Zolibertimab from vedotin. And Polivy is a similar drug, different target that's already approved. But we saw that in some of their initial Phase III data sets that the majority of benefit was in one subpopulation of its large B-cell lymphoma, whereas ZB works in both. So those are the kind of approaches that have led to our development and why we continue to be excited about the portfolio.

I do want to pick up on one of the things that you asked, which was from a commercial standpoint. And I think it's appropriate that Jannie make a comment because Jannie's experience and solid tumor in this, we are making a foray in heme both benign heme and heme malignancy. And I think I should turn it over to Jannie.

Yes, thank you, Dean. And I would just say, we've always had an ambition to diversify beyond KEYTRUDA, right? And we're doing that in solid tumors. We've always -- and Sophie can speak to this as well, it's been an ambition to also diversify into heme malignancies. We know it is different to solid tumors, but it is adjacent. We believe that we have significant capability that we can scale across hematology as well. And again, I think even though we had the ambition, we move with the science, we move with products that we think is going to bring meaningful value. And I think we now have 5 assets enhance that in and that can take us down that path. So I don't know if there's something that you would add.

I think I think to your point, we have now critical mass in terms of hematology to be able to build the commercial organization. We are looking at a disease over a large value pool like CLL over DLBCL, but also in an area where there has been no innovation like essential [indiscernible], and we believe that we can kind of shape the market with new and effective therapy

But also in relationship to your question, I would just emphasize, when we're talking about we're trying to give you a sense of the cadence of data readouts. I mean, I think we have listed 3 PCD dates in 2027 for heme assets and then an additional one in '29. So we're trying to lay out -- these are coming and you'll see it, and it's coming sooner than I think many people recognize.

Great. Jason?

Great. Jason Gerberry, Bank of America. So I just have a question on OptiTROP-Lung05 and I preface by saying feedback we hear from a lot of oncology KOLs is reluctance to subject patients to maybe ADC toxicities in the PDL high segment. So I'm just curious if you can speak to in OptiTROP-Lung05, any color on the management of the AEs through support of care, be it either anemia requiring transfusions or any prophylactic measures with stomatitis? And then if those measures are implemented in the counterpart TROP2 study?

Yes. Thanks for the question. Benefit and risk are always critical for the patient and the oncologist, and we agree with that. And the reason you would want to consider something beyond KEYTRUDA in this population is that while survival is good, there's still a lot of people who, unfortunately, have progression and die with high PD-L1 expression tumors. So antibody drug conjugates are still cytotoxic therapy in the current generation that are out there. And so they will have cytotoxic activity or side effects. And most of them are related to where there's expression of TROP2, so you get GI toxicities with them or it's related to some small circulation of the payload, and that's where you're getting some of the hematologic toxicities.

These are toxicities that physicians are very, very comfortable in managing. In the OptiTROP-Lung05 study, the AE rate reporting, so the way AEs are reported in China studies, is that all hematologic labs are reported as adverse events, whether a physician thinks they're clinically meaningful or not. That doesn't happen necessarily in global studies. There was no use of primary growth factor support in this study for mouth sores for stomatitis in China. They do not routinely use steroid mouthwash. They'll use baking soda mouth rinse, oral hygiene, other kind of care events, and have, in our global studies, we are very aggressive with secondary use of growth factors as well as mouth care, including oral stomatitis management because the study was started a while ago, and we've learned and have really adapted.

I think there is a question that people sometimes ask about, will AEs in a China study be the same as you would see in a global study. And you can look at there are other TROP2 ADCs, who have very similar rates of stomatitis and as well as low grade and most of them are thankfully low grade as well as Grade 3, and they're fairly consistent across most of the studies.

So it's going to be -- does this affect quality of life? Are people going to be able to take it? And I think with these kinds of adverse effects, particularly low-grade ones that, yes, hematologic ones tend to not be disruptive for the patients. And it's that benefit is the PFS and OS there for these patients, and that's what will change instead of just using KEYTRUDA as a monotherapy.

Jon Miller.

Jon Miller from Evercore ISI. I'll ask a question about something else big at this conference that we haven't talked a lot about, and that's the RAS space. Dr. Green, you mentioned, do you expect to see, for instance, lung get more and more fragmented. You specifically called out RAS is a potential population where that's going to happen. But when I look at your pipeline, I see a relatively thin list of of assets in that space compared to a large list of assets in development across the field. So what are your plans for RAS? How do you think that is going to develop in lung and beyond? And when can we hear more from you about the [indiscernible].

I'm going to take a first shot and then give it to Marjorie, but I just would just -- when one thinks about the RAS space, it may be reasonable. RAS is in so many tumors. But a simple way to think about is think about lung, pancreas and CRC. The first movers in RAS were really important in G12C. I think that some of you have asked, why are you doing a RAS program. And the concern that we had back in 2018, 2019, was whether those RAS molecules could really survive the ability to get into first-line lung. And this goes to one of the comments that Marjorie says, combinability is critical. So the quality of your molecule and the combinability, in that case with a PD-1, is critically important. So we have a study that Marjorie will talk about, which is we're hoping to lay that down in first-line lung for G12C, which will be important.

We also look at the G12C and ask ourselves, what does it teach us about other tumors? G12C is not prevalent in pancreas, but it is, in some sense, in CRC. So the ability to see, even in a small percentage, what that monotherapy looks like and how well it combines with the other medicine that's not PD-1 in that standpoint, it's cetuximab. And so that data is coming out. We believe that we have to be outside of G12C clearly, and we have an asset 4716 that is advancing with pace. We -- the way I would simply say it, it's a non-G12C broader RAS molecule. We haven't cleared what it is exactly, but that's moving at pace in clinical development as well. But I think it would be worthwhile to give an update of how you look at that data, especially the ones that we hope to advance, especially in G12C and first line in lung and in CRC.

Yes. No, thank you so much. I think Dean really highlighted what -- how we've been thinking about this, and it does fit in with our strategy is that to have the best effect, you need to be able to combine and caldorasib, and you saw the breakthrough therapy designation. I talked about it has really well-tolerated AE profile combined with pembrolizumab. And the activity is compelling. And so we have a series of Phase III studies in non-small cell lung cancer. We have one in those who have TPS scores greater than 50% [indiscernible] 004. And then we also have one with QLEX combined with KEYTRUDA QLEX where we are going head to head against the 189 regimen because we are so impressed with the tolerability combinability, the importance of hitting a driver mutation with a very potent and clean targeted therapy. We also have studies in the adjuvant setting and in unresectable non-small cell lung cancer.

And then because this is combinable and you might have seen the data in colorectal cancer, we have pretty robust monotherapy activity with our G12C inhibitor compared to some of the peer assets that have published information. And when we combine with cetuximab and chemotherapy, the responses are quite robust and durable. So we have a study ongoing in colorectal cancer.

So we have a broad development program there. And as Dean said, we have MK 4716, but we're not talking about it yet. So this is an important pathway. We want to make certain that we've got assets that meet those characteristics of being single agent active and combinable to ensure that we are improving therapeutic index and ability to benefit patients.

Mohit.

Mohit Bansal from Wells Fargo. Before I start, first of all, congratulations on the data. Since I congratulated, I can ask 2 parter probably. So the question is, so since you talked about combined ability, I think how do you think about the combined ability of the top 2 ADC and VEGF PD-1 here? And when you think about the combinations in the future, I mean, yes, you have a Phase II-ready asset in VEGF PD1, but the competition is a few years ahead. How would you think about partnering your sac-TMT with other PD-1 VEGF that are out there to get to the market sooner? Because with KEYTRUDA, you did the strategy, you played the strategy where it worked out really well for you. So I just want to understand that part.

So if I understood, the question is when you have a really important compound, are you willing to combine it with other people's compound almost agnostic, a little bit of what we did with KEYTRUDA in some sense. I would say that we're always open to that, and we're always open to that, not just in oncology, but we're open to that in non-oncology where you have really important assets, whether it's WINREVAIR or something like that. So that's something we've always considered. And that's something that, depending on the opportunity.

But having said it, I do think that -- as you specifically talk to PD-1 VEGF, we have a PD-1 VEGF that we're quite confident in, and we have a really good portfolio of ADCs and other compounds that you could combine. And one of the things is when we think about those studies, one has to think about the speed, the rigor and you have to balance off sharing it and owning 100% of that combination, but you always have to balance it. But I think your point is well taken, and it's something we think about not just for our PD-1 VEGF, it's not just what we think about our sac-TMT, but it's with any asset that we have that we think could really have broad implications. So we are open to it and people know that we're open to it. We did it for KEYTRUDA. We will do it for other compounds in our portfolio, and that answer is not just limited to oncology.

Malcolm?

Malcolm Hoffman here for Evan from BMO. TROP2 agents have been more challenged in non-small cell lung cancer. So much of ASCO because this year, it feels like a discussion on how your TROP2 can be both a leader in non-small cell and a better competitor for some emerging PD-1 VEGF agents. Can you talk about, first, why you think we are seeing such efficacy in non-small cell despite other TROP2 failures? And second, what you think we have learned from this ASCO about competitive positioning of sac-TMT versus these other PD-1 VEGF agents?

So I'm going to make a flippant comment that got picked up by some of you, is that correct, at JPMorgan where I said, not all ADCs are the same. Some can be too loose, some can be too tight and some can be just right. And with that, I'll hand it over to Marjorie.

So yes, I think when we first started working with this, I was talking to the team about Goldilocks and the 3 Bears, and depending upon where you are raised, particularly if you're our China team, they didn't know that story. And so they looked at me very strangely.

It is -- they're not the same. I think that's the hard thing is we think that the ADCs are similar and they're truly not. And so I can't speculate about data sets that you've seen, but you've seen high response rates durability in nonrandomized data sets in the first-line setting with TROP2 ADCs. And I think that there's a lot of different factors that go into successes of studies. But we're very confident in the data that you see, you can't do much better than a randomized Phase III well-conducted study, like we've seen with OptiTROP-Lung05 as well as the other data sets that they've generated. So it's a nonanswer, I think, but it goes back to Dean's part. They're not all the same.

And I would just emphasize the linker payload of Kelun, this TROP2 ADC, as you can see from the slide, is not the only asset. Similarly, I would just say the linker payload of Daiichi Sankyo that they really pioneered is also important, and we don't just have one asset. But how you position these different flavors given the molecular design differences, one has to think thoughtfully about those differences. But I don't -- I want to make sure we respect very much the linker payload of Kelan and go back to the slide. It is not just 1 compound. And we respect very much the linker payload, which is different for Daiichi Sankyo. And you see how we advance them but we're not -- we're advancing them in different ways and different tumors.

All right. Maybe just a couple of more questions. Nick.

Nick Jennings, Goldman Sachs. A question on read-throughs or learnings from OptiTROP-Lung05. First, in lung. What, if anything, in the data makes you feel more confident in the maintenance setting or adjuvant setting? And then outside of lung, are there any derisking things that you see for other indications that you're running in TroFuse? And then finally, is there anything that you can share in terms of prospects for any other interim reads for the TroFuse trials? Are there any trials progressing where you could actually see an interim?

So I'm going to turn it over to Marjorie. But as you guys know, famously, we do not comment on interim analysis. With that, Marjorie.

We don't comment on our analyses. Yes, I am sorry, I had echo Dean there. I think learnings what I was happy to see was consistency of data from sort of the Phase II data sets into the OptiTROP-Lung05, including, as you get into bigger studies will safety be the same, and we saw very consistent data. And so that's, sort of, you think about how do you take that kind of information. This is also not the first Phase III that we have from our partners. They've had multiple Phase III readouts. And so we're seeing consistent data across multiple indications with the AE profile, with the dose modification, with the discontinuation. And that is how we have learned in our global studies to be able to ensure that AE management is as tight as possible.

Physicians are so good at learning how to manage toxicities over time. But in global studies, we don't want them to have to learn in real time because it puts the patient in a bad spot and our ability to show a benefit at a disadvantage. And so that information has informed for how we are overseeing and how we're managing our Phase III programs.

Vamil?

Vamil Divan from Guggenheim. So 2 for me. So one, obviously, you laid out a lot of -- what you've done to diversify away from KEYTRUDA. Just curious if you want to comment more on kind of where you see openings to further differ supply, whether it's modalities, mechanisms based on it was at ASCO or just more generally and feel free to take that outside of oncology, if you want to.

And then just the second part is just around the -- obviously, a lot of interesting data from China. You guys are taking advantage of this. Just how were thinking of balancing, I guess, obviously a large U.S. biopharma company, how you're balancing sort of leveraging the speed of development in China, but also investing in the U.S. I think a lot of concerns raised here around what this means for the U.S. biopharma industry. So any comments you want to make there?

So I'm going to take your last question because I heard that completely. I think that China is an important player, and we've recognized that. I mean I just -- our partnership with Kelun is not just about assets, it's about their people and how they think. And we're very lucky to have that collaboration. And we have recognized that, and I can't remember when it was publicly disclosed. Maybe it was publicly disclosed in '22, something like that, but we have worked with them longer than that. And so we have enormous respect for what they do. But I also want to just emphasize that there are so many important things that are happening outside of China. And I would just emphasize, for example there is a possibility that for the first time after, I don't know, 3, 4 years, it could be "a cancer vaccine" does -- and I don't mean hepatitis B, GARDASIL or EBV, I mean that. And that's something that we're extremely lucky to be partnered with Moderna. So I just want to make sure that, that's emphasized.

And then when you look at -- you guys talked about the KRAS space. You have to give credit to, for example, Amgen and Mirati. They pioneered that with Switch2. And you have to give incredible kudos to the work done from Rev Med using a tri-complex inhibitors. So for us, it's important to take innovation from the best places throughout the globe. And I hope that we continue to do that because these diseases take more than one bright idea. So that's where I would lay that question is. What was the first?

Part one was other areas within oncology that you might consider moving into?

So one is the heme. We just want to make sure you guys realize we're making a array in heme. And I'm not sure if he's listening, but it's a little bit of a homage to Roy Baynes, who's a heme malignancy who was stuck doing a whole bunch of solid tumor stuff and did a pretty reasonable job if I may say so. But this is a bone marrow transplant heme malignancy guy. So if we're successful with this, I hope that he will eat at a burger joint with me, and I will give him enlicitide, but that's a place.

But the other place is tissue targeting. We think tissue targeting is really important. We talked about antibody drug conjugates. We talked about Kelun, we talked about Daiichi Sankyo, but we have not revealed the internal pipeline that is moving fast. Tissue targeting is not just with a chemo payload. There's other payloads that you can do. And increasingly, the work -- actually, you have to give Roger some credit at a different company who was very much advancing T-cell engagers largely in heme malignancy, but there's been a corner turn with T cell engagers in solid tumors.

So you see it in our -- right? We look at KEYNOTE-189 and Cetera, that's great. But for small cell lung cancer, what you see is that we're trying to do KEYNOTE-189 there. How we're trying to do it, we're trying to use a next-gen chemo with an ADC and the next-gen IO with a T cell engager. And if that works, we wonder how broad that principle is in places where maybe pembro didn't work as well as we had hoped. So those places are really important to us.

So I know there's still a few hands going up. We may be able to remain here for a few minutes after we're done to answer any follow-up questions, but we'll end with Meacham.

Meacham from Citi. On your broader ADC strategy, given sector MDs studied across various indications and assuming it moves into earlier lines, across different tier indications. How do you think about downstream treatment sequencing with your other ADC especially [ 41 ADC? ] Just trying to get a sense of your internal framework for avoiding ADC overlap across targets, payloads or tumor indications.

Yes. I mean I will give it to Marjorie. But every time you come up with therapy as great as KEYTRUDA. Number one is not everyone responds, right? And the other second thing is you can respond and then not respond. So it's almost like an incessant need for constant innovation. So with that, I'll turn it over to Marjorie.

Yes, I think this is why we have such an extensive biomarker program in our sac-TMT firm as well as in our other targeted therapies is that it is -- because of antibody drug conjugates as one example and here what you've asked about, have multiple ways that they can work through bystander effect through sort of the differences in the payload, the DAR, there are going to be differences amongst all of these drugs. And so some of them may need to have specific enrichment to get to where you may want to use drug A versus drug B.

Yes. I think it's to be determined how these will separate at what time. We've already seen some antibody drug conjugates approved to have biomarkers, like in ovarian cancer, wherever that has happened, and we've seen them in bladder where it doesn't. So I'm not going to speculate on the future. I think it is important to understand where people are most likely to have benefit and least likely to have detriment. And that will help separate out how these drugs work over time is the general guess.

There's very immature data about the ability to sequence antibody drug conjugates. There are some -- there are small data sets looking, for example, at the Daiichi's great DXD platform showing that there is less response. When you do, for example, in HER2-positive breast cancer, one into the next. It doesn't mean that, for example, like a [indiscernible] couldn't work, but the same payload may have some challenges. And I think that there is a lot of interest in thinking about what is the mechanism of resistance? Is it [indiscernible] kind of mutation? Is it pump? Could you change the payload to where the pump doesn't kick the payload out? And that will help with the sequencing part. This is true just like with chemotherapy itself is that we generally don't give taxane 1 straight into taxane 2 for most tumors. There are some kind of brakes in payload switching or chemotherapeutic switching. And I think the same thing will be true for ADCs. I'm speculating though.

All right. Thank you all again for your time and attention and some really great questions. We appreciate it. Dean, anything you'd want to close with?

Please enjoy. There's bacon in the back. And [indiscernible], we hope, will be available shortly...

Thank you for standing by. Welcome to the Merck & Co., Inc. Rahway, New Jersey, USA, First Quarter Sales and Earnings Conference Call. [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, Julie, and good morning, everyone. Welcome to the First Quarter 2026 Conference Call for Merck & Co, inc. Rahway, New Jersey, USA. Speaking on today's call will be Rob Davis, Chairman and Chief Executive Officer; Caroline Litchfield, Chief Financial Officer; and Dr. Dean Li, President of Research Labs.

Before we get started, I'd like to point out that we have items in our GAAP results such as acquisition-related charges, restructuring costs and certain other items that we have excluded from our non-GAAP results. There is a reconciliation in our press release.

I will also remind you that some of the statements that we make today may be considered forward-looking statements within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are made based on the current beliefs of our company's management and are subject to significant risks and uncertainties. If our underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

Our SEC filings, including Item 1A in the 2025 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, a slide presentation will accompany our speakers' prepared remarks. These slides, along with the earnings release, today's prepared remarks and our SEC filings are all posted to the Investor Relations section of our company's website.

With that, I'd like to turn the call over to Rob.

Thank you, Peter. Good morning, and thank you for joining today's call. Advancing and delivering breakthrough science to address unmet medical needs remains the foundation of our strategy to create sustainable value for patients and shareholders. We continue to make tangible progress in accelerating and augmenting our pipeline. And with the recent new product launches, the transformation of our portfolio to a far more diversified set of commercial drivers is now well underway.

Turning to our first quarter results. We delivered year-over-year growth with revenue of $16.3 billion, driven by continued strength in oncology, animal health and growing contributions from new products. We remain confident in our outlook for 2026, which Caroline will speak to in a moment.

We also achieved several important pipeline milestones, the FDA approved IDVYNSO as a new treatment option for adults with virologically suppressed HIV-1, reflecting our ongoing commitment to innovation to address the evolving needs of people living with HIV.

Additionally, the FDA granted priority review for I-DXd, our antibody drug conjugate being developed in collaboration with Daiichi Sankyo for adult patients with previously treated extensive stage small cell lung cancer.

In ophthalmology, we initiated Phase IIb/III studies in neovascular age-related macular degeneration for MK-8748, our TIE-2/VEGF bispecific antibody. The second candidate from our acquisition of iBio. We also presented important Phase III results across multiple other therapeutic areas.

Finally, in our Animal Health business, we have high expectations for long-term growth, driven by new and ongoing product launches. We're pleased to have introduced NUMELVI to the U.S. market, the first and only second-generation JAK inhibitor for allergic dermatitis in dogs.

Our planned acquisition of Terns Pharmaceuticals with its promising candidate for certain patients with chronic myeloid leukemia is another example of our science-led business development strategy in action. TERN-701 has the potential to be a best-in-class therapy in a disease where there is an opportunity to further improve depth and duration of response for patients. Given the substantial unmet need for additional options, we believe TERN-701 has multibillion-dollar commercial potential and will be a significant driver of growth in the next decade. This transaction demonstrates our disciplined approach to pursuing business development when compelling science and value align. And we are confident in our belief that TERN-701 can benefit patients while generating value for our shareholders.

Looking ahead, we continue to expect a particularly robust period of Phase III data readouts from novel candidates over the next 18 months. Our portfolio is undergoing a meaningful transformation to one with a rapidly expanding and diversified set of growth drivers. We're in the midst of initial launches of over 20 new products, almost all of which have blockbuster potential across a broad set of therapeutic areas.

To move with the speed and precision this opportunity demands, we announced an evolution of our commercial operating structure. Our new business unit model, organized around products in therapeutic areas is built to drive accountability, sharpen focus and increase agility, ensuring that every part of our commercial organization delivers on the promise of our pipeline for patients.

We're pleased to welcome Brian Ford to our executive team to lead our new specialty, pharma and infectious diseases business unit. While Yani Ushausen has been appointed to lead our new global oncology and MSD International business unit. Corp Guindo has taken leadership of a newly formed strategic access policy and communications unit. Each of these individuals brings deep experience to these important roles. Together, this leadership team and structure will enable strong execution of our strategy, which includes extending our leadership in oncology while building a powerful, diversified portfolio across a range of therapeutic areas. We're confident that this change will best position us to deliver on a potential commercial opportunity of over $70 billion by the mid-2030s from these 20-plus anticipated new growth drivers alone.

We're also taking important additional steps to accelerate our ongoing transformation as it relates to artificial intelligence. Last week, we announced a multiyear partnership with Google Cloud to scale advanced AI, data and agentic capabilities across our company. This complements our recently expanded collaboration with Tempus AI designed to advance our precision oncology strategy as well as a recent agreement with the Mayo Clinic that will allow us to leverage Mayo's clinical insights and genomic data sets at scale. Together, these efforts support improved productivity across our organization and create a real opportunity to advance the innovation in our pipeline with greater speed and with a higher likelihood of ultimately reaching patients.

As we look forward, we continue to see robust demand for our innovative medicines and vaccines around the world. We're investing behind our pipeline, optimizing our operating structure and are fully committed to our purpose of using leading-edge science to save and improve lives. We're encouraged by the progress we're making and look forward to the many significant milestones coming in the months ahead.

In summary, we remain confident in our strategy and in our ability to deliver sustained growth and value for our shareholders.

Before I turn the call over to Caroline, I want to recognize Sanat Chattopadhyay and Joe Romanelli, both of whom have announced the retirements from Merck. Sanat and Joe have made lasting contributions to our company and to the patients we serve, and I want to thank them for their many years of impact. And now to Caroline.

Thank you, Rob. Good morning. As Rob noted, we delivered growth in the quarter driven by continued strength in Oncology and Animal Health as well as increasing contributions from our many compelling product launches. Our commercial and operational execution continues to enable us to generate strong results in the short term while we advance our broad and deep pipeline and invest in innovation to deliver long-term value for patients, customers and shareholders.

Now turning to our first quarter results. Total company revenues were $16.3 billion, an increase of 5% or 3% excluding the impact of foreign exchange. The following revenue comments will be on an ex exchange basis.

In Oncology, sales of the KEYTRUDA family of products which includes KEYTRUDA and KEYTRUDA QLEX, increased 8% to $8 billion, with global growth driven by continued strong demand from metastatic indications and robust uptake in earlier-stage cancers.

Strong utilization in tumors that primarily affect women, including breast and cervical cancer, continues to be a key contributor to growth. In addition, we saw increased use of KEYTRUDA in combination with Padcev in locally advanced or metastatic urothelial cancer. In the U.S. growth benefited by approximately $250 million from the timing of purchases.

We are pleased with the positive feedback following the recent launch of KEYTRUDA QLEX, Sales in the quarter were $128 million. On April the 1st, we received the permanent J code, and we look forward to having an even greater impact on patients and health care systems.

Our broader oncology portfolio achieved another quarter of strong growth. Notably, WELIREG sales increased 43% to $199 million driven by continued uptake from ongoing launches in international markets and increased use in certain patients with previously treated advanced renal cell carcinoma in the U.S. We look forward to potentially reaching more patients with renal cell carcinoma, following positive results from the LITESPARK-011 and -022 studies.

In Vaccines and Infectious Diseases, GARDASIL sales were $1.1 billion, a decrease of 22%, driven by lower demand in China and Japan, consistent with our expectations. In the U.S., sales declined 10%, primarily due to timing of CDC purchases, which was partially offset by price.

In pneumococcal, CAPVAXIVE continues to progress well, with sales of $142 million, an increase of 31%. Outside of the U.S., sales were driven by uptake from ongoing launches in certain markets. In the U.S., growth was driven by increased demand from both retail pharmacies and nonretail customers, partially offset by a reduction in wholesaler inventory.

In Cardiometabolic and Respiratory, WINREVAIR continues to have a positive impact on patients with pulmonary arterial hypertension. Global sales were $525 million, a reflection of the continued strong demand for this important therapy. In the U.S., we continued to see steady progress with more than 1,600 new patients having received a prescription and an increase in usage by patients with background therapies do not include a prostacyclin. Outside the U.S., we continue to progress with securing reimbursement and ongoing launches.

Sales of OHTUVAYRE, a novel maintenance treatment for adults with COPD, were $131 million. As expected, sales were adversely impacted by the CMS reimbursement change as well as Medicare deductible resets. We are encouraged by the prescription trends, which began to recover in March.

Consistent with our strategy to maximize OHTUVAYRE's strong potential, we are making investments to reach more patients and physicians, which we expect will accelerate growth in the second half of the year and beyond.

Our Animal Health business delivered another quarter of strong growth, with sales increasing 6%. Livestock sales grew 8%, driven primarily by higher demand for ruminants and poultry products as well as price. Companion animal sales increased 4% due to new product launches and price, partially offset by a reduction in vet visits.

I will now walk you through the remainder of our P&L, and my comments will be on a non-GAAP basis.

Gross margin was 81.9%, a decrease of 0.3 percentage points.

Operating expenses increased to $15.2 billion, including a $9 billion onetime charge related to the acquisition of Cidara Therapeutics. Excluding this charge, operating expenses grew 2%, reflecting increased investments in support of our key growth drivers, partially offset by benefits of our multiyear optimization effort and recognition of a portion of the external funding for sac-TMT.

Other expense increased to $318 million, primarily reflecting financing related to recent business development transactions.

Our tax provision was $957 million. As a result of the nontax deductible onetime charge for Cidara, we had a pretax loss this quarter resulting in a tax rate of negative 43.5%.

Taken together, we reported a loss of $1.28 per share. which includes a negative impact of $3.62 per share from the onetime charge related to Cidara.

Now turning to our 2026 non-GAAP guidance. We have narrowed the range and raised the midpoint of both our full year revenue and EPS guidance. We now expect revenue to be between $65.8 billion and $67 billion, representing growth of 1% to 3%, including a positive impact from foreign exchange of approximately 1 percentage point using mid-April rates.

Our gross margin assumption remains approximately 82%.

Operating expenses are assumed to be between $36 billion and $36.8 billion. This range does not include the proposed acquisition of Terns or any additional significant potential business development transactions.

Other expense is expected to be approximately $1.3 billion.

We assume a full year tax rate between 23.5% and 24.5%, which reflects the nontax deductible onetime charge for Cidara.

We assume approximately 2.48 billion shares outstanding.

Taken together, we expect EPS of $5.04 to $5.16, including a positive impact from foreign exchange of approximately $0.10 using mid-April rates.

It is important to note that this guidance does not include the impact of the proposed acquisition of Terns, which is expected to close soon. We expect the transaction will result in a onetime charge that will increase research and development expense by approximately $5.8 billion or approximately $2.35 per share.

In addition, ongoing investment to advance TERN-701 and the assumed cost of financing will negatively impact EPS by approximately $0.12 this year.

As you consider your models, there are a few items to keep in mind. For KEYTRUDA, recall that while growth benefited from the timing of wholesaler purchases in the first quarter, we will face a corresponding headwind in the third quarter.

For ENFLONSIA, consistent with the first quarter, we expect minimal sales in the second quarter, given the seasonal nature of the product and continued high levels of RSV monoclonal antibody inventory in the market. We are actively engaging customers in advance of the RSV season and remain focused on educating health care professionals and parents on the importance of protecting infants from this potentially serious disease and expect shipments to increase in the second half of the year.

Lastly, we expect SG&A expenses to increase over the remainder of the year as we invest to maximize the impact of our recent and upcoming launches.

Now turning to capital allocation, where our strategy remains unchanged. We will prioritize investments in our business to drive near- and long-term growth, including new product launches and a robust pipeline.

We remain committed to the dividend with the goal of increasing it over time.

Business development remains a high priority as evidenced by our recently announced acquisition of Terns. We maintain the ability within a strong investment-grade credit rating to pursue additional, science-driven, value-enhancing transactions going forward.

We are on pace for approximately $3 billion of share repurchases this year, as previously communicated.

To conclude, we are confident in the outlook for our business driven by global demand for our innovative medicines and vaccines, including our many new product launches. We remain committed to bringing forward medically significant innovations that will enable us to deliver value to patients, customers and shareholders well into the future.

With that, I'd now like to turn the call over to Dean.

Thank you, Caroline. Good morning. Progress continued with a steady cadence of clinical and regulatory development. Today, I will provide updates in cardiometabolic and respiratory, oncology, infectious diseases and ophthalmology then conclude with key upcoming milestones.

Starting with cardiometabolic and respiratory. The global burden of atherosclerotic cardiovascular disease remains significant. And with recently updated clinical guidelines recommending lower LDL-cholesterol thresholds, there remains a need for innovation that is broadly accessible.

At the American College of Cardiology Congress last month, additional Phase III data were presented for enlicitide, our investigational oral PCSK9 inhibitor. Enlicitide is designed to reduce LDL cholesterol in a similar manner to PCSK9 antibody therapies with the simplicity of a daily pill.

The Phase III CORALreefAddOn study demonstrated statistically significant and clinically meaningful greater reductions in LDL-cholesterol at 8 weeks compared to other oral add-on lipid-lowering therapies when added to background statin therapy. Of note, enlicitide also showed statistically significant greater reductions across key secondary endpoints, including apolipoprotein B and non-high-density lipoprotein cholesterol.

The CORALreef program has generated compelling evidence for the efficacy and safety of enlicitide As a pill, enlicitide has the potential to democratize access to a potent lipid-lowering therapy. With clinical guidelines targeting lower LDL-cholesterol targets, the field of preventive cardiology is increasingly energized and focused on early, aggressive LDL-cholesterol reduction.

Also at ACC, we showed full results from the Phase II CADENCE trial, evaluating WINREVAIR in adults with combined post- and pre-capillary pulmonary hypertension and heart failure with preserved ejection fraction. WINREVAIR met the primary endpoint of reduction from baseline in pulmonary vascular resistance compared to placebo. At the 0.3 milligram per kilogram dose, WINREVAIR prolonged the time to first occurrence of a clinical worsening event, which was an exploratory secondary endpoint with a hazard ratio of 0.18. Results provide compelling proof-of-concept and warrant further evaluation in Phase III. This is an underdiagnosed condition with an extremely poor prognosis. There are currently no approved therapies.

Moving to Oncology, KEYTRUDA now has 44 FDA-approved indications across 19 tumor types as well as 2 tumor-agnostic approvals and continues to generate evidence further transforming cancer care.

In the first quarter, the FDA and European Commission approved KEYTRUDA in combination with paclitaxel, with or without bevacizumab, for the treatment of certain patients with platinum-resistant ovarian cancer based on the findings of KEYNOTE-B96. This is the first PD-1 inhibitor based regimen to show a statistically significant improvement in both progression-free survival and overall survival versus paclitaxel with or without bevacizumab for these patients.

We also announced findings from the KEYNOTE-B15 study demonstrated KEYTRUDA plus Padcev reduced the risk of event-free survival related events by 47% and risk of death by 35% for cisplatin eligible patients with muscle invasive bladder cancer. This is the first and only perioperative immunotherapy plus ADC regimen to extend survival for these patients. Based on these data, the FDA has accepted supplemental BLA filings for KEYTRUDA and KEYTRUDA QLEX under priority review and is targeting an action date of August 17. KEYNOTE-B15 is the sixth study of a KEYTRUDA-based regimen to demonstrate overall survival in an earlier stage cancer and, if approved, would mark the 12th earlier-stage indication for KEYTRUDA.

We also continue to make progress across the broader oncology portfolio. WELIREG, our first-in-class oral HIF-2-alpha inhibitor initially approved for the treatment of certain patients with von Hippel-Lindau syndrome has now shown additional clinical data for patients with renal cell carcinoma across multiple stages of disease.

The LITESPARK-022 study evaluating WELIREG plus KEYTRUDA in the adjuvant setting, demonstrated a 28% reduction in the risk of disease recurrence or death compared to KEYTRUDA alone. In addition, the LITESPARK-011 study, evaluating WELIREG plus Lenvima, demonstrated a 30% reduction in the risk of disease progression or death in certain patients with advanced RCC and versus cabozantinib.

Supplemental applications for WELIREG in combination with KEYTRUDA or KEYTRUDA QLEX based on LITESPARK-022 were granted priority review by the FDA with the PDUFA date of June 19. The FDA also set a PDUFA date of October 4 for WELIREG in combination with Lenvima based on the LITESPARK-011 study.

As announced last week with our partner, Eisai, the combination regimens from the LITESPARK-012 study did not meet the dual primary end point of progression-free survival and overall survival for the first-line treatment of patients with RCC and compared to KEYTRUDA plus Lenvima. The data from the study provides learnings to the broader program. Studies from the LITESPARK clinical program, including LITESPARK-033 and 034, evaluating WELIREG in combination with zanzalintinib, are ongoing.

Together with our partner, Daiichi Sankyo, we announced that the biologic license application for ifinatamab, deruxtecan, or I-DXd, for the treatment of extensive-stage small cell lung cancer in certain patients with disease progression has been granted priority review by the FDA. This was based on results from the Phase 2 IDeate-Lung01 trial, and the Phase 1/2 IDeate-PanTumor01 trial. The FDA has set a PDUFA date of October 10.

As Rob mentioned, we continue to identify external opportunities to strengthen and diversify our pipeline, most recently with the proposed acquisition of Terns Pharmaceutical. TERN-701, a novel oral allosteric inhibitor of the BCR::ABL oncogene is being evaluated for the treatment of certain patients with chronic myeloid leukemia and has the potential to be an important addition to our growing hematology pipeline. Clinical data has shown encouraging activity with promising rates of major molecular response and deep molecular response by week 24.

Importantly, this includes responses in patients with high disease burden, who previously received multiple lines of therapy. We are eager to get to work with the talented Terns team to advance this program in a timely fashion.

Turning to HIV. Last week, the FDA approved IDVYNSO, our once-daily, single-tablet 2-drug regimen of doravirine and islatravir, a next-generation nucleoside reverse transcriptase inhibitor that blocks translocation, indicated for the treatment of certain adults whose HIV-1 is virologically suppressed based on 2 Phase III SWITCH study. Approval was previously granted in Japan.

IDVYNSO is the first approved 2-drug regimen that does not include an integrase strand transfer inhibitor.

At CROI, additional data was presented demonstrating noninferiority and a similar safety profile at week 48 versus the 3 drug, INSTI-based regimen, Biktarvy, in adults who had not previously received antiretroviral treatment. In addition, IDVYNSO was shown to maintain virologic suppression at week 96 in adults who switched some other oral antiretroviral therapies, including Biktarvy.

Islatravir, a potent long-acting antiviral that forms an anchor for additional regimen is currently being evaluated in late-phase trials as a once-weekly combination with Gilead s lenacapavir, an HIV capsid inhibitor, and separately in combination with ulonivirine, an internally developed non-nucleoside reverse transcriptase inhibitor. We plan to present data from our HIV pipeline at an upcoming medical meeting.

Next to RSV. In February, positive new data were presented for ENFLONSIA for the prevention of RSV lower respiratory tract disease in infants and children under 2 years of age at increased risk for severe disease over 2 seasons from the Phase III SMART study. These findings will be shared with global regulatory authorities with the intent to obtain an expanded indication.

RSV is a leading cause of infant hospitalization globally and is especially serious for children under 2 years of age at high risk for severe disease. These data provide additional evidence for ENFLONSIA for the prevention of RSV in younger children who remain at risk entering their second season.

Earlier this month, the European Commission approved ENFLONSIA for the prevention of RSV lower respiratory tract disease in newborns and infants during their first season, based on the Phase IIb/III CLEVER and Phase III SMART trial.

Next, in ophthalmology. We remain focused on retinal diseases associated with vascular leakage and neovascularization, with emphasis on improving structural and functional outcomes for patients and helping reduce the burden of certain retinal diseases. This month, we initiated 2 pivotal Phase IIb/III trials evaluating MK-8748, an investigational bispecific Tie-2 agonist/VEGF inhibitor for the treatment of neovascular age-related macular degeneration. The MALBEC and TORRONTES studies are the first trials in a broader late-phase development program for MK-8748. The decision to advance development is based on promising results from the Phase I/IIa RIOJA trial.

In closing, we anticipate multiple events and milestones across therapeutic areas in the coming months, including, in oncology, please mark your calendars for our annual investor event at the ASCO Annual Meeting in Chicago on the evening of Monday, June 1, where we will outline progress on our oncology pipeline and strategy. On the regulatory front, as noted, potential approvals for KEYTRUDA plus Padcev in MIBC, WELIREG in expanded RCC settings and for I-DXd in extensive stage small cell lung cancer.

In HIV, data from the Phase III ISLEND-1 and 2 trials evaluating islatravir and lenacapavir, a once-weekly oral 2-drug treatment regimen in collaboration with Gilead.

In cardiometabolic and respiratory, the September 21 PDUFA date for WINREVAIR for the label update based on the Phase III HYPERION study and the Commissioner's National priority Voucher Process for enlicitide is progressing.

In immunology, data for tulisokibart, our TL1A inhibitor, based on the Phase III ATLAS-UC trial in ulcerative colitis and Phase II ATHENA study in SSc-ILD.

Finally, in ophthalmology data from the Phase III BRUNELLO study of MK-3000, our novel Wnt agonist, being evaluated in patients with diabetic macular edema and the Phase II portion of the RIOJA study of MK-8748 being evaluated for the treatment of patients with certain retinal diseases.

I look forward to providing further updates throughout the year. And now I will turn the call back to Peter.

Thanks, Dean. Julie, we're ready to start the Q&A now. We'd appreciate if analysts would limit themselves to a single question today so we can conclude the call at the top of the hour. Thank you.

[Operator Instructions] Our first question comes from Carter Gould with Cantor.

Maybe we'll start on the pipeline on MK-3000. How are you thinking ultimately about dosing the 1-year BRUNELLO data is likely not going to inform much on duration interval and the Lucentis comparison is going to leave lots of questions unresolved. I fully appreciate that 40% have suboptimal responses to VEGF, but can this reach your targets if it ultimately requires every 4-week dosing? Or put differently, are there reasons you have conviction about every week or every 12-week dosing?

Thank you very much. So just stepping back, MK-3000 is our potential first-in-class novel candidate targeting Wnt pathway. -- for retinal vascular disease. Almost all the other mechanisms are based on VEGF. And as you've highlighted, up to 40% have suboptimal response to VEGF.

In terms of dosing, frequency, when one sort of does these trials once start at every 24 weeks and upon doing that, then you go further from that. So we believe that one should focus on Q4 weeks, but one should not only focus on Q4 weeks. So your question, which I think alludes to, are we considering other frequencies, the answer is absolutely yes. But the initial focus is on 4 weeks because that is very important to get into the label.

I just want to also highlight really quickly that it's not just MK-3000, it's MK-8748, which is the novel bispecific directly agonizing Tie-2 that we're also excited about, and that as well is advancing in Phase IIb/III trials in retinal vascular disease.

Our next question comes from Jason Gerberry with Bank of America.

Had an update or a question on the WELIREG clinical update on LITESPARK-012 recently provided. And I wanted to get your sense, does this provide any concerning read-through to some of the ongoing readouts for LITESPARK-022 and the ability to see OS benefit there? And also, you have another frontline study with WELIREG, albeit in a post-PD-1 setting. So just kind of curious if you can speak to some of the read-throughs to some of the ongoing trials.

We were having a hard time hearing you, Jason. Let me restate the question. And then I think I'll get it. I think what you're asking, given the LITESPARK-12 outcome, how does that make us think about getting OS in some of the upcoming LITESPARK studies and what's our overall view as it relates to WELIREG. I think that's the way I was trying to ask.

Thanks because I could not hear quite well. In relationship to the other ones like LITESPARK-022, LITESPARK-011, which have PDUFA date in June and October. I think we're very bullish in relationship to how those will turn out. And also in relationship to the question that you have of how -- what's the readout of this trial that had 3 agents involved, which is a PD-1, VEGF TKI and a HIF-2-alpha, I think we are studying that data, but I would be very cautious to sit there and say that has any negative implication to other trials where, for example, we have a VEGF TKI and WELIREG or a PD-1 and WELIREG.

Our next question comes from Michael Yee with UBS Securities.

As we think about coming up to ASCO, where you will obviously have your SAC PMT featured in lung cancer, of course, obviously, PD-1 VEGF also featured in a plenary as well from a competitor, how are you thinking about the dynamic of a sac-TMT in the context of PD-1 VEGFs and your own Lenova asset and perhaps accelerating that? And maybe just give us a snapshot being as to where we stand on these 2 types of programs.

Yes. So I'll answer the question too individually, but I will also answer what I think you're alluding to is the possibility of combinations of that. So in relationship to the PD-1 VEGF, we're very interested in the space. We shared some encouraging early data at AACR. And our construct of the leading PD-1 VEGF is most similar to ours. And so we're looking at our own data. But to be frank, we're also looking at the broader field as well. And so we're eager to move PD-1 VEGF Ford in our trials.

And one of the issues that we think in our hands, a PD-1 VEGF, if it should be better than KEYTRUDA, we have a plethora of agents that would benefit from a combination with either KEYTRUDA or a KEYTRUDA plus or a PD-1 VEGF. So we're advancing that.

In relationship to sac-TMT, I believe that at the ASCO, our strong partner and collaborator Kelen will provide optotroplung-05 in first-line non-small cell lung cancer. And I think people will look at that data very carefully because it may reflect on our global trials, which are not just within China but throughout the globe.

In relationship to the question that you said is, is there any possibility of thinking about combining those to -- the answer is absolutely yes. And we're developing the information and also taking a scan to the outside world as to where and when to best combine a PD-1 VEGF with the rest of our portfolio.

Our next question comes from Asad Haier with Goldman Sachs.

Congrats on all the progress. Maybe just a high-level one back to BD, you've been fairly active across a number of different areas, and you're saying you're ready to pursue additional transactions. So just level set us on where you still see the biggest gaps in your portfolio that could benefit from more BD as you scan the therapeutic landscape? What's the sweet spot now in terms of deal size? And is there a point at which the BD lever starts to diminish in importance just given your growing confidence in the growth trajectory out of the mid part of the next decade with the portfolio transformation that's already underway?

Yes. Asad, I appreciate the question. I would just start by saying we are very confident in the assets we have, the new assets we bought in through business development as well as the continuing progress we're making with our pipeline. So that continues and that grows. That said, we also continue to focus on business development. And as we've said in the past, we don't necessarily target specific therapeutic areas as the first question we ask. We always ask the first question, which is where do we see a significant unmet scientific opportunity where the science is compelling and can address.

And in doing that, that allows us to think about where to focus. So we start with the science. We then asked the question, how does it fit strategically and then move to the value question and where we see science and value in line we move. So that has not changed. Our approach remains to be that as our focus.

From a size perspective, we continue to look anywhere in the $1 billion to $15 billion range with that kind of being the sweet spot. But as we've consistently said, we have the capacity to go beyond that for the right strategic deal. And we will, if and when we see that. So that is where we're looking as far as the therapeutic areas where we do continue to see interesting science, obviously, oncology continues to be an area where there's a lot going on. We continue to look.

Immunology is an area where we continue to see interesting opportunities as well as cardiometabolic is probably the 3 most likely areas, but we are willing to be opportunistic beyond that as well.

And I guess, Peter, did remind me one part. When will we have less urgency to do a deal. My view is we can always do better. We can always grow stronger. And if we have the capacity, we will continue to invest. As Dean has said, we think in terms of one pipeline, whether it's internal or external. And so that mix of internal plus external will be an ongoing part of our strategy, you will not see that change.

Our next question comes from Vamil Divan with Guggenheim Securities.

I just had going back to Win Revere. I appreciate your comments about the cadence data in ACC. Just curious if you could provide any updated thoughts on how the discussions with the FDA are going on moving forward the Phase II program there, you remain confident on the clinical listening being can be the primary endpoint of the Phase III? And then just maybe any sort of rough estimate on how long you think you would actually take to execute a Phase III program in this indication.

Yes. Thank you very much. So in relationship to Wind River, I mean it's reshaping the standard of care in PAH. And now the question is whether or not we can move it to a different segment of pulmonary hypertension, those people with heart disease. The patient population that we pick is a relatively small patient population of those patients who have pulmonary hypertension and heart disease. But it's probably one of the biggest unmet needs that I know of in this patient population, who at least the way that I would describe it is a very different patient population than that of PAH. And one could actually say is more complicated, is older and has more comorbidity.

We think that the cadence gives that proof of concept -- as I had said previously, it's fine to talk about the primary end point reductions in PVR. But at least for me, in this patient population, it will be very important to have the endpoints that allow someone and when I mean someone, I mean patients, providers and payers to really see a compelling conglomerate of endpoints in the time to clinical worsening. And -- and that's where we will be having our discussions with the FDA.

I think the other one that will be important is defining the inclusion criteria in relationship with the FDA and also the broader community in relationship to how do you actually operationalize the clinical trial, but also for everyone to be very clear that in our minds, this is a patient population that is an orphan patient population.

Our next question comes from Daina Graybosch with Leerink.

Yes. I want to go back to ASCO and the data we're going to see from Kalon on OptiTROP-Breast05. That's a China study. And I wonder what should we keep in mind as we look at those outcomes on how it could or could not translate globally any differences in what you're doing globally? Or any other things to keep in mind.

Yes. Thank you very much for that question. So just stepping up at a higher level, we think sac-TMT, it is a coke to ADC, but we think that it has some important differentiation. And we believe that the sac-TMT has a potential to be I think Elliot has often said a cornerstone and Margaria said a workhorse ADC. And we have 17 Phase III studies, 13 are in first movers. We have an in blast, non-small cell lung cancer, gyn, gastric and bladder.

When we do our trials and when we speak to our close partner, Kalon, we use the fact that they are, in some sense, doing signal finding in registrational trials in China. And we recognize China is different, but these are important data for us.

In relationship to the exact details of the sac-TMT and the Kian, I would just remind you that the OptiTROP-Breast05, they will have data. But I think it's very important to sit there and go, if -- how one thinks through that in terms of how that would read out. We are following their data very much. But I think that we are guided we are guided by the results. I do want to emphasize that in their OptiTROP, it's sac-TMT plus KEYTRUDA versus KEYTRUDA in PD-L1 positive first-line non-small cell lung cancer. And it's very important that if one wants to do an ADC plus KEYTRUDA versus KEYTRUDA in the United States, ex China, one has to look at where a PD-1 and what's the range with which the PD-L1 cut-off is.

And so for us, this is the first Phase III combination study of sac-TMT and KEYTRUDA to read out. We have 50% of our Trou studies are evaluating KEYTRUDA combos in our TrophUse-007, our global study at ACTMTand KEYTRUDA versus KEYTRUDA in TPS greater than 50% in first-line non-small cell lung cancer. And I emphasize that simply because in the United States and ex China, TPS greater than 50% is where KEYTRUDA has an indication.

Our next question comes from Steve Scala with TD Cowen.

What are the gating factors for FDA acceptance of the enlicotide application? And Dean, can you speak to the changes that you're pursuing on titration? What shorter durations are you pursuing? And is the 15 minutes you spoke to previously before or after administration of the drug?

Yes. So I would just say that the enlicitide, as we've said out is we want to have the first and best-in-class potent oral PCSK9. It's designed in a very similar manner to antibody. And the data from the Phase III as a as we have discussed, I think lay out the value statement and relationship to its potency in terms of all the important by proteins. In relationship to the CNPV, the issue in relationship with the CNP is just for all of us to understand that the NPD process is a little bit different, which is we -- it's almost like a rolling submission, sort of way to think about it.

And through that rolling ambition, at the end of that sort of rolling submission, that's when the FDA sits there and gives you a letter and a PDUFA date. And so we are actively in those discussions with the FDA. And then as we normally do when we get formal acceptance of the complete file, which is a little bit different in the CMPB we'll make an announcement. I will emphasize that in our discussion with the FDA, -- what is very important to them is us really showing them that the CMPD program is important that we're addressing an important U.S. public health crisis that we're delivering innovative cures and we're increasing domestic drug manufacturer and supply chain resilient. So those are all important to the FDA, and we are in really good conversations with them.

And so I think that is going quite well, and it's progressing well. I would imagine that our estimation that we could get an approval at the second half of this year I see no reason to doubt that at this moment in time. In relationship to what you said in relationship to this issue of how you would take it -- we're also in the discussion with the FDA as to what the exact label is in relationship to how they will talk about prescriptions and when to take it and how to take it. And I don't want to get ahead of that conversation because those are extremely active conversations as we speak.

Our next question comes from Chris Schott with JPMorgan.

I just wanted to touch base on TL1A I think this one's got maybe a little bit less attention than some of your other late-stage readouts this year. But can you just talk a little bit about the role you're seeing TL1A playing in the IBD space? And maybe more broadly, when we think about immunology and IBD, there does seem to be more discussions about combination therapy as maybe the next step for the market. I'm just interested in Merck's approach here kind of building on the TL1A as I think about a broader pipeline?

Yes. So I would begin to say that throughout the immunology sort of field, there are certain nodes that are really important 23 is an important note. TNF is an important note. And that's how the field is set up. We wonder whether TL1A is such a node and that -- and our hope is to laSocobar could be 1 of the first and best-in-class TO1As. So that's in that sort of framework.

The other thing that you've just said, I think is really important is that there is increasing interest in combining different these nodes. This is something that was tried 10, 15, 20 years ago, and it didn't turn out well. But now the data suggests that in certain cases, you could begin to combine. When you look at the AE profile of tubasocopart, it's if you take the Phase II data, not just our Phase II data, but across the Phase II data. It is a member of the TNF superfamily, but from an AE profile, I might describe it as a kinder gentler AE profile than other NOTO-TNFs and with profound efficacy.

So I think combinations will be employing. -- in relationship to what we hope to see in relationship to Phase III ulcerative colitis and chronic and Crohn's disease, we have readouts coming out we hope to be first mover, but I also want to emphasize that we also think that TL1A may be also distinguished not just to be an important note, but it may be important for not just inflammation or dampening but also for fibrosis. And we have Phase II data in SSC ILD and in HS that's coming in 2026. And that hopefully will define the unique role or the unique position that T1 has with all the other major notes.

Our next question comes from Louise Chen with Scotiabank.

I wanted to ask you about the CADENCE study. There was some debate on the results that you recently presented at a medical meeting. And I'm wondering what you think the Street may be missing about the competitiveness of your product.

So I'm not sure I know everything that you're referencing. In terms of the competitiveness of our product, I don't know how else to answer it is, I don't know from a competitive standpoint that there's any treatment for this patient population. And when I look out, I'm not so sure that I see something that, that will break that barrier. In terms of whether or not you can make a Phase III, but sort of models what happens in the Phase II. I think that's where the focus is.

And that's been the focus in our conversations with KOLs, but also the FDA. And there is a clear understanding that this patient population, this patient population is 1 with a tremendous unmet need. And so I don't know that I would call it competitive sort of dynamic sort of thing. It's whether someone for the first time can have a compelling treatment for a patient population that is in dire need.

Our next question comes from Omar Raffat with Evercore.

I wanted to touch up on some incremental information that came out on your turns deal, which I don't think we discussed on the call you as did earlier. And by my math, it looks like the incremental patients may have had an MMR achievement rate of something like 2 out of 10 or something along those lines. Could you just speak to the -- that drop and how does that change or not change your overall thoughts about the drug's profile? Because presumably, that's like the real target population early in the launch?

Yes. Thank you so much for that. So I would just say that in this -- in CML, there's multiple approved therapies, and it appears that there is significant unmet need. And the value proposition for us for turns to 101 is whether or not it has the potential to be a best-in-class Alister TKI with high selectivity and improved therapeutic index. When data is presented at some of these meetings initially when they're early, Oftentimes, they're stated in 1 way. But for us, it's really important to always look at that data, whether it's especially when you go to ASCO, AACR or ASH, we look at it immediately in the eyes of how do you think in terms of registration.

And it's very important to translate whatever the abstract says to, what I would say, a more conservative ITT population consistent with regulatory standards. Given that, what was laid out at these public congresses is turn stated to 75% MMR and 36% DMR achievement rate. As the data evolved and we were looking at very specific patient-level data we believe that the MMR will be north of 50%. And within the confidence interval as had been publicly stated. And we think that in MMR in that sort of range is extremely compelling.

And then the other point that I would just highlight is we also think that the DMR rate is also very interesting to look at and whether or not this drug could not only create a best-in-class in relationship to MMR, but whether it could catalyze the field to increasingly think of DMR as a treatment goal.

Our next question comes from James Shin with Deutsche Bank.

Dean, have a question. Can you help us distinguish MK-6837 from sac-TMT? And then just going back to the TL1A question, is there a view within Merck that TL1A could stand alone in immunology because from a market or commercial perspective, immunogy seems to be very much a portfolio-driven strategy. Some of your peers have large portfolios, and there's a very competitive remote that's built with that?

Okay. So let me ask -- let me tackle the immunology question really clearly. We're very focused on TL1A, but if you ask me is TL1A is our ambition to stop at TL1A, -- would we use TL1A as a beach at to expand and extend. The answer is we would undoubtedly move it to expand and to extend -- we had expanded from IBD to other conditions, and we would advance it to conditions where the combination of immunofibrosis would be really important.

In relationship to other molecules, of course, if one had a leading TL1A that could advance through the series of different indications that we have, then in each 1 of those indications, you would immediately think of what's the combinatorial partner whether it be in IBD or HS or in SSC IOD. So we would immediately think about doing that as well. So we are focused on TL1A, but that focus does not create a situation where we're not thinking about not just whether we can be first and best, but what's next as well. And I think the other question was related to MK-6837. Is that correct?

I didn't catch the other one. MK-6837 is another ADC, which had a unique payload, and we have discontinued that especially when you see the profound impact of sac-TMT and also in relationship to -- we've always said that we're very interested in the ADC field in changing the target but also changing the payload and thinking about combinatory or cycling different payloads as the field moves on in the antibody drug conjugate.

Maybe I could just add 1 little bit as a teaser, maybe to what you'll see as we go into next year and beyond. In our invisible pipeline we often refer to we have other assets in the immunology space that you're not seeing right now. So just to reinforce Dean's point, we aren't just a TL1A company. We have other things in development beyond that. And as we move forward in time, you'll start to get a better sense of that as we unleash that as it moves into Phase I.

All right. Thanks, James. We'll squeeze one last question in before we end the call.

Our last question comes from Geoff Meacham with Citibank.

All right. Dean, in HIV, just given the recent approval of Avito, can you talk about how you guys see the competitive setup and related, I know you have prep coming up, but how much of a strategic priority is HIV and infectious disease when thinking about the overall BD strategy.

So in terms of our interest in HIV, there is a profound interest in really in our HIV program. And for those of you who've talked to Eliot Bar, the Chief Medical Officer, I think you can feel that just in his presence. Islatravir is a next-generation nucleoside reverse transcriptase inhibitor. It blocks translocation, and we have the daily program -- and increasingly, there is interest in going from a 3-drug daily program to a 2 drug.

And of the 2 drug daily programs, I think we're the only ones without an entity backbone. So I think that's very important. -- critically also important is that we believe ezlotivir can anchor to weekly, and you see it in later lenacapavir, which is a 2-drug combo, which hopefully will be the first Q week and then loci with UL, which is in development, and there will be data being presented, I think, in due course, it could be the smallest pill could be favorable DDI profile and be extremely effective.

And then as you said, to me, the monthly, if you could have 12 pills and protect people with MK 852 I think that would just be such an important contribution as a commercial product, but also as a global product for public health throughout the world. So if the question is, are we committed? And are we passionate about our HIV program? I hope that you heard from the tenor of my response, the answer is unequivocally yes.

Great. Thanks, Geoff, and thanks, everybody. Apologies for going over a few minutes. Give us a call if you have any follow-up questions. Thank you.

Thank you for your participation. Participants, you may disconnect at this time.

Thank you for standing by. Welcome to the Merck & Company Inc. Rahway New Jersey USA Investor Event announcing the acquisition of Terns Pharmaceuticals.

[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, Amanda. Good morning, everyone. Welcome to Merck's investor call highlighting the announced acquisition of Terns Pharmaceuticals. 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. 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 2025 10-K as well as Tern's SEC filings identify certain risk factors and cautionary statements that could cause ours or Tern's actual results to differ materially from those projected in any of our forward-looking statements made this morning. Merck & Company Inc., Rahway, New Jersey USA. undertakes no obligation to publicly update any forward-looking statements. During today's call, a slide presentation will accompany our speakers' prepared remarks. These slides and our SEC filings are posted to the Investor Relations section of our company's website.

Our speakers this morning include Rob Davis, Merck's Chairman and Chief Executive Officer; Dr. Dean Li, President of Merck Research Laboratories, Jannie Oosthuizen, Executive Vice President and President, Oncology and MSD International; and Caroline Litchfield, Chief Financial Officer.

With that, I will turn the call over to Rob.

Great. Thanks, Peter. Good morning, everyone. The ongoing successful execution of our science-led strategy is enabling us to positively impact patients and drive sustainable growth over the long term. We are transforming our company with launches underway for more than 20 anticipated new growth drivers, almost all of which have blockbuster potential and together represent a combined non-risk-adjusted potential commercial opportunity of over $70 billion by the mid-2030s. Innovation-driven value-enhancing business development is an important element of our strategy to expand and diversify our pipeline across a broad set of therapeutic areas, including oncology.

Today, we're excited to announce our proposed acquisition of Terns Pharmaceuticals. Its lead candidate, TERN-701, is a potent, orally available next-generation allosteric tyrosine kinase inhibitor being studied in certain patients with chronic myeloid leukemia or CML. We believe TERN-701 has the potential to be a best-in-class therapy, driven by high selectivity and an improved therapeutic index that could lead to efficacy advantages versus currently approved TKI agents. Patients with CML often remain on therapy for many years. And while significant advances have been made, there remains opportunity to further improve disease control and treatment outcomes.

In addition, challenges with today's treatments related to durability and tolerability lead to frequent switching. TERN-701 is designed to address these unmet needs and provide an important potential new option for patients. Given the size of the addressable population and the remaining unmet medical need, we believe TERN-701 has multibillion-dollar commercial potential and will be a significant driver of growth in the next decade.

This acquisition builds upon our deep expertise in oncology and strengthens and complements our growing hematology pipeline, which has significant future commercial potential as part of the oncology business unit under Jannie's leadership. More broadly, this transaction reflects our commitment to acting decisively when compelling science and value align and our confidence in the benefits TERN-701 will bring to patients while generating value for our shareholders over time. We're eager to welcome the talented Terns team to Merck and look forward to the contributions they will make as part of our organization.

With that, I'll turn the call over to Dean.

Thank you, Rob. Good morning, everyone. Our company has made remarkable progress in treating cancer, most notably solid tumors, but there is more work to be done. As we have advanced our oncology strategy and diversified our clinical pipeline, hematology has become a particular area of opportunity and interest. The acquisition of Terns provides our company with an opportunity to further investigate the potential of TERN-701 for certain patients with CML. CML is a slow-growing cancer derived from the bone marrow's blood forming stem cells and is characterized by a distinct translocation between chromosomes 9 and 22 known as the Philadelphia chromosome.

Historically, due to limited treatment options, the diagnosis of CML was almost universally fatal. The advent of tyrosine kinase inhibitors fundamentally transformed the treatment landscape and significantly improved outcomes for patients. Today, CML is generally managed as a chronic condition with many patients remaining on therapy for extended periods of time, often for many years. However, long-term exposure to existing therapies is associated with increased risk of relapse due to the emergence of resistant driver mutations, primarily in the kinase domain or active site of the [ BCR::ABL ] protein.

Similarly, while adverse events tend to appear in the first few months, the cumulative risk of developing intolerance to one or more TKI therapies increases with the duration of treatment and the number of lines of therapy. As many as 40% of patients treated with active site TKIs switch therapies within 5 years. In the second line and later settings, the majority of people with CML do not achieve a deep molecular response. So despite multiple available treatments, there remains significant need for further options.

The focus of development has therefore evolved with enhanced emphasis on increasing the depth of response and overall disease control while improving long-term efficacy, safety, tolerability and overall quality of life. TERN-701 is a potent, selective, oral next-generation allosteric BCR::ABL tyrosine kinase inhibitor. Unlike traditional active site competitive TKIs, TERN-701 is designed to specifically target a distinct site on the ABL protein that controls kinase activity, thereby overcoming mutations that occur in the kinase active site.

This differentiated mechanism is designed to inhibit the oncogenic driver while minimizing off-target effects. The high degree of target selectivity observed with TERN-701 supports the potential for higher dosing with more complete inhibition and an improved therapeutic index. TERN-701 has demonstrated preclinical activity against multiple resistance mutations, further supporting its continued evaluation across different lines of therapy.

In the ongoing Phase I/II CARDINAL study, TERN-701 has demonstrated promising activity in patients with Philadelphia chromosome-positive CML previously treated with at least 1 TKI with encouraging rates of major molecular responses and deep molecular responses observed by week 24, key measures of the reduction of BCR::ABL cancer cells. Importantly, these responses were achieved in a previously treated patient population with high disease burden, including those previously treated with multiple TKIs and even those who had previously relapsed while receiving Asciminib, the only allosteric TKI approved for treatment of CML.

We reviewed the totality of data for TERN-701 and estimate that the final MMR achievement using a more conservative intent-to-treat population would be approximately double the MMR and double to triple the DMR achievement of approved TKIs, including Asciminib. Based on this analysis, TERN-701 has the potential to be a best-in-class therapy for certain patients with CML. Furthermore, TERN-701 has also shown a faster kinetic response to achieving MMR and DMR than approved treatments, providing additional support for its potential best-in-class profile.

Safety is a critical consideration in CML given the long-term nature of treatment. To date, no dose-limiting toxicities have been observed for TERN-701 and the majority of treatment-emergent adverse events reported have been low grade. Furthermore, the overall safety and tolerability profile appears favorable with a low incidence of serious adverse events based on data available to date. Dose expansion is ongoing to further characterize the safety profile and inform optimal Phase III dose selection.

Looking ahead, we see an opportunity to apply our global clinical development capabilities to evaluate the potential of TERN-701. We intend to design a rigorous and appropriately powered clinical program that addresses both frontline and later-line treatment settings in CML. As with all of our programs, our focus will be on generating high-quality data that clearly characterizes TERN-701's benefit risk profile and supports its potential role in the treatment landscape. TERN-701 further augments and complements our growing and innovative hematology pipeline, spanning multiple modalities and disease areas.

In addition to our existing approval for KEYTRUDA, we have a series of pivotal readouts from a pipeline of innovative hematology candidates within the next couple of years, including Nemtabrutinib, our non-covalent BTK inhibitor, Bomedemstat, our LSD1 inhibitor and Zilovertamab vedotin, our ROR1 targeting ADC. As well as MK-1045, our CD19xCD3 T-cell engager, which is being evaluated in a Phase I/II study.

We believe TERN-701 provides a strong strategic fit within our broader hematology ambitions and reinforces our commitment to science-driven innovation with the goal of making a meaningful difference for patients over the long term. Finally, I'd like to reiterate Rob's comments and convey my admiration and respect to the Terns team for their remarkable achievements in discovering TERN-701 and advancing the science in this important disease area.

With that, I will turn the call over to Jannie.

Thank you, Dean. As both Rob and Dean highlighted, we are committed to advancing the science in hematology and an area of significant clinical need and opportunity to positively impact patients. Given our expanding pipeline, we are well positioned to launch several innovative therapies in the coming years. And so I am excited to add TERN-701 to our portfolio, and I'm confident in its potential to deliver meaningful benefit for patients. CML is a chronic disease that often requires long term and in many cases, lifelong treatment. As outcomes have improved, patients are living longer, which has contributed to the increasing prevalence of the disease over time.

Across the U.S., key European markets and Japan, there are estimated to be 18,000 new patients diagnosed with CML each year. As the treated population grows, factors such as tolerability and adherence have become increasingly important. Despite multiple approved treatment options, unmet need remains, particularly in the context of long-term duration. TERN-701 has the potential to be the best-in-class treatment for certain patients with CML. And as Dean noted, it will be complementary to our current hematology portfolio where we expect a cadence of launches over the next several years.

Given the substantial unmet need for additional options for certain patients with CML and the significant potential benefits of TERN-701, we believe it has multibillion-dollar revenue potential and can be a meaningful driver of growth beginning in the early 2030s and continuing through the next decade.

With that, I will turn the call over to Caroline.

Thank you, Jannie. Turning to the financial details of the transaction. We are confident that TERN-701 can be a meaningful driver of growth in the next decade, and this transaction has the potential to create significant value for shareholders. Merck has agreed to acquire all outstanding shares of Terns Pharmaceuticals for $53 per share, representing a total equity value of approximately $6.7 billion or approximately $5.7 billion net of acquired cash, cash equivalents and marketable securities.

We intend to finance the transaction primarily through new debt, and we do not expect an impact to our credit rating. The transaction is expected to close in the second quarter of 2026, subject to the tender of a majority of Tern's outstanding shares as well as regulatory approvals. We expect the transaction to be accounted for as an asset acquisition.

As a result, we expect a charge to research and development expense in 2026 of approximately $5.8 billion or approximately $2.35 per share. In addition, we expect a negative impact to EPS of approximately $0.17 in the first 12 months, which represents investment to advance the development of TERN-701 and the assumed cost of financing. The impact of these charges will be reflected in both our GAAP and non-GAAP results. Our balanced approach to capital allocation remains unchanged. Business development continues to be an important priority. We remain committed to a strong investment-grade credit rating while preserving capacity within it to pursue additional value-enhancing transactions.

In summary, the success we are having in advancing and augmenting our pipeline, including through science-led business development, such as the planned acquisition of Tern, increases our confidence in our ability to deliver important innovation to patients and sustain our long-term growth while providing value to shareholders. I will now turn the call back to Peter.

Thank you, Caroline. Amanda, we're now ready to begin Q&A. I just want to let everyone know that in the room with us is Dr. Marjorie Green, Senior Vice President and Head of Oncology Global Clinical Development.

[Operator Instructions]

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

Congrats on the deal. I really want to kind of get into the nitty gritty. In your diligence, can you explain why TERN-701's allosteric inhibition may be more optimal than other active site TKIs in CML.

So this is Dean. I'll just make some really quick comments, and I'll hand it back to Marjorie. So you're asking whether or not inhibitors of an allosteric why they are potentially superior than those who are orthosteric, which is the active site. I think the data from Asciminib suggests that there are advantages of an allosteric site over an active site or an orthosteric tyrosine kinase. That sort of had been played out. In relationship to turns, we believe that this allosteric inhibitor could even have more superior efficacy in relationship to the TKIs at our active site and also potentially in a basket in relationship to those who are also on allosteric. But Marjorie, is there anything you wanted to add?

Yes. No, thanks, Dean. Part of the interest, I think, has to do with mechanisms of resistance that occur over time. And it does appear that for the different classes of TKIs, there are different mechanisms of resistance. And it is potentially possible that by using different allosteric, you're able to overcome resistance that could exist with some of the first and second-generation TKIs.

Our next question comes from Alex Hammond with Wolfe Research.

On safety, Turns noted that there was no symptomatic lipase elevation. Should we interpret this as there were asymptomatic elevation? And if so, is there any concern in larger clinical trials that you could see symptomatic elevations? And I guess as a follow-up, what's your appetite for continued BD and any additional therapeutic areas of interest?

So why don't -- I'll have Marjorie take the first question, and then I'll answer the second question about continued interest in business development.

Yes. Thanks for the question. Regarding the lipase elevations, Terns has publicly disclosed and data that we have confirmed that rates of lipase elevation are present, but they are low grade and in their nature, the majority of adverse effects that occur with these kind of PKIs, you will see signals within the first 6 months of exposure for majority of AEs. And so I think, again, what they are showing are consistent with the class low-grade lipase elevations.

Thank you, Marjorie. And then as it relates to business development, to be clear, hopefully, what you see here is a transaction that very much fits into what has been our ongoing business development strategy, which, as you know, and we've communicated pretty consistently always starts with the question, do we see a significant unmet need where there is innovative science that can address it? And then we ask, how does it fit within the strategic portfolio that we have?

And then finally, do we see an opportunity for compelling value creation. And in this case, we hit all of those factors. As we look forward, our interest continues to be to add more to the portfolio while we are very excited about what we have, and I give all the credit in the world to Dean and our scientific team for what we've been able already to achieve as represented in the potential $70 billion plus. And remember, that's only from a select set of assets, not from our entire portfolio. We feel very good about where we are, but I always believe you can do more.

And in that spirit, we will in a disciplined way, continue to look for opportunities. I'm excited that we can add to our position in oncology here, both in terms of putting ourselves in a position to continue to be a leader in oncology, but also to diversify within the oncology space and add to our hematology portfolio. Beyond that, we continue to be interested in other therapeutic areas. and it should not be a surprise. Immunology continues to be an area we often look and are excited about cardiometabolic vaccines, ophthalmology based on some of the recent deals we've done. And then we're always opportunistic, again, starting always with the first question, where is the science pointing us and what do we see as the need? And that is always the driver.

Our next question comes from James Shin with Deutsche Bank.

First question is for either Dean or Marjorie. Appreciate 701's frontline CML trial as against investigator's choice for MMR. Any chance this frontline trial includes testing for noninferiority and possibly superiority to Asciminib? And one for Rob and team. It seems you have line of sight to late line and frontline CML for 701. So how much does this terms deal change the $70 billion peak pipeline figure presented earlier this year?

So this is Dean. One of the things I just want to be a little bit cautious about talking about a potential Phase III development program is Number one, we don't have ownership of this company or the control of the study design. And our intention always is to pursue a robust and appropriately powered program that demonstrates the unambigorous promotable advantage of whatever medicine or vaccines we're advancing. But I would just ask Marjorie is there anything else that you want to add?

No, I agree. We're very excited about the potential of TERN-701 to make a clinically meaningful difference for people with CML, and we will execute a robust, well-developed program should the transaction go through.

And as it relates to the $70 billion plus, you should assume, as we said, with multibillion-dollar plus opportunity, commercial opportunity from this asset, we are growing it. I'll let you determine how much multibillion is.

Our next question comes from Louise Chen with Scotiabank.

Congratulations on the deal. So I wanted to ask you if you could elucidate a little bit more how TERN-701 would fit into the treatment paradigm if it's approved? And then how do you expect it to take share? Would it be new patients or from existing therapies?

So I'll just give a highlight, which is what we've said in the prepared remarks is our calculation based on early data suggests that there's a possibility that this drug, TERN-701 may have around 2x MMR versus approved TKIs and 2 to 3x DMR in approved TKIs and a faster kinetic response than that was treated before and also a very favorable safety and tolerability so that someone could stay on it. So I just think that, that's the scope of how we view the positioning of this scientifically, but I'll hand it over to Jannie for a commercial view of that potential ambition.

Yes. So thank you, Dean. So as we said, we see this to be a multibillion-dollar commercial opportunity. I'm not going to so much talk about the assumption on share. I think the first order of business would be to stand up the development program to really generate the data that is needed to define the differentiation that we're going to have against other options, both from a clinical option point of view, depth of response, durability and tolerability. And we will share more as the Phase III program shapes up, but we think that this could be a meaningful choice in the CML setting.

I might just add, I think the other part of the question, primarily, we see this as new patients coming on therapy and being able to move into that space. That's the way we valued it. Obviously, over time, we will look to see for the opportunities for switch as well. But given the number of new patients that unfortunately continue to become inflicted with CML every year, there's a meaningful opportunity there. Having them stay on therapy chronically allows you to effectively multiply that over time. And then to the extent we drive switch over time, it even goes higher. So all of that is why we're so confident in the multibillion-dollar opportunity.

Our next question comes from Jason Gerberry with Bank of America.

Maybe just a follow-up question just on the commercial point. I guess from your standpoint, which of the, I guess, data variables in future data really is key to having success driving a switch in a market like this? Is it really the safety? Is it the lack of food effect or efficacy differentiation in the head-to-head comparisons? And then just as a follow-up, did you guys describe any value to assets beyond 701 in this deal?

Yes. So let me just take a first stab at things. In relationship to the basic question, at least my simple sort of view is especially in oncology, especially oncology, but in all therapeutic areas. efficacy and showing improved efficacy is a critical component of how we look at our own internal programs and how we look at every other program when we do business development. So it's a common sort of thing. Efficacy is critically important. But with that, I'll hand it over to Jannie.

Yes, absolutely. I will tell you what makes us excited as a commercial organization is if you can have a treatment with double the MMR, 2 to 3x DMR and that faster kinetic response to achieve both MMR and DMR on top of a very tolerable product, I think this will be a significant choice in that first-line setting. So again, as Rob said, there's about 80,000 patients annually across the U.S., Japan and key European markets that is newly diagnosed with CML -- so we see a product with a profile like that capturing a significant number of patients in that first-line setting and could motivate some physicians to switch other patients on to a therapy like this.

And Jason, in terms of the valuation, our valuation is based on TERN-701.

Our next question comes from Michael Yee with UBS.

This is [ Dina ] on for Mike. Thinking about time lines for the pivotal study, I know that Terns had previously said that the second-line study would start first and then the first line or frontline study would be running in parallel, but about 6 to 12 months behind. Is there any way that, that time line can be accelerated, especially for the front line? And how are you thinking about just the path forward from there?

So I'll just take it really quickly. I want to be a little bit thoughtful and careful as to how to answer any questions directly related to clinical trial design and time lines until we are fully in control of Terns. And also, this will also require discussions clearly, whether it's Terns or us with the regulatory agencies. So I don't want to get ahead of that. But there is nothing that Terns has said that we would sit there and we are going with the assumptions of what they have said publicly.

Our next question comes from Geoff Meacham with Citi.

This is Mary Kate on for Geoff. So Terns has mentioned additional data from the CARDINAL trial is to be expected in the second half of this year. I guess just should we expect a similar readout in terms of time lines? And could you maybe walk us through how you're looking at the ongoing clinical trial and what you'd like to see to further bolster your confidence in this program?

I mean I would just emphasize the way that we look at this program is we conduct a comprehensive and rigorous evaluation of all available data. And at that level, we're looking at patient level data and always thinking consistent with regulatory standards for registration. So we're comfortable as we get more data and as people -- more people are treated with this drug and also those who are treated with the drug get more experience, that will inform how we think about future development and the time lines related to that. But Marjorie, is there anything else that you would like to add?

Yes. No, thanks. Terns has done a fantastic job with their development of 701. And I think they've talked about publicly and shown that they've already completed dose escalation are in randomized dose finding. And so we would work with ensuring that, that data is well described and understood and presented in a timely fashion.

Our next question comes from Daina Graybosch with Leerink Partners.

Rob, you talked about the 4 pillars of Merck's BD strategy and one is an opportunity for compelling value creation. And I wonder if you could talk more specifically in this case, why Merck owning this asset is going to create more value for your shareholders.

Well, obviously, one of the strengths we've had over the last several years is the position we've been able to enjoy in oncology. And we've been working hard to expand that. As Dean highlighted, we have multiple assets that we'll be launching in the hematology space over the coming years. This adds to that. We've already been building the commercial capabilities and leveraging, frankly, what we already know from the solid tumor side to leverage over to that. And given the scale we have, both from our clinical programs, which I continue to be proud of what we've done. I think we have the best clinical team in the industry in oncology.

And so the confidence that when we give them an asset that they can bring it through and deliver it clinically, we've shown we can do that consistently. And so that gives me great confidence in our ability to drive this program to success. And then given the scale we have commercially in the marketplace, we will leverage that full network to drive this product. So this is something that builds on where we want to be. As Dean has always said, we started, we were a leader in IO. We are committed to being a leader across broader oncology with a very diversified portfolio of assets, and this adds nicely to that. So I'm very confident in the compelling value this is going to bring for shareholders.

Our next question comes from Mohit Bansal with Wells Fargo Securities.

This is Will Zhang on for Mohit Bansal. Congrats on the deal. So I guess moving over to the first-line setting. So [ Gleevec ] and its generics still have meaningful share in the first line despite [ Scemblix ] being approved and available there. How are you thinking about overcoming this first-mover advantage with TERN-701? And just where do you see opportunity for TERN-701 to take share here?

Yes. So I'll let Jannie talk about the shares and the commercial aspect, but I think it will be important to hear from Marjorie as the person who leads late-stage oncology, why she and her teams are excited about bringing this opportunity to patients with CML.

Yes. Thanks, Dean. There -- you're correct. There are still physicians who are using the first-generation Gleevec. They've gotten used to the management of the side effects and have seen consistent efficacy over a long period of time. However, there remains significant unmet need in CML. And I think that's what drives a change in therapy showing that value. If you look at some of the data sets that people still present, you'll see a reference to MR2, which is what Gleevec was [ pounded ] for was the ability to get a cytogenetic negative test result with the drug.

However, what's becoming more and more apparent is that while the risk of accelerated phase of CML and blast phase has gone down significantly with drugs, it still exists. And so time to getting to that molecular response and depth of molecular response are important prognostic factors and prediction of how people with CML will do for the long term. So having a drug that is tolerable that people who are on for a long period of time can get an individual CML to a very rapid and deep response is very prognostic for their long-term outcomes. And we think that is what will drive the clinical uptake. There is a move to considering for some people treatment-free intervals.

And to do that, you need to have very, very prolonged deep molecular responses and people wait for several years before they even consider that. And so I think that's the value proposition that people see. It's that depth of response and the tolerability that will change therapy.

Yes, I fully agree, it's Jannie. I think as we've seen again and again in oncology, it's the data that really makes the difference. And if we can deliver that improved MMR, but as Marjorie said, the deep molecular response at 2 to 3x plus the tolerability versus current options, we are confident that we will take significant share.

Our next question comes from Umer Raffat with Evercore ISI.

I have 2 here, if I may. First of all, congrats to you guys on the deal. Two, if I may. First, just the fact that we're going into a [indiscernible] binding pocket. I guess my first question would be, have we seen any MMRs in T359 patients because I feel like there's been no conversation on that so far. Secondly, on MMR itself, I feel like any headline number is just -- there's just a lot more to it than the headline itself. So my question instead is there's a 64% MMR in 28 patients. Separately, we know 18 patients at baseline were enrolled because they discontinued because of lack of tolerability. So how much of this 28-patient denominator is driven by lack of tolerability patients rather than lack of efficacy or truly resistant patients?

So I'll turn it over to Marjorie, but I just sort of really want to emphasize that there's probably like maybe 20% to 30% of patients that demonstrate resistance and 70% of those estimated to develop a point mutation in the ABL gene. In relationship to the data that we've had, we've seen patient level data and also remember that there is continuing to be a dose escalation in relationship to the doses with which the patients are being exposed. But I was just going to turn it over to Marjorie, if there's any other considerations that she wanted to bring.

Yes. No, thanks. The Terns are doing a great job at analyzing and evaluating the potential for people with and without different kind of mutations of BCR::ABL. That data has not been publicly presented to my knowledge. And -- but these people are being enrolled into the study to understand the characteristics of TERN-701 further. I think in their public presentation that they did in December, they go through the details of how they calculated the different levels of response.

And so what we did, as Dean said, is we had patient-level data -- and we looked at it through multiple different lenses because the nature of Phase I/II studies is that you get a very heterogeneous population. And so we were able to look at people based upon prior therapies. And as Dean said, a significant number of people enrolled in these studies that had prior assay and lack of efficacy was present in a high number of them rather than intolerance. And so there's a lot of very rich data there. I can't share the full details of the work that we've done, but the study has been open for a long time, and the data that was presented at ASH had a data cut of September. And so what we were able to do is confirm this profound efficacy you hear us all talking about and that it's held up over time.

Our next question comes from Luisa Hector with Berenberg.

Just in terms of the deal valuation, so Caroline said based on TERN-701, could you add any color on how you may have changed your thought process? Is this largely based on U.S. value? Any thoughts around [ MFN ], [ IRA ], channel mix? And then just any comments on IP, just your levels of confidence in the IP.

Thank you, Luisa. So the valuation that we do considers a whole number of scenarios. What I would say is TERN-701 is a really impactful product. It's a product that has orphan drug designation. As such, as a product given the current rules, we would expect to not be included in IRA nor in MFN. Our valuation, however, is predominantly driven by the United States. So we are very confident in the valuation that we have given for the product and very excited for its launch. As we look at IP, we expect that IP will go out into the 2040s.

Our last question will come from Emily Field with Barclays.

I guess sort of a follow-up question to the earlier one on Gleevec, but asking a different way. I was just thinking back to ASCO a couple of years ago when Novartis presented the ASC4 first data. Most of the questions from the analysts then were really about the genericization of the earlier generation TKIs and how they expected commercial development from a payer and reimbursement perspective. So I was just wondering how you guys have thought about that and how the sort of generic and payer landscape may have evolved by the time this product could launch and how you'd be able to get coverage.

I'll just say from a scientific standpoint, then I'll hand it over to Jannie. My understanding from the physicians that we've talked to is that the desire or the attractiveness of that first allosteric TKI is such that people do want to prescribe it because of what they are perceived as improved ability to get MMR. And so I just want to sort of emphasize that what we believe is really important in this field is the improved MMR that we may achieve with TERN-701, but also the very much improved deep molecular response that when we look at it, we have not seen data that's similar to that outside of TERN-701. But with that, I'll turn it over to Jannie.

Yes. I mean, as we looked at it, we couldn't see any utilization management in terms of current treatment options. So we do believe that Asciminib will continue to take share. As we look at TERN-701, we do believe that differentiated data will continue to give the ability to use, and we will have time to really establish this as a treatment choice. So we do not foresee in terms of how the market currently operate that utilization management, genericization of any of these first or second-generation TKIs will affect the utilization, reimbursement and access to TERN-701, for instance.

Great. Thanks, Emily, and thanks, everyone, for your time and attention this morning. Please reach out to the Investor Relations team if you have any follow-up questions. Have a great day.

Thank you. That concludes today's conference. Thank you for participating. You may disconnect at this time.

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46th Annual Healthcare Conference. We are absolutely delighted to have Merck senior leadership here with us today. Representing the company, Caroline Litchfield, who is Executive Vice President and Chief Financial Officer; and Dr. Dean Li, who is President of Merck Research Labs, lots to talk about, both in the pipeline as well as the current operations. But to set the stage, Caroline, I'll turn it to you.

Thank you, Steve. So good afternoon, all. Thank you for being here, and thank you for your support and interest in Merck. Our company is transforming its portfolio. We're launching many new products including WINREVAIR, OHTUVAYRE, CAPVAXIVE Enflonsia and QLEX. We're in the midst of having more than 20 new growth drivers in our Human Health business. Every one of these products has the promise of advancing patient care and almost every product has blockbuster potential. And we've highlighted that there's more than $70 billion of commercial opportunity from those 20-plus products.

And it's not just human health. Our Animal Health business is also launching many products, and we expect to more than double the revenues of our Animal Health business by the mid-2030s.

And so we're increasingly confident in our future. And that future also includes a robust early-stage pipeline that will continue to evolve and hopefully yield Phase II, Phase III programs in the coming months and years that will equally drive revenues and patient impact in the 2030s.

So we're confident as a team that we can navigate the KEYTRUDA loss of exclusivity. And we talk about it as being more of a hill than a cliff as we expect our revenues to have a shallow dip before quickly turning to strong growth within a few years. And we will continue as a team to execute: execute on our launches, execute on our pipeline and continuing to augment this pipeline with scientifically focused value-creating business development so we can drive impact for patients and long-term growth for our company. So with that, we look forward to talking about anything and everything that's going on at Merck.

Great. So let's start with the pipeline. So Dean, you have 6 late-stage pipeline readouts in '26 and '27 and I'd like to ask you to rank them by clinical risk and let me just go through them for the sake of the audience, islatravir lenacapavir, MK-3000, tulisokibart, sac-TMT, the Cidara antibody and I-DXd.

So I'm going to list them by what they mean to us as a pipeline. And so I would sit there and say sac-TMT and I-Dxd are very important. They are all based on really important in most cases, Phase II. But actually, in the case of sac-TMT, they're often based on Phase IIIs from China. So that is our pivot of KEYTRUDA and chemo going to next-gen chemo.

In terms of new molecular mechanisms of actions, I think the MK-3000, the first new MOA for diabetic macular edema and neovascular AMD and clearly to the tulisokibart, where there is a possibility that this TL1A node could potentially become equivalent to the node of TNF and IL-23.

In relationship to sort of infectious disease, we're launching islatravir/doravirine, but the first time that someone could achieve a [ q weekly ] treatment is a islatravir and lenacapavir. And I think that will increased -- we already have a lot of confidence in this pathway with islatravir/doravirine so is islatravir and lenacapavir. And clearly, MK-1406 in relationship to, in some sense, a pre-exposure prophylaxis for influenza. So I think all of them are important in different ways. And so that's how I would sort of lay out the importance and relationship to our pipeline.

Okay. Great. I should have mentioned at the outset, should anyone have a question anywhere along the line, please raise your hand, and we will call on you. Lots to dig in on those products alone. But maybe we could start with MK-3000, a very exciting drug. What is the ideal target patient population for this asset? And what do you strive for in a clinical profile?

Yes. So if one looks at diabetic macular edema and neovascular AMD, that field has been transformed over the last two decades by anti-vascular endothelial growth factor molecules. And they've all come in maybe 6 to 10 years after each other. So you have Lucentis, you have Eylea, then you have Vabysmo. In every one of those situations, each one of them kind of took over the lead of the other ones using a non-inferior clinical trial. But all of them were based on vascular endothelial growth factor. This mechanism of MK-3000 is a totally different mechanism. It's based on Wnt agonism and so our hope is that we would do a clinical trial similar to the other ones that have been done. But the critical point for us is it will be important for anyone with diabetic macular edema or anyone with neovascular AMD, but critically important is around -- up to 40% of individuals don't respond to anti-VEGF or anti-vascular endothelial growth factor. So we believe that, that will be really important because it will be the first brand-new mechanism in decades for those diseases. And so that could be really exciting for the field.

And are the patients enrolled in the BRUNELLO trial, are these patients who failed VEGF?

No. So we're going to treat the trial no differently in relationship to all of the other trials, which is you basically take all comers. But essentially, you already know in those all comers, maybe 30% to 40% of the patients won't respond to anti-VEGF. So we will not be limited to those people who didn't respond. But in some sense, we will be enriched by the people who don't respond to anti-VEGF.

I see. Very exciting asset. Also on the list is islatravir. And we're intrigued by this ISLEND-1 and 2 trials. And curious, I guess, a risk with this modality could be that patients may forget a dose. So how is the trial designed? Is it patients who -- or do you exclude patients who have had trouble in trials with FAS or in the before, are you -- how are you gauging adherence? And how are you enriching the trial to assure regulators that there will not be a dosing issue with this molecule?

Yes. So these are people living with HIV. And the patients that we're doing are not patients who have virologic failures. So there's no enrichment. So this is going to be no different than any other sort of HIV study. What you've seen in our Phase II that this involves two important mechanisms, the nucleoside analog with translocation as well as the HIV capsid of our partner, Gilead. And in that trial, what you saw is you saw greater than 90% adherence and greater than 90% efficacy and we will count clearly adherence through pill count, but we believe that this once-weekly option, which will be the only once-weekly oral option for treatment will be something very important for certain patients living with HIV.

Okay. Maybe moving to another asset on the list, that being sac-TMT. What would be -- you point to as the strongest evidence that sac-TMT is better than the currently approved Trop ADCs, Trop-2 ADCs in lung and breast cancer?

Yes. So first of all, we have a Trop-2 ADC that is different. We would look at the other ADCs, one could potentially say that in one of them, the linker is a little bit loose. So you see this hematologic sort of adverse effect. The other one is quite tight. So you see the adverse effect of interstitial lung disease. So we think this is a differentiated molecules. Not all ADCs are the same. And HER2 is not the same thing as Kadcyla. And we are advancing sac-TMT in a whole series of trials, 17 trials. I think 13 of them are first movers, 4 of them are differentiated. And so we're moving in endometrial gastric, if positive, we can be the first mover of Trop-2. You specifically asked me about lung and breast. I can tell you all the theoretical, but we have a great partner in Kelun, and they have already shown Phase III trials in China that suggest that in non-small cell lung cancer in those patients with PD-L1 greater than 1, that, that would be a really important molecule. They've also done it in EGFR mutant. Again, that data is out there. And then the third place is HR positive, HER2 negative. And in each case of that, we have taken that lead and that information and formulated global trials that fit in the global setting based on those studies. And the data for those, I think many people have said they've been compelling in their differentiation in lung and in breast.

If sac-TMT does turn out to be differentiated relative to other Trop-2 ADCs, do you think the linker might be the key reason from an MOA perspective? Or are there other elements of the molecule that are...

I would say, generally, the antibody is basically saying the payload is slightly different but I do think it's all 3 combinations of the antibody, the linker and the payload. So I would say from a molecular standpoint, it could be more related to the linker. But I also think the concept that we were driving this in so many indications and tissue types that the other didn't even go into. So then you're not differentiated. You're just going there because you think your molecule has the tolerability and the durability to stay in for those cancers.

Questions from the audience? Moving to the Cidara assets. So can you just give us an update on the ANCHOR trial and your level of confidence that you are still on track to read out the trial in mid-2026?

So that trial did recruit extremely well in the Northern Hemisphere. We are definitely going to the Southern Hemisphere. We -- and I should just recount what this is, this is essentially an antiviral conjugated to a biologic backbone such that it has a long half-life and the concept is this would be a way to really reduce the chances of giving influenza, especially for those patients who are immunosuppressed, who have substantial comorbidities. We want to make sure that we are recruiting in the Southern Hemisphere because we think that it's very important to have a strain agnostic preventative in that patient population.

And I'll remind everyone that the flu vaccine does around 20% to 40% in us. But in patients who are immunosuppressed, it doesn't do that great. And in that patient population, the chances of something bad happening or a bad outcome is high. So we think this is a really important medicine for the world, but I would also just state that I'm going to imagine that the rate of vaccination in this country for flu will not necessarily increase over the next 3 to 4 years. So I think this molecule could be really important.

But Caroline, did you want to touch any of that?

So we're very excited about the promise that MK-1406 has. To Dean's point, we think this can be really impactful for people who have immunocompromised conditions or people over the age of 65. As we sized this opportunity, there's about 110 million people here in the United States. 85 million immunocompromised or with other comorbidities, a further 25 million who are over the age of 65. So what we're trying to do in our clinical program is really have a data set that will help see the impact that this protection could provide in helping stop getting the flu. And so we're progressing with our study. We have expanded and in the process of expanding in the Southern Hemisphere and would expect to read out during the early part of 2027.

Okay. A few products that aren't on that initial list though, which we discussed earlier, but are still very important, of course, first, the oral PCSK9. We had a cardiology panel yesterday here at the conference. Part of it was on lipids and the doctor believes that oral therapies are going to catalyze this market like we haven't seen in a long time. And the Merck product was front and center, albeit there was good attention on your competitor as well. But in addition to having the oral therapy, guideline changes were very much a part of the doctor's view what's going to catalyze growth in those markets. So how are you viewing that? And do you also think it's a catalyst? And also, can you include in the answer why you feel you can win in this market against what should be a pretty tough competitor?

So I would just say that I think many people don't realize that in 2013, in the American Heart Association, ACC guidelines, they took out any goal for LDL in 2013. I mean -- and in other places like Europe, they kept it. And that, I think, has done a disservice to the field and so over a decade, there hasn't been LDL levels. I believe that the American Heart Association and ACC will change that. They will drive that guidelines after more than a decade, they'll have some level for LDL, but I also think, increasingly, they look at other fields such as ASCO or oncology. I bet you they're going to not just lay a guideline but they're going to update their guidelines more effectively and more frequently.

The reason why that became so important is that a competitor or a colleague or however you want to put it, Amgen with Repatha show the VESALIUS trial. And essentially, if you had an LDL of 90 to 100, that's oftentimes your doctor says, "Well, that's kind of okay." If they could drive the LDL to 45, they got a 25% cardiovascular outcome benefit. So I think the HA and ACC realize there's a lot of movement in that space. And I think that if you get the guidelines, then you can get quality metrics than the hospitals care because if you're a hospital administrator, you don't care if it ain't in the guidelines. And I think it will catalyze the field.

In relationship to our molecule, essentially, I talked about VESALIUS. In some sense, what we try to do, and I should just highlight Repatha, which is the basis of VESALIUS was an Amgen product that Roger Perlmutter developed. We essentially had in our mind that we were going to make a biologic, a Repatha in a pill. So our molecule does exactly the interaction biochemically is exactly like Repatha. And the reason I say it is that the data that we've shown suggests that, but that makes it the most potent LDL cholesterol-lowering medicine that has ever been provided once it gets accepted. I believe that with the guidelines potentially coming in at 70 with some patient populations with 55 and increasingly drive it. A [ statin ] alone will not do it, you will need a [ statin ] and the next most important low LDL cholesterol-lowering molecule that you possibly can get. And that's what we hope to provide to patients and to people throughout the United States and the world.

And so what we have with enlicitide is very strong compelling clinical data. The United States have given us a commissioner national priority voucher. So we will be imminently filing enlicitide and an ordinary time line would take us to a Q1 '27 launch. We're hopeful, subject to that review process that we'll be launching in the nearer term.

Of course, approvals tend to reflect clinical trial design. And I imagine when this trial was designed 5, 6, 7, 8 years ago, the food dynamic was embedded in the trial design for whatever reason. But roll forward this number of years, it could be that maybe the fasting requirement is excessive, maybe it doesn't have to be that much. Is Merck doing any work to look at exactly in the contemporary world, how long that food effect has to be? Could it be shortened? Are you doing work to shorten it?

So I would answer it two ways. The answer is yes. But I would just recount that I understand that you're referring to someone else's where I don't have their Phase III, but their Phase II clearly is less LDL-cholesterol lowering. So if you take ours properly and you take theirs properly, ours is substantially more reduction in LDL. I don't know where their number is going to end up, but I suspect that even if you had a full English breakfast with ours than ours -- I still think it will be hard for people to be above ours. So ours, if you take it, you took it, you went to bed, you woke up, you took your medicine, you could have water, tea, coffee or like this for 30 minutes. If you do this, you'll get the most potent LDL-cholesterol-lowering medicine. If you sneak in a piece of bacon or something like this or a donut in there, I still think that you will have effective LDL-cholesterol but you won't have it at the level of the most potent LDL cholesterol lowering.

The question actually wasn't intended to infuse a competitor into -- it's more that your product could be -- it's a great product now, it could be even better if food restriction wasn't quite what it was. So is Merck doing studies to say, it doesn't have to be 8 hours, it could be one?

15 minutes? Is it 20 minutes? Those sort of things. Yes.

So you're doing that?

Yes. But I think the critical thing is we know that even if you did eat, where you would end up.

And knowing that this medicine, you will get up in the morning, you will take it with the other pills that you take. You can drink water, tea, coffee, you shouldn't eat for 30 minutes and in our clinical program, 96%, 97% of the patients on the program were compliant without us having to tell them what to do, they were naturally compliant with doing so.

Okay. Questions from the audience? You probably don't get a lot of BTK questions, but nemtabrutinib is a product that Merck seems to be maybe chatting about a little more about. Why is this an exciting molecule in a very competitive market?

It is a competitive market. I mean so this is CLL and -- there was a great drug that started the whole thing with Ibrutinib. But those are covalent inhibitors. And now the question is whether non-covalence can come in and go into first line. So we're really eager to see that but it's also we're talking about it not just because we're talking about nemtabrutinib. We talked about diversifying oncology. We had KEYTRUDA and they were going to diversify, and we're going to use what we knew about KEYTRUDA to get into the ADCs that we've just talked about to get into precision targeted, such as WELIREG and KRAS. But the other sort of thing is KEYTRUDA didn't have that big impact in heme malignancy. And so we have a series of compounds. It's nemtabrutinib. It's also [indiscernible] ADC. It's also our T cell engager, MK-1045 and then in the nonheme malignancies space, we have bomedemstat. So we're talking about nemta, but we're talking about 4 programs that will have readout in the next 1, 2, 3 years that is 4 products in the heme space.

Okay. One more product or a pipeline-related question then we'll get some to some business questions. But V940, will we get to Phase III cutaneous squamous cell carcinoma data this year? And if so, what should be our expectation?

Yes. So just to remind, this is the collaboration of the individualized neoantigen therapy or some people say the cancer vaccine for melanoma. That is in Phase III. We have two other Phase IIIs in non-small cell lung cancer, and we have a series of Phase IIs just peaking out ready to go into Phase III, depending on what we see with the Phase IIIs that we have out. And so the melanoma readout is based on a Phase II where you added the INT or the cancer vaccine on top of KEYTRUDA, and you saw an impressive reduction in disease relapse-free survival. The other important thing is over 5 years, that was a durable response. So we're very eager to see what that Phase III is because not only it will -- if it's successful, will it be important for melanoma, but it will trigger even more investment in these other tumor types.

In relationship to the PCD data, I think the PCD data is [ 28 ], and there's always chances of having interim analysis that read out early.

Okay. Can I ask about KRAS? You mentioned your KRAS inhibitor. Obviously, especially at the outset, an enormous amount of fanfare around the G12C inhibitors. I think it's fair to say that it's taking a little bit longer to see substantial impact on patients than perhaps had been hoped or at least implied by investor expectations. Where do you see the KRAS target going from here?

So I would tell you that KRAS G12C as a molecule and as a target is critically important in lung. And so this is an important lesson that we constantly learn, which is if you want to go in lung, and you can't move first line with a PD-1, you will not have an impact. The impact of KEYTRUDA or other PD-1s in lung is so profound that you have to be added to that. And the first-generation molecules could not do that. I don't think it will take time for those molecules. If you cannot combine with a PD-1 effectively and be at par of KEYNOTE-189 and better, I think it won't take on. Our 1084, we are enthusiastic. We're moving it in lung because we believe that it can -- here's a pill, you give subcu pembro, early, late, right? That's something that could be really important, both in the early stage, but in the first line. The same thing is true if you want to move it in CRC. If you're going to move it in colorectal cancer, it's fine to have a [ signal ] in second line, third line. But if you cannot combine it within EGFR or cetuximab, you will not have the full impact. So there was a lot of excitement because you got [ a signal ]. But in order to move these things, you need to be able to put it in first line, and you have to have a clear understanding of what it needs to combine with because if it does not combine, you will knock it in first line. If you do not get into first line, you will not have that impact.

Maybe going to a product that's just rolling out now and that's KEYTRUDA subcu or QLEX. So how -- what can -- other than sales, what metrics can investors monitor to see how you're progressing against that goal of 30% to 40% penetration of the KEYTRUDA molecule in a few years?

Yes. So we're really excited about QLEX, our subcutaneous formulation of pembrolizumab and the benefits it can provide patients as Dean just demonstrated in just a very short duration shot, you have been given your treatment for cancer. So what we have with this is a sales level of around $35 million in the fourth quarter of 2025 million. We expect sales to grow modestly in the first quarter this year before we'll see the permanent [ J code ] that we expect at the beginning of April. What we're hearing from both the health care providers as well as patients is in line with our expectations. That is, this is a tremendous innovation. It's an innovation that they need to work through their own operating processes and systems to ensure that it has the relevant formulary decisions. It's also on the electronic health record so that it can be utilized. But we're seeing early utilization already in predominantly patients who are on KEYTRUDA monotherapy or KEYTRUDA in combination with another oral agent. So that's the majority of the current use.

We are, however, also seeing use with IV chemotherapy. And that's largely in the early cancer setting. So the indications we're having thus far is the importance of this innovation the importance, especially when the patients are monotherapy or in combination with an oral agent and the importance in the early-stage cancer setting. So we expect still and have confidence in the 30% to 40% penetration of our overall KEYTRUDA business with adoption here for that patient group. And we will continue to provide insights to our investors as we see this unfold over the coming months and quarters.

GARDASIL, should we expect any major change in trends in 2026?

So we are very proud of the impact GARDASIL is having for the world in helping prevent HPV-related cancers. What we have stated for 2026 is we expect revenues to be roughly stable compared with where we were in 2025. And that's as we continue to really advance the vaccine, especially in the mid adult segment. While we do see in the adolescent segment, some maturation of where we've had penetration in the U.S. and outside of the U.S. So we see this as an important product for the world, an important contributor to Merck's revenue but not a driver of growth.

And we're down to only a few seconds left in the panel. So let me close by asking you each a question, same question, and that is, what do you anticipate will be the biggest change or surprise at Merck in the next decade? Maybe not a surprise to you, but it's a surprise to us.

So maybe where we started, our company really is transforming. And I think what you'll see in this next decade is our company transforming from a position where KEYTRUDA, GARDASIL and Animal Health were the dominant parts of our business to instead be a company that has a diverse set of products, products that are either first-in-class, they're best-in-class or we've innovated around them to bring the next innovation in those therapeutic areas. And as a result, we'll have made a difference in this world, we'll have driven strong growth for our company and returns for our shareholders.

And in Merck Research Labs?

To deliver on that promise.

Okay. That's a tall water. Well, thank you so much. This has been a very interesting conversation.

Thank you for standing by. Welcome to the Merck & Company, Inc., Wawa New Jersey USA Fourth Quarter Sales and Earnings Conference Call. [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 conference over to Mr. Peter Dannenbaun, Senior Vice President, Investor Relations. Sir, you may begin.

Thank you, Shirley, and good morning, everyone. Welcome to the Fourth Quarter 2025 Conference Call for Merck & Company, Inc. Roway, New Jersey USA. Speaking on today's call will be Rob Davis, Chairman and Chief Executive Officer; Caroline Litchfield, Chief Financial Officer; and Dr. Dean Lee, President of Research Labs. Before we get started, I'd like to point out that we have items in our GAAP results such as acquisition-related charges, restructuring costs and certain other items that we have excluded from our non-GAAP results. There is a reconciliation in our press release. .

I will also remind you that some of the statements that we make today may be considered forward-looking statements within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are made based on the current beliefs of our company's management and are subject to significant risks and uncertainties.

If our underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Our SEC filings, including Item 1A 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 & Company Incorporated, Rabale, New Jersey USA, undertakes no obligation to publicly update any forward-looking statements. During today's call, a slide presentation will accompany our speakers' prepared remarks. These slides along with the earnings release, today's prepared remarks and our SEC filings are all posted to the Investor Relations section of our company's website. With that, I'd like to turn the call to Rob.

Thanks, Peter. Good morning, and thank you for joining today's call. Our company's purpose to save and improve lives guides everything we do. In 2025, we advanced key programs across all phases of development, furthering our mission to deliver transformative medicines and vaccines that will improve health outcomes for patients around the world. I'm very proud of the significant progress we are making. And as we look ahead, we'll remain intently focused on bringing forward breakthrough science and innovation which is the foundation for creating sustainable long-term value for both patients and shareholders.

The transformation of our portfolio is well underway, and momentum is building as we continue to execute on our strategy. In 2025, our business benefited from successful new product launches, the advancement of important clinical programs and the expansion of our respiratory and infectious disease portfolios through the acquisitions of Rona Pharma and Cidara Therapeutics. As a result of this progress, we now have line of sight to over $70 billion of potential commercial opportunity by the mid-2030s, $20 billion more than just a year ago and more than double consensus 2028 peak KEYTRUDA revenue of $35 billion.

While we still have more to do, this meaningful progress further bolsters my already high confidence in our ability to deliver sustainable growth post the KEYTRUDA LOE period. Now turning to our results and initial outlook for 2026. Growth in 2025 reflects demand for our innovative portfolio, including for KEYTRUDA, which continues to benefit more patients with cancer globally, increasing contributions from new launches in cardiometabolic and respiratory as well as vaccines and strong performance of Animal Health.

We're well positioned to achieve commercial success across key products in 2026 while we make important investments behind our new product launches and expanded pipeline, which Caroline will speak to momentarily. Our research colleagues continue to achieve remarkable progress across our broad and deep pipeline. Focusing on a few key events from the fourth quarter; in cardiometabolic and respiratory, at AHA, we presented Phase III results for enlicitide that underscore the practice-changing potential of an oral PCSK9 inhibitor. Cardiovascular disease is the leading cause of death globally, and we look forward to bringing a potential new option to help address the CV epidemic. For winrevere we announced Phase II top line findings from the CADENCE trial that are supportive of its continued development in a different type of pulmonary hypertension. And building on recent momentum in HIV, we shared positive top line results for islatravir in combination with doravirine for treatment-naive adults living with HIV.

Finally, we're pleased that both enlicitide and SAC TMT, our investigational TROI directed antibody drug conjugate. We're granted commissioners national priority vouchers by the FDA, which may expedite review of these important investigational candidates after applications are filed. We recently completed the acquisition of Cidara, which complements our portfolio and builds on our long legacy in combating infectious diseases. MK 1406, formerly CD 388 is a potentially first-in-class long-acting antiviral candidate designed to help prevent influenza infection in individuals at higher risk of developing serious complications.

There is a substantial unmet need for influenza prevention in a large at-risk population and Phase II results were very promising. We believe MK 1406 has greater than $5 billion in revenue potential and can be a meaningful driver of growth later this decade and through the next. We're excited to welcome the Cidara team to our company and look forward to advancing this novel preventative antiviral agent.

Today, our business is anchored by an important set of commercial products that address critical unmet needs. We're also executing on the transformation of our portfolio with initial launches from over 20 potential new growth drivers to have the promise to advance the practice of medicine and change patient lives. Ten of these programs could be substantially clinically derisked over the next 2 years and represent the majority of our $70 billion of nonrisk-adjusted commercial opportunity by the mid-2030s.

And our long-term outlook is further bolstered by the strong growth we expect in our Animal Health business by the many early phase programs that will enter Phase I in the near term and through additional potential science-led disciplined and value-enhancing business development. We're entering a particularly robust period of first-time Phase III data readouts for novel candidates. In 2026, these include islatravir combined with lenacapavir, potentially the first once-weekly oil treatment regimen for people living with HIV. MK-3000, potentially the first new mechanism of action in 2 decades for patients with certain retinal diseases. And torsokibar, where we expect to see Phase III results in ulcerative colitis as well as Phase II data in other autoimmune diseases.

There is an even richer array of expected readouts in 2027 and including Phase III results for SAC TMT, which we believe is a differentiated Trop2 ADC. For IDXD, our B7-H3 antibody drug conjugate being studied in small cell lung cancer and other tumor types for NK-1406 as well as for a number of other important programs. In summary, we're successfully executing multiple product launches, making significant clinical advancements and augmenting our pipeline with strategic business development. We're also making the necessary investments that will sustain our success over the long term. Our progress and momentum positions us to continue delivering on our purpose for patients and create durable value for shareholders.

I want to recognize and thank our global teams for their commitment. While there is more to do, the actions taken, the progress we've made and our continued disciplined execution provide me with strong confidence that we're well positioned for our next chapter of success. With that, I'll turn the call over to Caroline.

Thank you, Rob. Good morning. As Rob noted, in 2025, we made meaningful progress in benefiting patients and customers around the world with our portfolio of innovative medicines and vaccines. Our business delivered growth driven by continued strength in oncology and Animal Health as well as increasing contributions from new product launches. These results demonstrate the enduring strength of our business and give us confidence in our outlook as we enter a period with many new launches. Our commercial and operational execution enable us to invest in discovering, developing and launching the next generation of innovations, which will drive long-term value for patients, customers and shareholders. .

Now turning to our fourth quarter results. Total company revenues were $16.4 billion, an increase of 5% or 4% excluding the impact of foreign exchange. The following revenue comments will be on an ex-exchange basis. In oncology, sales of the KEYTRUDA family of products, which includes KEYTRUDA and KEYTRUDA Q increased 5% to $8.4 billion, with global growth driven by robust uptake in earlier-stage cancers and strong demand from metastatic indications, utilization in tumors that primarily affects women, including breast, cervical and endometrial cancers, continues to be a key contributor to growth.

In addition, we saw increased use of KEYTRUDA in combination with Padcev in locally advanced or metastatic urothelial cancer. In the U.S., growth was negatively impacted by approximately $200 million due to the timing of purchases. We are pleased with the positive provider feedback following the recent launch of KEYTRUDA QLEX. As expected, sales in the quarter were $35 million. We look forward to having a greater impact on patients and health care systems following implementation of a permanent J code in the U.S., which we continue to expect to occur in the beginning of April. Our broader oncology portfolios achieved another quarter of strong growth. Notably, Welly rec sales increased 37% to $220 million, predominantly driven by increased use in certain patients with previously treated advanced renal cell carcinoma in the U.S. as well as continued uptake from ongoing launches in certain international markets.

We look forward to potentially reaching more patients with renal cell carcinoma, following positive data from the Light Spot 11 and 22 studies. In vaccines, GARDASIL sales were $1 billion, a decrease of 35% driven by lower demand in China and Japan. Other international markets grew 8%, benefiting from the timing of purchases. In the U.S., sales grew 7%, largely due to price. In pneumococo, the Capexes launch continues to progress well, with sales of $279 million, driven by demand from both retail pharmacies and nonretail customers, including uptake from increased seasonal immunization activity in the U.S.

In RSV, Inflonzia sales were $21 million. Initial uptake has been constrained by a lower-than-expected infant immunization rate coupled with high levels of total RSV monoclonal antibody inventory in the market. In cardiometabolic and respiratory, WINREVAIR continues to have a positive impact for patients with pulmonary arterial hypertension. Global sales was $467 million, a reflection of the continued strong demand for this important treatment. In the U.S., more than 1,500 new patients received a prescription and over 27,000 total prescriptions were dispensed.

We also saw an increase in the proportion of patients whose background therapies do not include a prostacyclin. Outside the U.S., we continue to progress with securing approvals and reimbursement. We are excited to build upon the successful U.S. launch of otuver, a maintenance treatment for adults with COPD with a novel mechanism of action. In the quarter, sales were $178 million, reflecting revenues following the acquisition of Verona on October 7. We delivered strong growth in new patient starts and total patients treated. We also saw physicians prescribe Otuver to more of their patients and an increase in the total number of prescribing physicians.

As a reminder, we expect seasonality in the early part of the year as Medicare deductibles are reset. We are making investments to maximize the ongoing launch in the U.S. and look forward to benefiting more adult patients with COPD. Our Animal Health business delivered another quarter of strong growth, with sales increasing 6%. Livestock sales grew 9%, driven by higher demand across all species. Companion animal sales were flat as growth from new product launches was offset by a reduction in vet visits. I will now walk you through the remainder of our P&L, and my comments will be on a non-GAAP basis.

Gross margin was 79.7%, a decrease of 1.1 percentage points due to higher inventory reserves, partially offset by favorable product mix. Operating expenses decreased to $6.8 billion, a charge of $150 million related to an agreement with Dr. Falk Pharma to acquire sole global rights to MK-8690 was lower than the $700 million in business development charges a year ago. Excluding these charges, operating expenses were flat reflecting an increase in investments in support of our innovative pipeline and key growth drivers offset by the benefits of our multiyear optimization initiative.

Other expense was $226 million. Our tax rate was 15.4%. Taken together, earnings per share were $2.04. Now turning to our 2026 non-GAAP guidance. We expect revenue to be between $65.5 billion and $67 billion representing growth of 1% to 3%, including a positive impact from foreign exchange of approximately 1 percentage point using mid-January rates. Our gross margin assumption is approximately 82%. Operating expenses are assumed to be between $35.9 billion and $36.9 billion which includes a onetime charge of approximately $9 billion related to the acquisition of Cidara.

As a reminder, our guidance does not assume additional significant potential business development transactions. Other expense of approximately $1.3 billion includes financing costs for Cidara and Verona. We assume a full year tax rate between 23.5% and 24.5%, which reflects the nontax deductible onetime charge for Cidara. We assume approximately 2.48 billion shares outstanding. Taken together, we expect EPS of $5 to $5.15 with a midpoint of $5.08, including a positive impact from foreign exchange of approximately $0.10 using mid-January rates.

Excluding approximately $3.65 per share related to the upfront charge for the acquisition of Cidara as well as $0.30 per share of ongoing costs to advance MK-1406 and finesta transaction, our midpoint would be $9.03. As you consider your models, there are a few items to keep in mind. We expect to deliver growth in 2026 driven by increasing contributions from our new launches as well as continued strength in oncology and Animal Health, despite a headwind of approximately $2.5 billion from generic competition, IRA price setting and the restructured agreement for Caselli go. Generic competition primarily impacts the Januvia family of products, Radeon and deficit.

We also expect significantly lower sales of Lagebrio due to continued soft demand some growth, including new product launches and our robust pipeline. And with the goal of increasing it over time. Business development remains a high priority. We are well positioned to pursue additional transactions when science and value align. Our guidance assumes approximately $3 billion of share repurchases, and we remain committed to not having excess cash build on the balance sheet.

To conclude, we entered 2026 with confidence in the outlook for our business, driven by global demand for our innovative medicines and vaccines, including the exciting progress of our many launches and upcoming clinical milestones from our promising pipeline. We maintain our longstanding commitment to bringing forward medically significant innovations that will enable us to deliver value to patients, customers and shareholders well into the future. With that, I'd now like to turn the call over to Dean.

Thank you, Caroline. Good morning, everyone. Progress continues across programs spanning multiple therapeutic areas. Today, I will provide updates across cardiometabolic and respiratory, infectious disease and oncology programs, then conclude with a summary of highlights from 2025 and upcoming milestones for this year.

Starting with advancements across our cardiometabolic and respiratory pipeline and programs, enlicitide, our investigational oral PCSK9 inhibitor has been designed to deliver antibody-like efficacy while offering a simple, once-daily oral treatment option with the potential to help address the CV epidemic.

Data from 2 Phase III studies evaluating elicitide for the treatment of adults with elevated LDL cholesterol were presented at the American Heart Association Scientific Sessions in November. In both the core reef lipid study, which included a broad population of adults with or at risk for atherosclerotic cardiovascular disease on background lipid-lowering therapies or with statin intolerant, and the Coral Reef AFH study in adults with Familia, heterozygose and hypercholesterolemia, enlicopide demonstrated statistically significant sustained reductions in multiple atherogenic factors, including LDL-C, Apo B, non-HDL-C and Lp(a).

The findings from the core reef HEFH were published in the Journal of the American Medical Association and from core reef lipids have been accepted to the New England Journal of Medicine. In addition, positive results of the third Phase III trial core reef add-on, evaluating elicitide comparing to other oral nonstatin therapies in adults with hypercholesterolemia and treated with a statin will be presented at the American College of Cardiology Congress in March.

The Phase III CORE REIT outcome study is ongoing and fully enrolled. For vinrevere, we continue to make progress on our global regulatory strategy. Last month, the European Commission approved an expanded indication in adults with pulmonary arterial hypertension with WHO functional Class II, III and IV based on the Phase III ZENITH study. We are continuing to evaluate vinrevere in an additional indication associated with progressive vascular remodeling and resistance. The Phase II Cadence study met its primary endpoint, achieving statistically significant and clinically meaningful reduction of pulmonary vascular resistance compared to placebo in adults with combined post and precapillary pulmonary hypertension due to heart failure with preserved ejection fraction.

These findings support proof of concept, which will inform a Phase III program in this population. Detailed results will also be presented at the American College of Cardiology Congress in March. Next, infectious disease. Last month, we completed the acquisition of Cidara Therapeutics. The scale of the ongoing seasonal flu outbreak in the Northern Hemisphere reinforces the threat posed by Influenza, the corresponding burden on health care systems and importantly, the need for improved prevention strategy, specifically for those individuals at high risk of serious complications.

The Phase III ANCHOR study evaluating MK-1406, a potentially first-in-class long-acting preventative strain agnostic antiviral with a differentiated mechanism of action, completed enrollment in November in the Northern Hemisphere. In parallel, we will enroll participants in the Southern hemisphere to ensure the collection of a robust data set spanning a broad patient population, including adults who are immunocompromised and to capture additional data on diverse circulating strains.

Furthermore, it is also important for the study to encompass those who have been vaccinated against the flu and those who have not. Turning to HIV. In November, we announced positive top line results for our investigational once-daily, single-tablet 2-drug regimen of doravirine and ezlosevir and next-generation nucleoside analog leveraging translocation inhibition from a Phase III study in previously untreated adults with HIV 1 infection. This is the first 2-drug regimen without an HIV integrated strand transfer inhibitor to demonstrate noninferior efficacy and safety versus the broadly used 3-drug entry-based regimen, Biktarvy. Based on its potent antiviral properties and barrier to resistance, it is our ambition that islotevir will serve as a novel anchor medicine across multiple 2-drug treatment regimens providing new daily and weekly options for people living with HIV.

Detailed results will be presented at an upcoming medical congress.

Moving to oncology. Data continue to demonstrate KEYTRUDA's impact in treating a wide spectrum of cancers. In bladder cancer, there were 2 recent notable developments. First, the FDA approved KEYTRUDA and KEYTRUDA Culex each in combination with padcef as neoadjuvant treatment and continued after cystectomy as adjuvant treatment for adults with muscle invasive bladder cancer who are ineligible for cisplatin containing chemotherapy based on Phase III KEYNOTE-905 trial.

This is the first PD-1 inhibitor plus antibody-drug conjugate regimen approved for this population. Second, we announced positive top line results from the Phase III KEYNOTE-B15 study. The combination of KEYTRUDA plus padcev, given as neoadjuvant and adjuvant treatment demonstrated statistically significant and clinically meaningful improvements in event-free survival, overall survival and pathologic complete response rates versus neoadjuvant chemotherapy and surgery.

This is the first and only perioperative immunotherapy plus ADC regimen shown to extend survival for cisplatin eligible patients with muscle invasive bladder cancer. Detailed results will be presented later this month at the ASCO Gentiourinary Cancer Symposium. Together, these regimens have the potential to offer patients with muscle invasive bladder cancer who are either eligible or ineligible for cisplatin chemotherapy, a KEYTRUDA-based option. Three additional Phase III studies are ongoing evaluating KEYTRUDA across different stages of bladder cancer, including KEYNOTE-992, KEYNOTE-866 and Keynote-676.

In collaboration with Moderna, we recently announced 5-year follow-up data for the Phase IIb Keynote-942 study evaluating intersabaran autogene, an individualized neoantigen therapy candidate in combination with KEYTRUDA in patients with high-risk Stage III or IV melanoma following complete resection. In the follow-up analysis, the study demonstrated a sustained improvement in recurrence-free survival with a 49% reduction in the risk of recurrence or death compared to KEYTRUDA alone, building on the previously announced primary and 3-year analysis from the trial.

The Phase III INTERPATH-001 trial in adjuvant melanoma is ongoing and fully enrolled. In November, the European Commission approved a subcutaneous injection of pembrolizumab and veraloranadase alpha market in the EU as KEYTRUDA SC for use in all 33 KEYTRUDA indications for adult patients. It is the first and only subcutaneous immune checkpoint inhibitor in Europe, that can be administered in 1 minute, every 3 weeks or in 2 minutes every 6 weeks. The availability of more rapid subcutaneous pembrolizumab administration is being integrated into our clinical development programs.

CANALI-007, a Phase III study evaluating colderasib an investigational oral selective KRASG12C inhibitor in combination with KEYTRUDA culex for the first-line treatment of patients with KRAS G12C mutant advanced or metastatic nonsquamous non-small cell lung cancer. In December, at the American Society of Hematology Annual Meeting, we highlighted progress across our hematology pipeline with positive data spanning multiple candidates, including MK-1045, an investigation of CD19 CD3 T cell engager in adult with relapsed or refractory B-cell acute lymphoblastic leukemia.

Naphtabrutineb, an investigational noncovalent BTK inhibitor in patients with chronic lymphocytic leukemia or small lymphocytic lymphoma, ambomademsta, an investigational LSD1 inhibitor in patients with polycythemia vera who are resistant or intolerant to cytoreductive therapy. In addition, there are 2 ongoing Phase III studies evaluating modest in essential thrombocythemia and orphan disease. 2025 was marked by significant pipeline progress, including positive data announced from 18 Phase III trials and the initiation of 21 Phase III trials spanning cardiometabolic and respiratory, immunology, infectious disease, oncology and ophthalmology. We also secured regulatory approvals across therapeutic areas, including in oncology, KEYTRUDA CLEC and additional KEYTRUDA-based regimen, including in patients with cisplatin-ineligible MIBC and locally advanced head and neck squamous cell carcinoma.

In infectious disease emplanzia are long-acting monoclonal antibody for the prevention of respiratory syntictal virus, lower respiratory tract disease in infants born during or entering their first RSV season. And in cardiovascular, the label update for vinrevere River in PAH. Finally, we continue to deliver on our 1 pipeline strategy by leveraging our clinical expertise and robust business development capabilities. The acquisition of Verona Pharma and Cidara Therapeutics further strengthen our pipeline and bring forward promising candidates with the potential to serve areas of significant unmet patient need.

Building on our momentum in 2025, we anticipate a series of milestones across multiple therapeutic areas in the coming months, including in oncology, the February 20 PDUFA date for certain patients with platinum-resistant recurrent ovarian cancer based on the KEYNOTE-B96 trial. Presentation of detailed findings at ASCO GU 4, Welareg, our first-in-class oral HIF-2 alpha inhibitor across adjuvant and certain types of advanced renal cell carcinoma based on the Phase III Light Park 11 and 22 trials and for KINO B15 and cisplatin eligible patients with MIBC.

In HIV, the April 28 PDUFA date for doravirine and islatravir, a once daily oral 2-drug treatment regimen and top line data from the Phase III ISL1 and 2 trials evaluating izlogivir and lenacapavir as a once-weekly oral 2-drug treatment regimen in collaboration with Gilead. In cardiometabolic and respiratory, the presentation of detailed results at ACC in March for vinerevere from the Phase II Cadence study in a subset of pulmonary hypertension due to left heart disease. And for elicitide from the Phase III Core REF add-on trial.

In immunology, data for Tuliocopar, our TL1A inhibitor based on the Phase III ATLAS UC trial in ulcerative colitis and Phase II ATHENA study in FSC ILD. Finally, in ophthalmology, data from the Phase III Brunella study of MK 3000 our novel win agonist being evaluated in diabetic macular edema and the Phase II RORA study of MK-8748 are potential first-in-class tie-2 agonist VEGF inhibitor being evaluated for the treatment of certain retinal disputes.

We continue to advance our diversified pipeline with a focus on executing with speed and rigor I look forward to providing further updates through 2026. And now I turn the call back to Peter.

Thank you, Dean. Surely we're now ready for Q&A. We have a hard stop today at 10:00 a.m. So I'd like to request that analysts limit themselves to 1 question, please.

[Operator Instructions] Our first question comes from Mohit Bansal with Wells Fargo.

And congrats on all the pipeline progress. Maybe if you can double-click on the CD388 asset and potential for interim here. So the flu season appears to be strong this season. So it would seem like that event rates may be occurring ahead of the plan in the ANCHOR trial. But would love to understand your thoughts around running the full trial? Is it based on generating robust data across 2 geographies, 2 seasons or anything you're seeing from the event based point of view ongoing trial? And should we expect an interim disclosure in March or after March or not?

This is Dean. I do think your point about the relatively severe season, especially for many of us in the Northeast for the flu demonstrates how important this small you could be. We have completed enrollment in the Northern Hemisphere. I want to emphasize, as I said in the prepared, we are in parallel recruiting in this southern hemisphere -- this is an event-driven trial. I want to have the right trial size, I want the powering of the assumptions. But most importantly, I need to make sure that I have strong data throughout a series of subpopulations that will be important for the future label. So at this time, we have not spoken communication plans following IA, but we're excited about this first-in-class once per season strain agnostic antiviral agent, which I think will have increasing need as the year go by.

Our next question comes from Akash Tewari with Jefferies.

Are there any plans to explore that GMT in a first-line and CLC setting in PD-1 low expressing patients or head-to-head against the KEYNOTE-189 regimen given some of the emerging data you're seeing out of China. I'm kind of curious why your coq2 development strategy seems to be relatively conservative versus what AstraZeneca and Daiichi are exploring, especially if you have a differentiated asset?

Thank you very much for that question. So as we've said repeatedly, we think this is a work horse ADC. We also think that I look at the HER2 field and -- so there and I go, you just changed the linker and the payload and all of a sudden, you have very different readouts from an antibody drug conjugate. And so we think sec TMT has a potential to be best-in-class TROP2 directed ADCs. What I would say when you talk about the ambition, I mean, we have 16 Phase III studies, 11 that we view our first-in-class, the other 5 are differentiated.

So I just I think we're very ambitious with our SAC TMT program. In relationship to the specific question in relationship to non-small cell lung differentiated approaches to others. But most important, we also have it in tissue tugs and tumor types where we are hoping to be first. So I would challenge a little bit the characterization that we do not have a robust and ambitious program. We have 16 Phase III studies.

Thank you Akash.

Our next question comes from Alex Hammond with Wolf Research.

So consensus currently anticipates KEYTRUDA's U.S. LOE to occur in '28. However, Merck SEC filings suggest potential for 2 additional patents that expire in '29. So I guess, how should we model the IP run rate for KEYTRUDA? And how should we think about the timing associated with QX ramp prior to KEYTRUDA IV biosimilar introduction?

Yes. Thanks for the question. As you look at the intellectual property situation for KEYTRUDA. There was -- when the original invention was filed for approval with the patent office, there were actually 4 patents that made up the patent estate that was the original innovation. One of those is the compound patent which expires December of 2028. 2 of those, one a method of making patent actually is extended out to May of 2029. And the second one, a method of use patent goes out to November of 2029. And so as we looked at this initially, we were conservative in our assumptions and always based off the compound patent, always though with the intent that we would defend the entire patent estate.

I think what has evolved over time is that this case law has emerged our confidence that we will be able to defend those additional 2 patents has grown. And thus, there is a potential that you're going to see protection actually make it through either May or November of 2029. For planning purposes, we continue to assume 2028 because I think that's a conservative assumption, and we'll have to see where it goes. And I would also remind you that we do face the IRA as of the beginning of 2029.

As we think about the QX adoption, we continue to think we're going to see 30% to 40% adopted as you get out to 2028 and we will drive that as high as we can. And as you know, we have priced this to drive for the adoption from KEYTRUDA IV to QLC. So that will continue. That strategy is underway. And frankly, whether it's '28 to '29 does not change the strategy we're following.

Next question pls.

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

I want to touch on the HIV data that you were discussing. Can you just contextualize the importance of a dual regimen versus the standard of care bactgravir of atarvy? And kind of what's the feedback in more broadly unmet need for a dual regimen versus the standard of care triple.

Yes. So thank you very much for that question. So as you highlight, we're really excited about is LotiVer because we really think it's a next-generation cleoside analog. So leverage is a unique mechanism of translocation inhibition that gives it high potency and high degree of resistance. In relationship to 2 drugs and 3 drugs, there have been always a need for different options you see it already, there is a 2-drug regimen out there in relationship to the 3 drugs, and there have been considerable switching that occurs in this patient population just as a general rule. So the ability to send a different sort of repertoire of compounds, especially if you can spare the integrase would be potentially very important for some people, that's often viewed in light of metabolic and long-term issues with HIV treatment.

So I think there will be an excitement of having a 2-drug combo without an insti backbone. Equally important, I just want to make sure is we're driving a 2-drug regimen for the first Q weekly offering and we have won with our partner, Gilead, and we have another 1 with Uline. So I think all of those, that 2 drug for daily, but also that 2 drug for weekly is something -- there's no weekly 3 drug or 2 drugs.

So we think there will be an important opportunity for patients to experience a 2-weekly option. And finally, we have a q monthly prep or we don't -- there is no other Q monthly oral prep. Although it's not islotivir, it's a related compound, which is MK8527.

Next question comes from Steve Scala with TD Cowen.

A bigger picture question for Rob. But in 2025, Merck achieved the sales guidance it provided to start the year and you dealt with the GARDASIL pressures all year long. But in any year for any company, there will be some challenges. So this is likely to be more the rule rather than the exception. And Merck has some growth products, too. So in what might be a typical year, Merck grew minimally. And in 2026, you are again looking for minimal top line growth with the KEYTRUDA LOE still a couple of years off. .

So the question is, is this what we should expect from Merck going forward, a company that grows modestly in good times and significantly pressured in less good times or can Merck achieve sustainable, strong sales growth in the decade ahead despite what will be inevitable challenges?

Yes. No, Steve, I appreciate the question. I would just reemphasize, as we look forward, -- and I think what you're hearing in our confidence and why we think, over time, we will be a strong growing company. So I'm not sure I agree with your characterization that we will be a modest growing company in every year or less depending on what happens that's, I think, taking a 1-year context.

But if you look over the longer term, that $70 billion we have of potential is significant when you think that, that is -- as you look at it, it's more than double what KEYTRUDA will be at its consensus peak in '28 of $35 billion. And importantly, $20 billion higher than where we were and driven by probably the broadest and widest pipeline we've had in here.

So our belief in our ability to have sustainable growth once we get post the LOE is as high as it's ever been. And we're not done. We have early-stage pipeline assets that we believe we'll be reading out in the next 2 years and will allow us to continue to bring some of those assets into this period, plus additional business development -- and as you know, none of this includes the Animal Health business, which we expect to more than double out to the mid-2030s as well as the base of KEYTRUDA over time.

So I think that's important to understand. And the other thing I'd highlight of the $70 billion, we're going to derisk substantially all of that by the time we get to the end of 2027. So you'll know the portfolio that's going to drive our growth into the next decade by the time you get out to 2027. And that's, I think, also important as people start to want clarity on the long-term future.

The last thing I would just add, if you look at 2025 as an example, what we saw in the quarter is really a strong growth profile. And as you look forward, if you adjust for the LOE period we had that we've noted with JANUVIA, with deficit, with Bridion plus LaGebrIo and Cosala. We actually are giving guidance of growth in, I think, the 4% to 7% or roughly 5% to 8% range over time, which actually is pretty strong growth. And I think that is more of the focus. What is the sustainable strategic growth of those assets long term, not what are the onetime nonstrategic LOEs we're facing this year.

Great. Next question please.

Our next question comes from James Shin with Deutsche Bank.

One for Dean. On Cadence an ACA presentation, can you help level state what we should and should not expect to win. Also, any color on which potential endpoints may be explored in the Phase III for CPC PH2?

You broke up for a little bit there. So I'll hope that I answer your questions. I think we'll provide the data from that Phase II. There's a primary endpoint, but there's also important secondary endpoints that will also be provided. In relationship to what you've just asked in terms of the a future Phase II that we've discussed. We're in the middle of those discussions with the FDA. And I think just as a general sort of statement. .

Generally, we'll have to think about things like functional activity. You often have clinical events that will be important. There'll be biomarkers, but it will be very important to align with the FDA because in this patient population, which should be an orphan indication patient population, we'll have to level set as to how one thinks about the outcomes and the primary secondary end points.

But we're eager to provide that data at ACC, and we're continuing to have discussions with the FDA as we define essentially a new population that we're going to target with this drug. And so some of the questions you had in terms of the endpoints are things that are important discussions right now.

Our next question comes from Carter Gould with Cantor.

Another 1 for Dean. I recognize on your TL1A, the near-term focus is on Atlas UC. At the same time, we're seeing the insurance til23 players step up sort of all sorts of combinations and as well as multispecifics rapidly intensify their efforts with pretty sizable partnerships. So again, recognizing Atlas you see is the eastern forgo focus, but how does Merck think about the importance and speed it may need to pursue combinations on the back of those data later this year?

Yes. So I love your question just so that we all level set. Essentially in this field, TNF and IL-23 has dominated. And the big question is whether there's a third node or a third class which is TL1A And our ambition is to be the first and best-in-class TL1A, we're studying it in 6 diseases. But as you highlight, it is the ulcerative colitis and the Crohn's disease that's coming up very quickly. If those are successful, like in every immunology indication, the question will become patient populations, other diseases. But then people will start talking about combinability. They'll talk about combinability in terms of 2 separate antibodies, I'll talk about by specifics and increasingly, they'll talk about orals.

And I can assure you that, that concept of we intend to be first and best but also that we have a robust plan for being next is well in line, but that's probably something that I don't want to say on a public call at this time.

Our next question comes from Geoff Meacham with Citi.

Another 1 on vinrevere. So you're about to hit 2 years on the market. Can you guys speak to trends on duration of therapy or maybe a real-world safety tolerability. And if anything, is different versus Phase III? And then beyond cadence, how are you guys thinking about related pulmonology indications, just where the mechanism may have an impact?

So I'll start. There were a lot of questions from a scientific standpoint, but I just want to emphasize that vinrevier is reshaping the standard of care in PAH. It's doing it because it is a differentiated pathway and a molecule. All the other drugs, you would look at this and you would say they are classic vasodilators. This is a drug that gets to the underlying biology through the genetics. And the way that I would actually begin to think about Wind River and what Windrevir may be doing to right heart failure and PAH is similar to what Merck showed for ACE inhibitors back in the day in relationship to left heart failure. .

So when you ask me that question, I'm sitting there like I think we are already reshaping the standard of care. I would imagine guidelines, will be coming out and will be shaped by that clinical data. In relationship to adverse effects and long-term treatment, I actually just came from a tour of -- in Texas of sites, and they're quite bullish on not only the drug but also the sustainability and the concept that all of a sudden, they began in their minds talking about cardiac blunting cardiac remodeling. So that's with this.

We are advancing in relationship to heart failure as the previous question did in cadence. But I love your question because much of it is focused on what is the stress on the right heart. And as you point out, there could be pulmonary indications where you get pulmonary hypertension that we have to think carefully about where and when to use this drug, but there are investigators who pose that question to us. And they also pose the question that, when you look at PAH, there is different patient populations, but quite a number of them have connective tissue disorders. So they immediately go connective tissue disorders are also related to pulmonary fibrosis and other pulmonary disease.

So those are discussions and those are things that people are exploring as we speak, and we will see some of those data and that will guide our decisions in the future.

And maybe, Jeff, I would just add, if you look at where we are today, just to give you a sense of the breadth, we have over 110,000 prescriptions, which have been dispensed. There's now over 9,100 patients who have started therapy. And if you look, our overall compliance continues to be quite high. We are seeing a slow increasing in the rate of discontinuation, but frankly, it's generally in line with what are slightly better than what we're seeing with other PAH products.

And so we feel good about where that is. And then on the safety side, we continue to be very confident in the safety profile, and it's consistent with label. And I'd also point out now as you've seen across what we've reported with Hyperion as well as with Xenith and then looking back at Stellar and then what we've also brought forward in some of the long-term data from Soteria across all of those, the safety profile is very consistent. And so we feel very good about where we are with compliance, where we are with safety, everything is tracking as you would expect.

Our next question comes from Umer Raffat with Evercore. .

Rob, I'm trying to balance today the fact that you're laying out a $70 billion non-risk-adjusted revenue opportunity for the current pipeline as well as all the prior track record sort of $5 billion revenue opportunities acquired for about $10 billion or under versus the large deal that's been in the press lately. I'm just trying to balance it all.

Yes, Umer, I appreciate the question. Obviously, we don't comment or speculate on market rumors. If you look at our BD strategy and where we are, I would start by just pointing to the fact that as you highlight, with the $70 billion of commercial potential we've highlighted and the fact that, that's $20 billion better than where we were a year ago, I am very proud of the progress we're making, and it's why my confidence is so high.

And obviously, we still have more time to continue to do more, both in terms of advancing our early-stage pipeline, which we think can have impact in this area as well as adding additional assets through BD, which we've indicated, we are continuing to be very interested in doing.

If you look at where we're focused, it's where we've always said, which is for opportunities where we see significant scientific advancement addressing an unmet need aligned with our strategy and importantly, where we see value creation. When we see those things aligned, we move, but we've always done it with discipline. You've seen that across all the deals we've done, and we will continue to do so as we move forward. Obviously, looking in the area up to $15 billion is our sweet spot. But as we've also highlighted, for the right scientific deal, we'd go bigger but using the same methods, the same discipline, the same approach we've used across everything we've done to date.

Our next question comes from Chris Schott with JPMorgan.

Just on MK 3000, it's obviously a new mechanism, but also listed as 1 of your key near-term products for derisking that $70 billion. Can you just help us that stage a little bit in terms of what gives you such confidence in this asset? And how large of an opportunity you see assuming we get some positive data this year?

I'll let Al speak about how big the opportunity is, but diabetic macular edema and wet age-related, I'm sorry, AMD and DME are really important indications. And have important molecules out there. They are all based on vascular endothelial growth factor. This is the first pathway that is based on the genetics of vascular stability in the eye and we have the first agonistic antibody towards that.

So we're really interested in seeing whether this mechanism will work because it will be the first non vascular endothelial growth factor that's going to be driving to the indications of age-related macular degeneration and diabetic macular edema. Just historically, up to 40% individuals have suboptimal response to VEGF. We think that, that's an important opportunity for us. But I also want to just make sure that people recognize that even in patients who have responses to vascular endothelial growth factor, MK-3000 could also be part of the repertoire with which they're treated as well.

And maybe just to add, Chris, to some thoughts here on market potential. As you know, if you look at what you see with diabetic macular edema, there is about 1.6 million people with DME today in the United States. It's the leading cause of vision loss due to diabetes. And I'd add, you've got with wet AMD, an additional 1.5 million patients in the United States. So if you look across the total of that market, that's about a $15 billion market. And as Dean just pointed out, 30% to 40% of patients are only partially or not responsive at all to anti-VEGF therapy.

So the opportunity to bring a new mechanism into this space is quite meaningful. And the only thing I'd add is while you're speaking about MK 3000 in DME now, we are also studying it in wet AMD and RVO and importantly, we have NK-8748, which is the novel bispecific antibody that agonizes Tie2 while inhibiting VEGF. We're very excited about that. It's really the combination of both of those assets that why we believe this is a greater than $5 billion opportunity as we look forward. And I would say it's probably one of the more underappreciated areas, I think, from the Street and what this really can be.

Great. Thanks, Chris. We're going to try and squeeze in 1 more question, please, Shirley?

Our question comes from Daina Graybosch with Leerink Partners.

Thanks for the question. I'll finish with the SAC TMT 1. I wonder if you could update us on your biomarker strategy, given a TROP2 ADC competitor recently announced or changing some primary endpoints of Phase III to narrow and top-2 expressers. I know you guys are cooking something and will we see that in any of the Phase IIIs?

Yes. I would just kind of answered the question the way that I answered it a few years ago, which is we think that SAC TMT has an ability to be best-in-class but it's also important to put it in the right tumor types and to have the right strategy for -- in those tumor types. There will be tumor types where we do not believe that a biomarker will be needed. But we also believe that there are places where that biomarker will be needed, especially if you look at how good the comparator you have to go against.

So a lot of it is context dependent on the tumor, but also what other treatments are there and how high of a bar you have to beat to beat that comparator.

Great. Thank you, Dana, and thank you all for your time and attention this morning. If you have any follow-ups, please reach out to the IR team. Take care.

Thank you. This concludes today's conference. We thank you for your participation. At this time, you may disconnect your lines.

Good afternoon, everybody. I'm Chris Schott at JPMorgan, and it's my pleasure to be introducing Merck today. From the company, we have CEO, Rob Davis; as well as Dean Li, President of Merck Research Labs. So Rob and Dean will say a lot to go through. Happy New Year, and looking forward to the presentation. Thank you.

Thanks, Chris. Appreciate it. All right. Good afternoon, everybody. I appreciate you spending some time with us this afternoon. Before I get started, just real quickly, I'd remind you that we do have forward-looking statements being made, and I'd point you to our language on our website, if you'd like more information about that.

If you look at where we are as Merck, I'm pleased to say we are in a moment where we're really starting to see our transformation underway. We've been executing on our strategy, and I can tell you, we're in a position now where I think we are well positioned for success, whether it's advancing our diverse and expansive late-stage pipeline. We now have 80 Phase III studies underway, we'll talk a little bit about some of those in a moment. We're commercially succeeding in launching the first wave of the next 20 growth drivers we have of the company. And we're augmenting that through business development.

The success and progress we've had to date now puts us in a position where we see visibility to more than $70 billion of commercial opportunity as we look out to the mid-2030s. And importantly, over the next 2 years, we're going to meaningfully, from a clinical perspective, derisk that opportunity, which we'll talk about. So as we sit here today, my confidence is high. It continues to grow. And we're really in a position to be set up for the next wave of success as we look at Merck going forward.

But before we look to longer term, maybe just take a moment and focus on 2025, where we have had many accomplishments. And I'll look both from a clinical and regulatory perspective, but maybe starting first with significant approvals. Obviously, we're excited that in the third quarter, we got approval of QLEX, which is our subcutaneous form of KEYTRUDA, an administration under the skin that we can do in as little as 1 minute. Very important innovation for patients. And in ENFLONSIA, which is our infant RSV vaccine. It's the only vaccine that you can basically administer regardless of weight in a single dose. Something we're very excited about.

In our Animal Health business, where we don't talk as much, we're actually also seeing a wave of new product introductions, one of which we're very excited about, NUMELVI, which we just recently had approved in Europe, and we will get approval early in 2026 in the United States for a next-generation JAK inhibitor for atopic dermatitis for animals. This is a huge market in the animal health space and one we are very excited about what the next generation product we're bringing and one that we will continue to focus on as we move forward.

We also are delivering key positive data readouts. I'd focus you on enlicitide. During 2025, we read out 3 clinical studies for enlicitide. This is our oral PCSK9, a drug we're very excited about. Given the fact that this is an oral pill, simple to take, we're going to make it simple to access at affordable prices, we really have the opportunity to democratize care for patients dealing with the need to lower LDL-C, and it's something that we're very focused on as an opportunity not only in the United States but globally.

In the infectious disease space, we have important data readouts in both HIV PrEP as well as in multiple readouts in treatment with islatravir, which is really becoming, we believe, the next anchor medicine in HIV. And I'm happy to say we're actually going to have this April, hopefully, the first approval with islatravir doravirine in our once-daily treatment coming in April. So that will be the first of many to come.

We also are seeing important late-phase clinical trial initiations. I would highlight just a few of them for you, starting with sac-TMT. You might know this is our TROP2 antibody drug conjugate. We now have this antibody drug conjugate in 16 Phase III studies, 11 of which have the potential to be first in class. And this is going to be a very important area as we look forward.

In immunology with Tulisokibart, we have an important Phase IIb studies underway now looking at different opportunities beyond where we started in ulcerative glycan Crohn's, we now have 6 studies, 4 that are in Phase II, 2 that are in Phase III.

In ophthalmology, we have important studies underway now with MK3000 as well as MK8748, and I'll get more into that in a little bit, and we can jump to it on stage. But importantly, we're about ready to start anytime. I think it's imminent, Dean, a new Phase III study for MK8748, which would be a meaningful acceleration of that asset when we did the EyeBio deal.

In addition to what we're doing from a clinical perspective, we are also delivering successful new launches. We have a growing first wave of products, which are starting to contribute to the growth of the company. You can see those with WINREVAIR for pulmonary arterial hypertension, CAPVAXIVE, which is our PCV vaccine, ENFLONSIA for RSV. As I mentioned, we had QLEX, which we launched in the third quarter. And recently, we just closed and added ODIVER through the acquisition of Verona, which we brought in and we'll see the benefits of as we move into the fourth quarter, which is an important new drug in the area for patients with COPD. This is, in and of itself, a multibillion dollar opportunity we've added. So as we sit here today, we feel very good that we're starting to deliver proof points for our ability to commercially execute on the more than 20 growth drivers we have. This is just a small sampling of those, and we'll get into more of them in a moment. And importantly, we're starting to see a much more diverse and broad pipeline to drive that growth with these growth drivers as we look forward.

We've been doing business development to augment the strong pipeline we have internally with Verona, I just mentioned with Odiver, the first-in-class PDE3 PDE4 for treatment of patients facing COPD. This is the first new maintenance inhaled treatment in over 20 years in this space. It's off to a very strong start, and we're very excited about this opportunity.

And recently, we just closed on Cidara, which is -- you maybe know it is CD38. That's the way it was referred to under Cidara. We now call it MK1406. But this is a potential first-in-class, once-per-season agnostic antiviral in an important space to help high-risk patients facing the serious consequences of flu.

We have the deal we did with [indiscernible] for their oral small molecule Lp(a), and we are already looking at how can we combine this with enlicitide as a potential combination therapy for patients facing cardiovascular disease.

This all builds on the business development we've already been doing since 2021. We've now invested over $60 billion since 2021 in business development. You see the list of companies here. But importantly, we're not done. We have more to do. And I think we've shown a track record where we will move with discipline, and we will move with intention where we see scientific conviction behind an opportunity that aligns with value. We're going to continue to do that in the exact same way we've been doing it to date.

As you look at all of this, what this starts to pull together is the success we've had since 2021 in focusing on building out our pipeline. And I'm happy to say it's now becoming a reality. We have the most diverse pipeline in terms of both therapeutic areas and modalities. And I think legally, I have to say in recent history, but I would tell you it's probably at any time in Merck's history. And importantly, based on what we're seeing, we now have visibility, as I mentioned, to commercial opportunities based on that success through new growth drivers that will be more than double what KEYTRUDA will be at its peak sales based on consensus estimates in 2028.

Importantly, that $70 billion is $20 billion more than where we were this time last year due to what we've added to business development and our increasing confidence in some of our internal assets. And I would point out that while we talk about $70 billion by mid-2030s, we now believe we're going to achieve $50 billion by the early 2030s.

So the progress is significant. Our confidence is high. And probably the most important point, and I'll come to it in just a moment, we're going to have the opportunity to materially derisk a big portion of this over the next 2 years.

If you look at what makes up this $70 billion, we often get asked, what are the drivers? There are really 10 programs, 10 key programs that make up 70% of this $70 billion. If you look at them, all of them have blockbuster potential. We see them as multibillion-dollar opportunities. Nearly all of them are first-in-class molecules. Four of the 10 are either already launched or have positive Phase III data and the rest will have important Phase III readouts over the next 12 to 18 months. Two of them have received the commissioner's National prioritization voucher and that goes for enlicitide and our sac-TMT offering. So we have the opportunity to not only deliver a pipeline, but to continue to accelerate our ability to bring that forward. That's why we have the confidence I'm talking about.

If you look forward, in addition to the products we talked about which were either launched or about to launch with elicitide on the base, by the end of 2026, we will be in a position that we will have derisked clinically $35 billion of the $70 billion through positive Phase III readouts we would expect to see. We will cover substantially all of the $70 billion by the time we get to the end of 2027 through what we have with sac-TMT, MK1406 and our IDXD.

So as we sit here today, we feel very good about what we have. There's always more to do, but I'm really proud of the team. I'm proud of Dean and our commercial colleagues, our manufacturing colleagues. They have delivered. They continue to deliver and I have every confidence we will continue to do so.

As you look forward into 2026 through the remainder of this year, we have some really important data readouts. We have ezlotivir in combination with linacapivir in a Phase III study focused on once-weekly oral for the treatment of people with HIV. This has the potential to be the first weekly oral.

With MK3000, we have a new mechanism of action, the first new mechanism of action in this space in 20 years, aimed at diabetic macular edema. We see that coming forward with a Phase III in September of 2026. Importantly, this is well ahead of when we did the deal. We've significantly accelerated this program. I already mentioned to you that we also accelerated MK8748. It's why we have such confidence in our ability to have a meaningful impact in the ophthalmology space.

And then we have Tulisokibart, where we have the first of many studies coming, but this one is the Phase III ulcerative pruritus, which will read out in August of 2026.

As you look forward to 2027, for sac-TMT, I mentioned we have 16 Phase IIIs, 11 that are potentially first-in-class. We have multiple Phase III readouts coming in 2027. And I mentioned one of those will have the CNPV voucher. For MK1406, which is previously what we called the CD38, this is the long-acting antiviral where you got with Cidara, we expect to be in a situation to have the Phase III readout there with the primary completion date of January of 2027. And then for IDXD, which is our B7-H3 antibody drug conjugate, we'll have -- this is actually being studied across multiple different tumor types, but we'll have the first Phase III readout in a very important space in small cell lung cancer coming during the year, and then we'll see more coming after that. Small cell lung cancer continues to be an area where there's really a true unmet need, and we could have one of the first real meaningful opportunities to drive innovation in that space. So as we sit here today, I feel very good about the progress we've made, we have more to do. But as we sit here today, we're executing on our strategy. We have, I mentioned, over 20 growth drivers, the first wave already here among us. We have a catalyst-rich period over the next 18 to -- 12 to 18 months. And importantly, we're delivering on our purpose. We're delivering for patients. We're delivering for unmet needs. And ultimately, if we do that, we're delivering for our company and for you, our shareholders.

So I couldn't be more confident as I sit here today. It's why we continue to talk about KEYTRUDA as more the LOE as more of a hill than a cliff. And I'm quite confident that we will be in a position at a minimum to go through a very shallow period post the LOE returning in a few years to growth. But we aspire for more. We aspire to grow through it. And my confidence we'll be able to achieve that is high. We have more to do. We're not there yet. But with the actions we've already taken, the progress we've made and the execution we've demonstrated, I'm confident we eventually will be there, and that's my hope as we look forward to the future.

So with that, maybe I'll stop, and we can jump in for Q&A. Thank you.

Maybe just to kick off the question with that hill, not a cliff comment. I think you've described the KEYTRUDA LOE is something that's very manageable. We've obviously continually been building out this pipeline. Where we sit today, how confident are you that you can manage through this 2029 through early 2030 period without a meaningful degradation in the company's earnings.

Based on what I just showed you, we're highly confident. The fact that we now have that $70 billion and that we're going to be able to be in a situation by the time we get to the end of 2027 to have clinically derisked almost all of that is very important. And I should point out, and I didn't say it in the prepared remarks, that does not include animal health. Our Animal Health business right now is one we think will double, more than double from 2024 through the mid-2030s on a story very similar. It's about a wave of new product innovation coming in that space. It doesn't include our early Phase I pipeline. We have a large number of important Phase I, late Phase I products or Phase I programs that will be reading out starting this year. It's going to accelerate as we go into '27. And many of those could potentially have impact in this window of time. And you'll see more of that as those move into Phase II, we'll start to talk more about those. And then also, it precludes further business development.

So when I look at all of those elements, my confidence that we will see it be a shallow fall followed by growth in a few years is quite high. And I would point out, we modeled it on a risk-adjusted basis. That's assuming we achieve standard industry probabilities of technical success. If you actually look at what we've done over the last 3 to 5 years, we've actually done much better than that. So if you can assume we are more successful, that is on the upside from what we're communicating.

Excellent. On the $70 billion target, I know it's stepped up $20 billion over the last year. How much of that is external? How much of that's internal. Any directional color you can provide?

Yes. It's roughly -- if you look at the change we made, it's about half from the external opportunities we see and about half from internal.

Right. And as we go through the next year or 2 in terms of derisking, what are the most important events you'd point to that help derisk that $70 billion charge?

Well, I would go back to the 6 programs I showed coming. And I think those are going to -- those are really -- if you think about it, of those 10 key programs, we focused on 10 key products which will make up 70% of the $70 billion. By the time you get to the end of '27, they all will have been meaningfully derisked. So you can pick which one. It's hard to pick which is your favorite. You don't want to tell your children, which one you love the best. I love them all equally.

On business development, obviously, 2025 was a very busy year for the company. There's been some headlines heading into this year. Can you just taking a step back. With the $70 billion that you now feel you have in-house, what's the appetite for further deals? And kind of what's the parameters you're looking at as you consider putting into capital?

I appreciate the question. Now if you look at where we are, and I tried to address it a little bit in the prepared remarks, but we have been very disciplined. Since Dean and I took over in 2021, it's -- we followed a very consistent pattern. It always begins with what is the science? It always comes down to, is the conviction of my scientific teams there behind the opportunity? What is the unmet need that we're addressing? And if there is high conviction and excitement among my scientists, there's an unmet need we can address. And I see it aligning with our strategy. And overall, we see a path to create value. I think we've moved -- we're showing we're willing to move fairly quickly and decisively. And we've done it ahead of data. We've done it after data. It all comes down to that conviction. And so that is the model we've been following. It will continue to be the model we've been following. The areas of focus continue to be the same: oncology, cardiometabolic, now cardiopulmonary. You can kind of look at both of those spaces. Immunology. And then beyond that, it's more around areas of probably opportunistic focus. But really, those 3 tend to be the sweet spot of what we're looking at.

From a phase of development, we're open from Phase I through to Phase III. Obviously, as we move closer to the LOE, we've been more focused in the later stages. And you've seen that the deals we've been doing have been either Phase II, Phase III or in some cases, commercialized assets. We'll continue to focus that. As I think about the periods of time, there's now through 2028, there's -- 28 -- they're through 2032, 2035, if you will, and then 2035 and beyond. Everything we do looks at how do we impact each of those periods of time. So we don't look at trying to drive revenue for any one window. It's how can I bring science that brings commercial opportunity, but then it's complementary and builds a spun to our sustainable base for long-term growth.

If you look from a dollar perspective, we've been in that looking in that up to $15 billion range has been kind of where we've been looking. But we've been very clear, we're willing to go larger than that, but we only will do so following the exact same logic and discipline. And if we see an opportunity that brings the science where we see value, we'll move, we have the capacity, I think, to do pretty much anything we would want to do, but we will be disciplined. And in the end, while I feel very good about where we are, I still aspire to grow through KEYTRUDA. And that's starting to become within potentially our reach. We need to keep executing. We need to stay focused. And so we want to do more. We're going to continue to be disciplined. I don't feel that we have to do something, but we're going to do it if it's a smart thing to do, it's the right thing to do. And that's been where we have been and that's where we'll continue to operate.

And just remind us on capacity, kind of where the company is today, where you'd be comfortable taking elaborate.

Yes. So I would say we're multi-tens of billions of dollars. Is that the way I got to look at my CFO. I would spend more, he won't let me, it's just the way it goes. But in the multi tens of billions, I would look at differently and say, we are not limited from a balance sheet. It's more where do we see strategic opportunity.

Okay. Excellent. Maybe pivoting to some specific products, oncology. TROP2 seems like a very interesting one, one that to me feels very underappreciated by investors. Can you just talk about your aspirations for your program? I know you've got a huge Phase III set of studies running at this point. And when you kind of dig into those studies, which as the ones you're most excited about?

Yes. So our vision of sac-TMT or our TROP2 ADC is that it will be a workhorse ADC. And we have 16 Phase IIIs, and we say 11 of them are in indications that other people haven't moved in, many of them are, for example, in GI. But I would also emphasize that we have a great collaboration with Kelun. And they've shown China data in where some people say the top 2 are crowded, which is lung and breast. And that data looks compelling and differentiated. So we're going to places that no one is there or will be first, 11 out of 16. But in the places where it's tight, one can look at the data from Kelen and potentially extrapolate to us and say, that's a differentiated. And you ask yourself, why is it differentiated? It's one thing to say TROP2 and the antibody, but ADCs are linkers and payloads. And some are too loose, some are too tight. And maybe as ours is just right.

I like that one. In terms of the time lines of these reading out, is it possible we see more data in '26 from some of these programs?

I think there's PCD dates in '27, but this is oncology. It's event and there's always chances for interim analysis and earlier than that. And we're also excited by the fact that the administration also recognizes the possibility of this being an important asset and giving us CNPV so that if we do have data turnover, our ability to get it to patients even faster is there.

Great. And of the -- I think you said 11 of these are novel, correct me if I'm wrong, which are the ones there that you're most excited about?

I would say, endometrial, many of the ones in the GYN space. And it's a place where it's -- we have the potential being first-mover advantage. But I should also say that in "the crowded space" like lung and breast, we have seen pretty differentiated data from Kelun. And so if that flips over that can get me very excited as well. Yes. So this isn't just about the novel.

Yes. It might be worth just also commenting on. we recently went from 15 to 16 because we initiated new study in combination with QLEX. So as we think about what we're going to have is our next -- is our life cycle planning for how do we continue to bring value for patients longer term, we are already looking at how can you combine with QLEX as an opportunity that brings advantage to patients, brings combinations with better outcomes and also is one that we think we feel very good about.

Actually, on QLEX maybe just an update of how that roll out as..

Yes. Yes. So as I said, we received approval at the end -- I think it was October, end of Q3 of last year. It's early. Obviously, we're still just through the fourth quarter. I would say we're on track, but importantly, our confidence that we can achieve that 30% to 40% adoption in the next 18 to 24 months continues to be quite high. As we've pointed out in the past, for the first 6 months, while we're waiting for the final J code, it will be a little bit slower, but then we do expect to ramp to that 30% to 40% in the United States. And as you know, this is primarily where we see the highest rates of adoption coming will be in monotherapy or in combinations with oral agents like LYNPARZA, like WELIREG, as an example. But we do -- while we see those as the areas where we see most adoption, and I should stress that would also include where we have many of the early-stage indications. We now have 11 early-stage indications, what 5 with overall survival. But it also, we do think we'll have adoption into the space in patients who are on IV. We just think it will be less in that space.

So you're only just thinking in terms of what a tail could look like on KEYTRUDA when we can consider that 30% or 40% opportunity?

Yes. So if you look at where we are, our goal is in 18 to 24 months to have 30% to 40% adopted. That would put us out about the period of time depending on what happens with the LOE to be in a situation that we have that at the time that we lose exclusivity. Our intention is to price to ensure we can maintain share and maximize that tail as long as possible. So we're looking much more at the value under the curve as opposed to trying to do something where you take a short window of time to optimize value and then have it fall off a cliff, if you will. We've not given specific guidance for how we see that, but I do think it will be a meaningful tail that we can maintain through time.

Great. Just going to one of your required assets from last year, Cidara. Can you just talk a little bit about how you see this fitting into the flu landscape? And how big of an opportunity this could be come from Merck?

Yes. Maybe Dean can start on the clinical side, and I can speak to the commercial piece.

Yes, I really like this asset. I mean, it's essentially an antiviral that we know works. And it's conjugated not as an ADC, but conjugated to an Fc. So that all of a sudden, you can give it one time and you can protect someone for the whole season. And as everyone knows, those people who are immunocompromised or those people who are, let's say, on KEYTRUDA or on Tulisokibart or sotatercept or Odivir, they need extra protection than the normal vaccine can give you. So it just fits perfectly with the story in our pipeline and the patients that we want to treat.

One of the other things that I think is important is it's one time that you give it, it's strain agnostic. It's going to cover you for the whole season. But I think the other sort of thing that -- I don't know if you call it a tailwind or whatever. But with the pressure on vaccination, I cannot foresee flu vaccination increasing in this country over the next 3 years. I would imagine that if we're hopeful it stays the same, there's a chance that it comes down. And so I think this product is really important but it's also really important in a timely manner as well.

Yes. Maybe just to give you a sense from a commercial opportunity. And I think, obviously, we're all living this right now with what is one of the worst flu seasons we've seen and what you often forget is if you're immunocompromised, if you're otherwise have comorbidities that puts you at high risk, if you're over 65, this is a serious situation. 70% to 80% of hospitalizations are with people over 65, 90% of deaths from flu are in that over-65 category. So while we have the vaccines, and I would tell you, we believe probably 70% to 80% of that high-risk population or immunocompromised population are being vaccinated, the vaccines, while effective, are not, let's face it, they're not as effective as you would like. We actually show much more effectiveness with the antiviral than just with the vaccine. And so the opportunity to protect that population is important. We're talking about 110 million people. 85 million who are high risk or immunocompromised, 25 million in that over-65 range rate. So just going after that population, which is where we're starting is a huge opportunity. Obviously, our ability to potentially expand beyond that, we're looking at for many reasons that Dean was highlighting, but that alone is a significant opportunity. We're going to go there first. But we're looking at this as a greater than $5 billion opportunity for us as we look forward. And I think this could be one of those assets that still surprise us to the upside.

And then potential for an interim analysis here just given the flu season that we're seeing?

Yes. So we -- it's been completed for the Northern Hemisphere. We are going to open it up to the Southern Hemisphere. So those of you who are sitting next to someone from the Northeast right now, if you want to be in the trial, you need to go to the Southern Hemisphere. But there will be times for interim analysis. We won't quite announce that. But there is a possibility that we'll see an interim analysis. But right now, we are going to open in the Southern Hemisphere. We need those patients. We need a broad patient population to be able to have as robust of a label as possible.

Okay. Pivoting over to the oral PCSK9. Can you talk a little bit about just time lines here, how we should think about this? And then as we approach the launch, how you think about patient segments that could kind of adopt this one quickly?

Why don't you go ahead, Dean?

Yes. I mean, so you've seen some of the data at American Heart Association. I think the data -- the way that we've said it is we want to make the most potent LDL-cholesterol-lowering pill ever made and that we wanted to have a pill that essentially looked like the antibodies. And I think the data at AHA, 2 of the 3 studies were shown. A third one will also be shown later on this year. So we basically have a biological appeal. When you look at the clinical data, it's 97% compliance. And if you look at the adverse effects, the adverse effect looks no different than placebo. So this is something that we could really democratize the PCSK9. Our intention is to file and then we are also like sac-TMT, has the opportunity to do with the CNPV. And that's a relatively new program, and so we're working with the government. And so that time line means that we probably have the opportunity to potentially launch maybe early next year, but maybe even this year, and we're excited by that.

The last thing I would just say is there was also data presented at American Heart Association that's really important. So many of us here have an LDL of 90 and 100, and our doctor said it's just fine. But there was data shown that if you take an antibody to PCSK9 and you lower that LDL from 90 to 100 to 45, I think they had an improvement in cardiovascular outcomes of 20%, 25%. This emphasizes why it's important to democratize PCSK9.

You might comment on that we act in exactly the same way as...

Yes. I mean so this molecule is truly interfering with PCSK9 in a very similar epitope as where those antibodies. So this is truly an antibody in a pot.

Ask about just -- you talked about a multibillion-dollar opportunity here. Should we expect a gradual ramp like we saw with Repatha or just given some of the dynamics of how the injectable markets played out, could this be a little different?

Well, I would say I think we will see a faster ramp than Repatha. What will drive though, what ramp we see is really -- we're looking at really 3 factors that we're focused on. Obviously, it starts with our ability to educate and activate patients and physicians. I would say this is an area where it's been a little bit sticky, if you will. You haven't seen much change. And so we're going to have to educate people and get them willing to think differently about layering therapies in a way that maybe they haven't thought about, both as the physicians as well as the patients. So doing that education and activation will be important.

One of the things we think that can help drive that desire is if we can get the guidelines changed. We've done a lot of work. I know others in the space are doing work in this space, and Dean can speak to it. But with all the data that came out through the [ Vacelli ] study through what we're doing and others, I think there's a renewed discussion about what should be how you think about managing your cholesterol and what is good enough, but what actually can you do to be even better, especially if you're a high risk.

So we're going to continue to push for those guideline modifications. And if we can achieve that, which I actually have pretty good confidence, we will. I think that's going to be an important step. And then the third element of it is we've talked about, we're going to affordably price this to drive access. That still will require the payers, the insurance companies to adopt this. We think they will, but we're going to have to do work. So those 3 levers will determine the speed of the ramp. But maybe just -- so the long-term opportunity, by the way, is meaningful. But how fast it happens will depend on that. But maybe just to size this real quickly.

If you look about it today, there's 80 million people across U.S., Europe and Japan who are on lipid-lowering therapies and not a goal. In the United States, it's 30 million. And that's both primary and secondary prevention. And it's roughly -- it's not exactly, but it's close enough, half primary prevention, half secondary. So our intention is to go first for the secondary prevention market. And then from there, over time, broaden into the primary prevention market. So we see an opportunity, both initially to go with a layered approach on [indiscernible] to try to do the lipid lowering therapy. But over time, we have a broadening strategy not to mention then we have a combination strategy. If you go on clintrials.gov, we already have underway a combination study in combination with rosuvastatin, so a single pill, both the PCSK9 and the statin. And as I mentioned, while we haven't started the studies, we are looking at kicking off with our LP(a) small molecule, a combination of our PCSK9 with that. So Dean talks about you got to be first or best and then you got to think about what's next. So we have a life cycle management strategy here to make this a meaningful long-term opportunity beyond that first wave.

Maybe last one on the pipeline for me. You highlighted immunology, ophthalmology, HIV in terms of important readouts over the next year or 2. Can you just talk about the strength of Merck's pipeline in these settings? And how do you think about Merck competing in some of these spaces, where there maybe is a bit more entrenched competition?

Yes. Well, I firmly believe and Dr. Perlmutter used to always say when he was at Merck, great products make great franchises, great franchises don't make great products. And I think the key of what that really the message of that is it starts with if you have a product that is truly differentiated, that is the most important aspect. And part of the confidence across everything we've laid out, we think we have that, and especially in immunology and what we have with Tulisokibart with our TL1A. So across immunology and ophthalmology, I think we are there. So that's the most important piece. But beyond that, we've spent a lot of time focusing on how do we make sure we build out both in terms of dollars of investment. You remember, we did the multiyear optimization where we were looking to take out $3 billion of spend. That was not because we wanted to lower our spend. In fact, we're going to be accelerating our spend but redirecting that $3 billion into these programs. So we are very focused to make sure we invest behind them fully, which we're doing and that we have the right capabilities. We spent all of last year going bottoms up and then top down, outside in to look at this with myself and the strategy team kind of doing the top-down outside in and then looking at what we would build based on the way the peers have operated and then comparing that to the plans the teams were building. And that's informed where we saw we needed investments and capabilities. We're already addressing those gaps. We've brought in a lot of external talent where we needed to augment. So I actually feel very good that we're positioned to succeed across these commercially.

Great. Maybe time for one last question here. Just on GARDASIL. I know this is a big area of focus for the last 1.5 years or so. Latest update in terms of how you're thinking about trajectory of that one given what you're seeing ex U.S., some of the recent CDC changes, et cetera?

Well, I would start by saying GARDASIL is -- continues to be a very important product, first and foremost, for patients. It is truly an anticancer vaccine. And it's a tragedy that everyone is unvaccinated because it can prevent cervical cancer, it can prevent many head and neck cancers, other cancers. So I start there. But putting aside the patient aspect, if you think about it from a business perspective, it remains important for the company. But as we've already said in the past, it is no longer a key growth driver for the company. As we came into the year where we had communicated previously as we expected modest growth with this, obviously, the thing that has changed, as we recently heard from the CDC that are now putting out a recommendation to move to a single dose in the United States. I can talk about that in just a second. But we'll have to deal with that. But as you look in total at this, as we think about 2026, I would say we see it as a stable product. We're going to continue to invest for the growth. Any growth that's there is modest, and we need to see how this single dose plays out.

As it relates to that specifically, if you look at the market in the United States. So for the first 9 months, just to size this, in the first 9 months, we've sold $2.2 billion of GARDASIL in the U.S. 2/3 of that is in the pediatric adolescent space. And that's really the only piece we're talking about. That's where the CDC changes going to single dose effect, not the adult population 1/3. So that $2.2 billion, if I annualize that for simple math, let's just say $2.7 billion, that's not a guidance number, by the way. It just divides easily by 3. You should look at it and you say, of that then you can think of $1.8 billion being the total for that adolescence. Today, average completion rates are only 1.6 doses. In worst case, it will go to 1. We don't actually think it goes to 1 because importantly, what the FDA and the CDC maintain is they maintain shared decision making with your physicians. And all of the insurance coverage, both from a commercial and from the government have been maintained. So if you want the 2 dose per the label, you can get it, it will be reimbursed, and we believe pediatricians largely will continue to prescribe and recommend that. So we're going somewhere from 1.6 to something between 1, maybe 1.2, 1.3. Needless to say, it is not significant for us in 2026. It's manageable overall. I'm more concerned about it from a health policy perspective than I am, frankly, as a financial matter for the company.

Well, I think we're out of time. Congrats on all of...

Thank you very much. Thank you all.

Second day of the Citi Global Healthcare Conference. So my name is Geoff Meacham, I'm the senior biopharma analyst. Mary-Kate Davis with me as well from my team here on stage. So we're thrilled to have Merck in this session, and we have Eliav Barr, who is SVP, Head of Global Clinical Development and CMO; and then Chirfi Guindo, Chief Marketing Officer. So Eliav, Chirfi, good to see you guys.

See you as well. Thank you for having us.

Thank you.

Thanks for the time. So maybe we'll start with the -- first with the Cidara deal, right? So maybe just give us some kind of context for the thought process that went into this. I mean, I'm assuming it's more than just kind of economics and to try to manage the LOE. This is a real growth opportunity. It's a real unmet need. It's very different in terms of the platform technology. I want to get kind of your insights into that.

Well, maybe I can start with the medical side, and then we can -- I'll ask Chirfi to speak about the commercial opportunity. Influenza is a pretty bad disease, estimated around 110 million people in a season will get -- will have a medically attended illness. And so I think it's a pretty bad disease. The current flu vaccines are reasonable, but not -- but oftentimes, they're off and they're not particularly as effective. Moreover, they tend not to be effective in those individuals who are most likely to get sick from flu, the immunocompromised, those with comorbidities and so on, where immune response may not be quite as robust.

And then, of course, year-to-year, there's strain variability. What's great about CD388 is that it's a drug that has -- the strain agnostic is able to be efficacious across populations, 76% efficacy in the dose chosen for Phase III, and that's better than even the best of the flu vaccines. And as I mentioned, being able to use it in a variety of different kinds of patients.

So I think there's a high unmet medical need. It fits perfectly into our concepts around prophylaxis. We have both chemo prophylaxis and of course, vaccines in our pipeline. We have got a lot of other drugs in respiratory that are important and so there's a lot of overlap there. And I think the commercial opportunity is great, and I'll ask Chirfi to speak to that.

No, no, absolutely. I mean the fact that you are going to be able to protect, especially those high-risk individuals and immunocompromised individuals who often do not respond well to the traditional flu vaccine, it really is a big deal. And so as you think about it commercially, by the time we come to market towards the end of the decade, we anticipate that there will be about 110 million people in the United States who would be candidates for this treatment.

Once again, it's not a vaccine. It's an antiviral that you take once at the beginning of the season, and then you give full protection to the population for the whole duration of the season, right, irrespective of the strain of influenza that you're talking about. And so that is really the attractiveness from a public health standpoint of CD388. So from the 110 million that we anticipate, about 85 million fit the category of high-risk or immunocompromised.

These are people cancer survivors, people who live with COPD, atherosclerotic cardiovascular disease, PAH and so on and people who just have a weak immune response. And then you have about 25 million or so who are older adults who are not immunocompromised or who do not have those comorbid conditions that we talked about. So that is the pool of individuals that we anticipate coming into being candidates for protection with CD388.

So very, very attractive. Just to -- a couple more numbers that I could give you for context. In the United States last year, there were 1.6 million hospitalizations due to influenza, right, in the last season. And this season is panning out to be a tough one as well. So if you can provide protection to those individuals at high risk, I think the value proposition will be really, really compelling. So we look forward to really commercializing this. And we've announced greater than $5 billion commercial opportunity starting at the end of the decade and escalating into the early 2030s. So a really meaningful opportunity.

I guess let me follow up to that, Chirfi. I think when you -- you can see the differentiation, the fact that it's not a vaccine, it's an antiviral. I guess the biggest uncertainty I would imagine would be the payer context, right? So you'll have to have, obviously, Phase III data, you'll have to have maybe pharmacoeconomic data that shows -- but is the -- maybe the commercial approach to go after the highest risk patients for -- that may have not gotten a vaccine anyway to try to make payers sort of understand the differential value proposition?

Yes. I'll provide a couple of insights on this, how we're looking at this. First of all, in the Phase III program, we would have people who have been vaccinated and people who have not been vaccinated, right? So in terms of launch, in terms of commercial approach, we would consider the unvaccinated or the previously vaccinated as candidates equally, provided they're high risk, right? So that's really, really important.

Cidara did some payer research. We had opportunity to review some of that in diligence and so forth. And in that research, payers in the U.S., again, indicated that a price point between $500 and $600 per dose would actually present good value if you're talking about those high-risk individuals that I indicated. And so we will do our own research when we come to it once we progress. But the value proposition, we believe, is going to be compelling.

Yes. and then, Eliav, just a final one on this program. When you look at the development path, you mean potential for an interim analysis. So there -- is there anything that you can build into the pivotal program that could maybe help you with the market opportunity, the downstream, just to try to further separate out the differentiation.

So the population of the ANCHOR study is greater than 65-year-old patients. So it's in the right target population. The question -- obviously, the way it works in clinical trials is that you're powered towards your primary endpoints, which obviously is medically attended flu with symptoms and so on. But there will be opportunities for things like hospitalizations. As Chirfi noted, there's a lot of these and then measures of severity even more than that.

I think the influenza program is kind of similar to that. We had medically attended lower respiratory infections and then we had hospitalizations, ICU admissions and ultimately, those data were very important. So we want to make sure that the study is large enough to be able to have all those critical endpoints. And once we have access to the drug and the company, which we hope will be soon, we'll be able to take a look and make sure that the study is properly sized for longer-term outcomes -- not longer term, but more rare outcomes, it certainly is well designed for the outcomes that it's currently evaluating.

Okay. Thank you.

Great. I guess moving to another deal that you guys have closed this year, Verona. So that's recently closed and you're bringing in Ohtuvayre into your commercial portfolio for the treatment of COPD. Could you maybe talk about that opportunity and how you're looking at that product?

Yes. So first of all, we're really proud of the work. We're really pleased with the work that the Verona team has done, really impressive work in launching this -- developing the asset, first of all, Ohtuvayre and launching it in the United States. So far, the feedback has been excellent as far as we've been able to determine. And so the opportunity for is for us to really bring the commercial engine that we have as Merck to really scale the work -- the good work that Verona has started.

And so the feedback is excellent from customers. And we believe that there's a huge opportunity for us to apply this engine and to reach more patients and create the value. We've announced a significant opportunity in this space. And that's where I think the excitement is coming from. The feedback so far from the market research that we have conducted is excellent, and we believe that this is going to be a transformative agent.

So by the way, just to remind ourselves, the placement of Ohtuvayre in the GOLD guidelines is really quite favorable. And it's fairly broad across different kinds of COPD. It's the first kind of nonsteroidal anti-inflammatory agent that I think -- and I think that's very important, particularly because as we all know, steroid inhalers predispose patients towards pneumonia and other fungal -- local fungal infections. So I think it has great opportunities. We're looking at it also for non-cystic fibrosis bronchiectasis. And so I think that there's enormous potential within the sphere of chronic pulmonary diseases to improve outcomes for patients.

From a commercial perspective, you guys will have a pretty substantial respiratory portfolio was Ohtuvayre, the incremental investment in commercial and marketing, was it sort of nominal in addition to what you're doing already in PAH? Or is it going to be a substantial sort of add-on to the commercial effort?

Yes. We certainly have an engine, right, that we can apply to scale and augment the good work that the Verona team has started to do. And so that is really the opportunity that we see. We have, obviously, digital capabilities. We are going to reinforce the MSL capabilities, the commercial capabilities more broadly. And so this is really going to be a nice opportunity for us to create value.

Yes. And let's move to WINREVAIR. So congrats on the CADENCE trial in left heart disease. So that's -- we did a session at the Cleveland Clinic this past April, and there was significant enthusiasm for this in terms of unmet need. Where do we kind of go from here when you think about the next steps into a Phase III? Is there a potential to -- is this a fileable trial? I know that's not usually the Merck way, but this clearly is a substantial trial in an unmet need.

Right. So first of all, we agree that the unmet need is substantial in this pre- and post-capillary pulmonary hypertension patients with HFpEF. It's a population that's enormously underserved. There's nothing there for them, and they have a pretty high mortality rate. The CADENCE trial was designed as a proof-of-concept study. It had a lot of measurements, both from the pressures and heart function point of view and other elements, which we'll share in due course.

But we are very happy that the PVR data were very clear. And associated with all the other data that we collected in the study, we think that there's a really good opportunity for patients. In the field now, there's really not much for patients. And I understand the enthusiasm that people might have for this to become some sort of filing study. The truth is it's a proof-of-concept trial, and the primary endpoint was not a filing endpoint. We'll talk to FDA about the design of Phase III trials. And more than -- and I think that that's something that we'll be doing, and we're going to start Phase III next year.

The field is -- it's an unknown area. It's an area that doesn't have regulatory guidance. So we'll have to figure out the best way to design the trial and go forward. I think that the other reason why we would anyway want to do a Phase III trial is from the payer point of view, they probably want to make sure that they're seeing the right kind of value to be able to gain and give access to patients. So my net-net is we'll look at the data. We'll have the presentation in 2026 at an important medical meeting. We'll allow people to -- we'll have a really good consultation with our -- all of our scientific leaders. We've already done that. We'll present FDA with the data and our plans, and we'll go from there.

Yes. It does seem like given -- we had Marty yesterday at a session that he's thinking about in terms of unmet need, there is maybe streamlined approaches. This seems like as good a candidate as any, but I guess you have to have the FDA discussion.

Yes. We get -- we present data and they present us with their ideas of see how enthusiastic they are. And again, I think that the studies are -- that the study was pretty clear and gives us an opportunity with -- to improve outcomes, not just in pulmonary, but also in cardiac function.

Maybe looking at the opportunity in PAH, you've presented a lot of data kind of building. Have you seen this translate into higher usage from physicians?

Pulmonary arterial hypertension. Yes, is a simple answer.

From a durability perspective, have there been -- has that been better than you thought when you initially did the Acceleron deal?

Yes. So the feedback has been tremendous, right? So WINREVAIR in PAH is meeting all of our high expectations, right? So -- what I would say is -- just give me a second here, just bring my thoughts together for a second here. In PAH, what we're experiencing really is the feedback has been tremendous, right? So the data is planning it out, and we're seeing continuous positive feedback from the overall community. So maybe, Eliav, you can provide that.

Sure. Yes. So I think if you look at it overall for the SOTERIA study, when you look at the durability of the response and now we have people several years out, the safety profile is pretty much the same. Efficacy remains very good, and patients are sticking on trial. The things that I think are moving the needle in the marketplace is that we've had some terrific guidelines placement. And we're also really interested in -- we're also seeing a lot of use both in people with 3 drugs, and now we're moving towards those in the background of 2 drugs.

Right now, with the 3 studies that we've shown, we've taken the spectrum from newly diagnosed patients all the way to those who are advanced and close to lung transplant or having to have hospice care. So I think we're -- we have all the data out there. And from an uptake point of view, things have been going very well.

Yes. What I would add is really that you have the triple. What we're seeing is certainly in the U.S., where we are really -- we have most experience so far, we're seeing really uptake in the triple segment of the population. We continue to be very encouraged by the adoption in that category. That represents about 1/3 of the patients. Another 1/3 is in the dual, the so-called dual category.

And so we're seeing now the opportunity with the new data we have is to begin to really have greater penetration in that dual category of patient population. But the feedback has been tremendous. And so the data will pan out. But the real-world experience continues to be very encouraging as we continue on the launch trajectory for WINREVAIR.

That's excellent. I guess how are you looking at the OUS opportunity for WINREVAIR as well?

Yes. So we just started in Japan, really, really encouraging start in the Japanese environment. And in Europe, we also have -- we're going through the reimbursement process from country to country. But the overall feedback is really consistent with what we've seen also in the U.S. in terms of physician and patient experience. And so we look forward to really realizing the value there as well. And so -- yes.

I guess the question in PAH is you want patients to be healthy enough that they're on drug, either on a doublet or a triplet for an extended period, but they also are probably not going to take an injectable if they're Class I, right, maybe some Class...

Well, I mean, I think it's important to understand that sotatercept has been showing that across the different segments of patients, whether you're newly diagnosed, that's HYPERION, whether you've been on drug for quite some time and have worsening mostly on 3 drugs, that's STELLAR or whether you're in a pretty advanced state, that ZENITH, that you have similar benefits in time to clinical worsening and in hard endpoints like hospitalization or death.

The point, I think the way people get on drug is on therapy is they usually take -- have the 2 generics together, right? So that's kind of the base point. And then the question is what's your next drug? What I think we've shown throughout the trial program and with incredible consistency regardless of where you are in the disease journey is that sotatercept improves hard outcomes, along with all the good stuff that happens when you can walk around more and have a better exercise tolerance.

So I think physicians now gotten used to the 3-drug regimen, the drug, how to administer, all the things that have to happen in a practice. And I think we'll move to the second -- to the 2-drug regimen. One thing that we will have next year that's going to be very important is the auto-injector. And these are -- that might say, it's not -- how sexy is that? It's very sexy if you're a patient that needs to fiddle around with the dosing regimen and now you can have at home kind of nice single shot.

So I think that's going to make it easier for patients. And I think what we've done both with guidelines and with the work that we have both with our commercial and medical affairs team is to help people just reduce the kind of barriers, some of them are artificial. Some of them are I don't know how to use it in my practice or how is it all going to work, all of that so that we can have adoption. And I think that's translated into the really nice trajectory that we've seen so far with the use. Yes.

Yes. And the convenience is a huge factor, especially with the prostacyclins and those can be a little clunky there.

Yes. Yes. And so I think this is a good -- and again, patients don't want to come into the hospital or into the office to get their injection. So once we have the auto-injector, I think we'll get a lot more ease of use.

Yes. So let's switch gears to the oral PCSK9 program and the injectable PCSK9s have had very good commercial success. I think it took a couple of years for them to get the price and volume and align with payers. So you do have, obviously, the dosing convenience. But as you think about the overall profile, how are you thinking about going into the market? Is it more switches? Is -- are there new patients that you think are particularly suited for an oral modality?

Yes. What I would say is just coming out of the AHA where the data was presented, I mean, really, the opportunity we have here really is to provide the full benefit of PCSK9 because so far, it's a great modality, but it has really not had the impact that one would have hoped. And I think the scientific community was so ecstatic when they saw our data with enlicitide presented. And the reason why they saw that is this is something that could finally reach more patients, and really make a difference in the lives of patients and so forth.

So the data is really compelling, when you think about the efficacy data as compared to the injectables. And so I like to simplify it as you're getting a robust effect, right? So 60% -- I would say 60%, 50%, 50%, 30%, just simplify the math for a moment, right? So you're getting the robust 60% LDL lowering, right? And so you're getting the 50% basically lowering of the other parameters, right? And then you get your -- finally, you get 30%, right? So you put it all together, the profile of enlicitide is going to be unmatched by any oral agents, right?

And so this is what's giving the community confidence or excitement rather that this is really going to be a game changer in the practice of cardiovascular medicine. And so we're talking about addressing the CV epidemic because now we are going to have a tool that is going to allow us to do just that going forward.

Yes.

So if you look at -- if you -- so the problem that the current cholesterol regime, so to speak, has is that the actual goals that people need to get to are not very easily achievable with statins. So the current situation with regard to things that people can access, which are pills, was that you just go ahead and start a statin. I think that with injectable PCSK9s, of course, the efficacy is terrific with regards to cholesterol lowering, but access has just been dismal when you think about the large number of patients who actually need these drugs.

And because of that, I don't think that there's been very much impetus for guidelines to be much more prescriptive and very specific about which LDL levels you need to get to, to reach your goal. Now with an oral medicine that's just very easy to use, very easy to prescribe, will be priced both for access and for value and have the same kind of mindset for the treating physicians who tends to be a general practitioner, nurse practitioner, et cetera, in a community center. Those guys can -- the ease of access will be very good.

And now there's going to be an impetus to be able to change guidelines to be more prescriptive. And I think that's where both ACC and AHA are looking to do at least is what scientific leaders have uniformly told us so that we can actually reach a -- focus people on reaching a goal, break the current inertia, which is I got you on a statin and I'm done with your LDL cholesterol. I'm not really thinking about it anymore.

But now focusing on what's the target, what's the goal? Statins will get you a certain part of the way there. Unfortunately, they can't get you all the way there. Now these days, we really want to have very low LDL cholesterol levels. So we think that having an oral PCSK9 that can be easily used doesn't create any adverse experience. There's no new drug-drug interactions and can be available without a lot of paperwork, will allow that movement. And hopefully, that will impact the rates of disease and death from cardiovascular disease. So we'll see.

Is it reasonable to assume, let's say, in the next couple of years, guidelines will evolve to everyone is on a statin and then you have sort of verticals of who needs a PCSK9 oral or injectable, who needs a CETP, who may need Lp(a)? Do you think -- I just don't know how it's going to all shake out.

I'll tell you the enemy -- so at this point in time, the enemy of being able to move things so that patients actually benefit is complexity. I think that the first position, the easiest one will be who -- what is the level of LDL cholesterol you need to get to? And my hope is that there's just going to be one number, but it's possible that they'll maybe have 2, the 2 numbers being those people who don't have clear evidence of atherosclerotic cardiovascular disease, but have risk factors and those people who already declared themselves, and that's something like 70 and 55. So all in all, if we can get that done, and that's simple, simple, and then we can do PCSK9.

Now the Lp(a) stuff is going to be very, very important as well. However, there's a lot of education that's going to be needed around that, especially like what's the right test to use to measure Lp(a), what level you need to get to. So I see that as being a slower uptake. Eventually, it's going to be very important. But I look at the LDL cholesterol as people understand what it is, but they really need to be forced to a goal. And if you can get that as a quality measure, then all of a sudden, physicians are actually thinking I need to get them to that goal, not I just need to put them on a statin.

Can you capture that in the label? I wasn't sure the regulatory kind of discussions are...

Well, we never -- we can't talk about -- we don't know what -- the label is up to the FDA to ultimately agree to. What we can say is what patients we studied in the clinical trials program, which included primary prevention patients and secondary prevention patients. So we anticipate that those kind of patients would be in the product circular. We don't know. That's something that FDA needs to opine on. Yes.

Okay. All right. So let's switch gears to the -- there's a lot to go over the vaccine space. So on GARDASIL, just sort of the one-stop question on that. I mean you guys have talked about recovery unlikely this year, maybe the end of next year, kind of give us a catch-up maybe on a global basis, like in 1 year's time, do you think you'll be -- have a lot of the headwinds behind you? Or do you think this is more of a longer-lasting?

Yes, we think that we have really reached a point where we are going to continue to drive modest growth going forward at this point. And obviously, the China situation is -- was a problem. But at this point in time, it represents less than 1% of the revenue. So on a going-forward basis, we are looking forward to continuing to drive modest single-digit growth going forward for GARDASIL. We still have work to do. We're proud of the work we've done really in providing protection around the world. So this is something that our company is extremely proud of, and that work must continue going forward.

For beyond GARDASIL, looking at your -- the rest of your vaccine portfolio and some of the newer launches, can you maybe talk about how those are going and your expectations there?

The respiratory...

Launches of CAPVAXIVE...

Yes, CAPVAXIVE, yes.

Oh, yes, CAPVAXIVE. Yes, so CAPVAXIVE is going really well. So it's meeting our high expectations. So really, we look forward to bringing it globally, right? So that's still early days from that perspective. Influenza is also early days. We are just in the starting phase in the United States. And both, we believe, are well-differentiated assets, and we look forward to really scaling and executing the launch as we go forward.

Let's switch gears again to immunology. Again, there's quick hits on everything. That's a good thing though because you guys have quite a diverse portfolio, so...

Yes, we do.

TL1A, so on the back of the Prometheus deal. So your first major readout could be next year...

Next year, yes, it is.

That's highly anticipated that I think consensus numbers for WINREVAIR were $1 billion at peak and maybe now it's like more than $5 billion. For this one, I guess, it has not really moved because we haven't seen a lot of new information. So help us maybe frame kind of how you're looking at this opportunity in terms of your investments, like just -- it does seem like you could go after a number of different immune indications pretty quickly.

So we have -- so first of all, the TL1A mechanism was attractive to us because it was both anti-inflammatory and antifibrotic. So it provides a dual point of action for diseases that have a lot of these problems. Of course, the whole field was discovered on the basis of inflammatory bowel disease, and that was where we went first. The UC data are going to be available. The induction study will be available next year and then induction maintenance thereafter.

And Crohn's disease will also be first in that. Aside from that, we've got about 4 other indications that I think are going to be very important, some of which will have Phase II readouts, which will tell the tail in the 2026 time frame. The first of these is systemic sclerosis-associated ILD. So this is interstitial lung disease caused by scleroderma. This is a mixed inflammatory fibrotic disease. It's a sweet spot for a drug like tulisokibart. The Phase II study is pretty large, large enough that I think we'll be able to see a good signal. That's going to come in the April time frame.

And then later on in the year, we'll have a study in hidradenitis suppurativa, HS, which is, again, in dermatologic disease, inflammatory and fibrotic that I think we will be able to see. We also have a trial in axial SpA and -- so spondyloarthropathy as well as rheumatoid arthritis and other indications that we're looking to start soon.

So we're taking a page from the success stories in the immunology space. HUMIRA had multiple, multiple indications and a lot of the other drugs, the same. Our focus is on inflammatory plus fibrosis. And I think we have the right readouts coming through that will be able to validate why the Prometheus acquisition was such a good thing. And then we've got, of course, other Prometheus drugs and Phase I on that I think will be -- also have an important role to play. Yes.

Is a basket approach though for [indiscernible] is that the -- is should -- is the best approach sort of to go linearly and have a Phase III and figure out the next trials? Or do you -- would you...

No, we're going to see -- so this is why we're doing a bunch of Phase IIs in parallel now. I mean I think that the key was to get ulcerative colitis and to get the base understanding of what the drug does by itself in ulcerative colitis and Crohn's. That's necessary, and it's necessary both from a biologic point of view, but also most importantly, to tell physicians, patients, payers and regulators what this drug's capability is.

We now have started with multiple Phase II studies. There will be more coming next year, and that's in the mono space. We're very interested in combination therapies. My -- I'm not an oncologist, but most of my time at Merck has been in oncology for a good reason. But we -- so we -- that's a world of combinations, and we need to be able to do that here as well. But it has to be rational combinations and I think once we read the induction data, then we'll start a whole bunch of other studies. So this is -- we're at the point of an inflection in the clinical trial field of broadening this drug up quite a bit. We see a lot of potential here.

And we can move to oncology. I can't leave with 5 minutes to go, it's the first question on KEYTRUDA. So let's talk about QLEX, so the subcu. I know early days for the launch, but give us some context for how you're thinking about the wave of patients that are more likely to go on this versus KEYTRUDA with the consideration, obviously, that biosimilars down the road are going to be eroding. Is it mostly preadjuvant like pre-metastatic kind of...

So obviously, QLEX is off to a really good start. We are really enthusiastic about the early feedback that we're getting here in the U.S. We just got the good news also from a European perspective on that formulation, KEYTRUDA subcu. So we believe that this will be really a good option for patients in the earlier stages of disease. And so we are gearing up for that. We have resourced the launch appropriately. For us, this is a launch, right? And so there's an opportunity here to impact earlier stages of cancer. So that's kind of how we are thinking about the opportunity.

Can you force that through -- with payers through discounting or rebates or whatever to try to maybe narrow the initial adoption? Or is that just how it's going to work out in the real world...

Well, at this stage you have -- at this stage where you have mono use, where you have combination use with -- in the earlier stages, this is where the adoption is anticipated initially. And so, so far, again, it's early days, we believe that KEYTRUDA QLEX is going to be adopted in that segment. What we've indicated is an adoption rate in the initial 18 to 24 months of about 30% to 40% of QLEX in the United States. And so obviously, the first 6 months might be slower because obviously, we have to get the whole reimbursement system going and adoption will then kick in with that sort of magnitude.

For oncology for the ADC, so I think you have a couple of ADCs that are going to turn the card over in 12 to 18 months from now. Talk a little bit about the funding of the TROP2. I wanted to get maybe your perspective on that.

Well, so we have -- so first of all, we are -- we think the TROP2 ADC is going to be sac-TMT, is a really differentiated molecule with a program that's really quite different from what has been used -- done for the other ADCs. So I think that's -- we have a lot, a lot of confidence in it. We're very pleased that Blackstone was able to -- saw the data and we're willing to plunk down quite a bit of money to help us. The reason -- what we need to be able to do is to -- as you see, we're just now talking about oncology. We've got this breadth of opportunity at [indiscernible]

A lot of things are moving in the right direction, knock on wood, no wood here. But anyway, so we're hoping that things are going to be -- are going to expand even further. We've got these acquisitions that now need to be fully funded. We've got launches that need to be fully funded. And so I think as a company, we were -- we wanted to make sure that the short-term P&L profile was appropriate for the expectations of shareholders. And so we thought this was going to be a really good deal.

They put $700 million against our R&D spend in 2026 in exchange for low to mid-single-digit royalties after the approval of -- after the readout and approval of sac-TMT for a particular study that's in triple-negative breast cancer.

So overall, we thought that the deal was really good, and it helps in ensuring that we're able to apply all of our resources to the extraordinary opportunities that we have. This is also in the context, of course, our multiyear optimization where the company has chosen that they're going to work to streamline and to focus attention on the things that really will move the needle on behalf of patients and therefore, the company. So I see this as a great opportunity from the R&D point of view from my shop, it gives me a lot of breathing room.

Is that approach to use Blackstone or others to help fund the development a good model for other ADCs in the pipeline?

Well, we -- the other ADCs are partnered, and so they're a little -- it's a little bit more complex. There are other -- and then there are some ADCs that are still within our group. I don't see this as a model that I'm going to use -- that we're going to use every time. But this particular opportunity because sac-TMT is such a large part of our spend and our future and what we believe in, we thought that this would be -- we're very, very confident in this program.

And so that's why we allowed them to look in and see what we thought. And I'm psyched that they actually really -- they agreed with us that this is a tremendous opportunity. I don't know that it's going to be something we do every time. But it's -- when the opportunity arose, it was a good one.

Awesome. Eliav, Chirfi, thank you very much.

Thank you.

Thank you for your time too.

[Audio Gap]

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...