Merck earings call 2024q4.txt

Merck & Co. Inc. (NYSE:MRK) 43rd Annual J.P. Morgan Healthcare Conference January 13, 2025 7:30 PM ET

Company Participants

Robert Davis - Chairman and CEO
Dean Li - Executive VP & President of Merck Research Laboratories

Conference Call Participants

Chris Schott - JPMorgan

Chris Schott

Good afternoon, everybody. I'm Chris Schott from JPMorgan, and it's my pleasure to be introducing Merck today. From the company, we have Rob Davis, Chairman and CEO; as well as Dean Li, who is the President of Merck Research Labs. So Rob and Dean, Happy New Year. Thanks for joining us. We look forward to our presentation from Rob and Dean, and then we're going to jump into some Q&A from there. So with that...

Robert Davis

Thanks. Great. Good afternoon, everybody. Before we get started, I will point out that I will be making forward-looking statements. So if you would like to see our information on this, please see our website and you can get -- learn more about what we do and we think about making forward statements, and obviously, they carry with them their own risks and uncertainties.

As you reflect on where Merck is and where we've been, hopefully, you see what we see. And I can tell you, I feel very good about where the team is in executing on our strategic priorities. And if I think about that, most importantly, it's the progress we're making, advancing the pipeline and augmenting the pipeline. And importantly, we continue to focus on scientific innovation with the patient really at the center as the core of what we see as a driver of long-term sustainable value, both for our shareholders and for all of our stakeholders.

We're now at a little over 3.5 years since I took over the role of CEO and myself, along with Dean and the rest of our leadership team, are really proud of what we've accomplished in the last 3.5 years. And really, it starts with what we've been able to deliver as you look at revenue growth. We've delivered consistent year-on-year strong growth. And as you look at 2024, assuming the midpoint of our guidance, we're at 7%, building on the 9% to 12% we had in year '21 and/or year '22 and '23.

So consistent good revenue growth, but more importantly, it's what we're doing with the pipeline. And I feel very good about the progress we're making. We have more than tripled, nearly tripled, the number of assets we have in late-stage development. You can see here, we've gone from 9 in 2021 to '26 in 2024. And importantly, what you see is not only the number but the diversity, both diversity within oncology, where we've continued to expand into tissue targeting, molecular targeting and other areas beyond just IO, but also increasingly, as we're growing into other therapeutic areas and feel very good about where we are and the contributions that pipeline is going to make as we look into the future.

And not only have we done that through internal work, but obviously, we've been very focused from a business development perspective, with nearly $40 billion invested in the last 3.5 years across really a diverse set of assets that have built out the pipeline. And maybe just to give you one example, because I think it's a great example of what we do, both in terms of accelerating and diversification. And that's with the acquisition we did this year of EyeBio.

EyeBio brings with it a new mechanism of action for the treatment of patients facing wet AMD and diabetic macular edema. It's an area where we think there's still is a huge unmet need and an opportunity for us to bring important new science that not only allows us to continue to build on what we're doing, but really start to move into areas where Merck has been in the past in ophthalmology. And so I feel very good about that. It's just one proof point of what we're trying to do.

And as you look at from a regulatory and commercial perspective, 2024 was a very busy year. We had significant approvals, several key data readouts, and I would just really focusing you on not only on those, which really covered the breadth of the different therapeutic areas in which we play, but importantly, 3 important launches, all off to a good start in WINREVAIR in pulmonary arterial hypertension; CAPVAXIVE, our pneumococcal vaccine; and BRAVECTO injectable in our Animal Health business as a parasiticide.

We're going to build upon that momentum as we look at 2025, and you can see significant additional important approvals, launches and readouts. And maybe I would highlight just a few because I think it's important to really draw your attention to some of the things we're focused on.

First and foremost, as you look at the list of drugs that we will be launching, we're very excited with the recent approval for our GARDASIL in male indication in China, which we're now in the midst of starting to launch as we speak in ages 9 to 26. We're very excited about what clesrovimab, our RSV vaccine can be, as we look at a PDUFA date of June 10 of this year and continue to move very fast to be in a position to launch that important new drug.

In oncology, we now expect to file, have approval and launch our subcutaneous pembrolizumab in 2025. That's actually new information and an acceleration from where we thought we would be. So obviously, given the importance of subcutaneous pembrolizumab, we're very excited of the continued progress we're seeing there.

And then on the Animal Health front, in addition to the BRAVECTO injectable, which is an important product, we're going to be launching a new next-generation derm product in the Animal Health space, which is a very large space and continues to build the momentum we have in our Animal Health business.

As you look at data readouts, I would just highlight a few. Enlicitide, which is our oral PCSK9, will have important multiple Phase III readouts this year with efinopegdutide, which is our GLP-1 glucagon dual activist, will also have an important readout there from our Phase IIb that I would highlight for you. And then you really are seeing a return from us into the HIV space with important readouts with islatravir and with MK-8527, which I'm sure we can get into in the Q&A because we continue to believe our opportunity in HIV is very much underappreciated.

And then obviously, we continue to see great opportunities in the broader oncology portfolio, but I think it should be noted that we talk about that last, not first, because we have so much beyond just oncology as we look forward. And you really see that here. We really, long term, are evolving to probably what will be the most diversified portfolio we've had in recent history within the company.

And you see that here, this represents basically all of the Phase III assets we have with primary completion dates between now and 2028, and it's significant. 20, 20 new growth drivers, almost all of which have blockbuster potential, and they reach across oncology, cardiometabolic, immunology, vaccines, ophthalmology. So the breadth of what we're bringing -- the depth of what we're bringing and the number of what we're bringing gives us great confidence as we think about the diversified portfolio we have as we look to the future.

And so whether it's looking at the revenue growth we've been able to deliver, the really important additions we've had to our late-phase clinical development program nearly tripling from 9 to 26, or what we've done in the early-stage pipeline, where now we have over 50 assets, preclinical or Phase 1, many of which will be moving into Phase II over the next 2 to 3 years. So as you think about catalysts in '25 and into '26, you're going to increasingly see things move from what we would call the invisible pipeline, which is our Phase I pipeline, into the visible pipeline, the Phase II pipeline. So a lot of exciting things coming.

And importantly, if you take all of that together, and this really, what we have here reflects what is our long-range plan. So you've heard me, in the past, comment that I have confidence that we see the KEYTRUDA LOE is more of a hill than a cliff. And in one-on-ones with many of you, I've commented on the fact that this is what we're showing our Board. What you see here represented, obviously, we've tried to descale it so you can't do the math. But it is a graphical representation of our long-range plan.

And I would just point out a few things. First, you can see the meaningful change just since 2021. What you see there is actually a representation of what we were looking at in 2021. How much we've added and I give a ton of credit to our MRL colleagues, to Dean, to our business development folks because it's the ability of our teams to accelerate what we have in our internal pipeline, and to meaningfully add to it through the external business development we've done that put us in a situation today where we actually -- while we're not done yet, I don't want anyone to believe we think we're finished. We're not. But I honestly believe if we can continue to make this same kind of progress over the next 2 to 3 years, there's no reason we shouldn't aspire to grow through the LOE, not just beyond the LOE as you see represented here.

And the confidence I have today that maybe we can achieve that aspiration is meaningfully better than it was a year ago, which was better than it was the year before that. And that's because we've been very consistent in the progress we've made. And to that point, if I take you back a year ago to the same conference, to try to help characterize some of the value we saw, we laid out at that time, looking at really some of the specific therapeutic areas non-risk-adjusted revenue potential we saw. And we highlighted that in our oncology portfolio, and this excluded -- if you recall, this excluded anything having to do with KEYTRUDA. So this is really looking at our antibody drug conjugates, all of the targeted small molecules we brought in, the individualized neoantigen therapy in combination we're doing with Moderna. Those assets, we believe, had greater than $20 billion of revenue potential by the mid-2030s.

Cardiometabolic, we had $15 billion, and we talked about immunology based on TL1A with multibillion dollar potential. As we sit here today, we see more opportunity both through the addition of the T-cell engager programs we brought in, plus continuing important progress in the oncology portfolio where we have. We now think we can achieve greater than $25 billion in revenue potential by the mid-2030s. You see from an immunology perspective, the multibillion dollars we now actually see being greater than $5 billion. And importantly, as we think about HIV, I mentioned that I continue to believe this is underappreciated, we think it's greater than $5 billion in revenue potential through the programs we have with islatravir and with our other agents, next-generation NRTTI and other assets we have, both in the treatment and prep setting, which we can get into in the Q&A. And then ophthalmology, we believe, is a multibillion-dollar opportunity in and of itself.

So as we sit here today, and then you add to that what we have in infectious disease and vaccines, in Animal Health, where we expect revenue to more than double by the mid-2030s, our early phase programs and the fact that we're not done with business development, it's why I am more confident than ever that we are well positioned to be a sustainable, growing company well into the next decade and beyond. And obviously, I know there's a lot of questions around that, but hopefully, this frames for you our growing excitement while we have such confidence. And if we can continue to make the progress we've made, which we will, really, it's -- the opportunity is meaningful.

So with that, maybe I'll come back over, and we can jump into the Q&A.

Question-and-Answer Session

Q - Chris Schott

Perfect. Great. Well, thanks for those comments. Maybe just to build on those -- the last topic here. I think you rolled out this idea of kind of the hill, not a cliff. Where we sit today, how -- what does that hill look like? How derisked do you feel that 2029, 2030, 2031 time frame is in terms of Merck's ability to manage through its life cycle?

Robert Davis

Well, and as you saw from the chart we showed, I don't think we're done. But I would say we feel that cone of opportunity I just showed, that really was looking at different risk scenarios. So to achieve the minimum side of that cone, actually, I feel very confident. I think we're largely derisked to that outcome. The question is where can we come out in that cone, and that's what we're waiting to see. But obviously, we want to continue to do more. But I feel very good about where we are and the number of different opportunities we have on goal to really deliver that outcome.

Chris Schott

And when you look at where you've evolved since 2021, how much of that spend internally generated pipeline versus how much of this has been Merck been able to externally access assets?

Robert Davis

It's been -- and it depends on how you look at it, and Dean can comment as well because some of it, we've -- a lot of this -- we brought in stuff pretty early. And we moved it incredibly fast. You could argue, was that internal or external? I'd argue in many ways, if it wasn't for Dean's team's ability to move it through late discovery into development, we wouldn't have it where we are. So I'd probably say it's 50-50, but I would look to Dean to quote.

Dean Li

Yes, I think it's -- that's a fair way to look at it in different therapeutic areas. And if you look at the HIV portfolio, it's really driven by islatravir. If you look at, for example, the antibody drug conjugates, the initial wave has been from external. So there's a mix. And I would imagine that over the next 5, 10 years, there'll be a percentage up and down, but it will be around 50-50 internal, external over the extended period of time.

Robert Davis

I think the other important point to make is we tend to think of the best science wherever you can get it in what we call the 1 pipeline. So we tend not to try to think of, is it internal or is it external? It's what's the best scientific opportunity we see in an area where we believe we have some differential capability, and then let's prosecute that opportunity.

If it happens to be within the pipeline, that's great. If it happens to be that we see something externally, that's better than what we have internally, let's not be arrogant or have hubris, let's say, hey, if that's better, let's switch and go to where it goes. And a credit to Dean to really drive that one pipeline mentality, which I do think is really in the culture now within the MRL team.

Chris Schott

Great. I know you updated a couple of the longer-term targets of the presentation just now. Maybe elaborate a little bit more for oncology going from '20 to '25. What have been the biggest drivers of that increase?

Robert Davis

Yes. Well, so one piece of it is we did add through Harpoon, the T-cell engagers. We think that will be an important addition. But then a lot of it, and I'll ask Dean to comment, is increasing confidence in the antibody drug conjugate portfolio, what we see with G12C, but probably the TROP2 is probably worth highlighting because that's probably one of the major areas driving that change.

Dean Li

Yes. I mean the antibody drug conjugates, there's a series. We've done stuff with Daiichi Sankyo, and I think they're very promising. But the lead program that has had a substantial expansion over the last 2 years in the number of Phase IIIs, I mean, it's substantial, I think it's 10 Phase IIIs, is in the TROP2-ADC.

But I would also look at oncology outside of that. It's not just KRAS G12C, it's bomedemstat for essential thrombocythemia; CYP11A1 inhibitors for prostate. So there's a series of compounds there. And clearly, in the PD-1 sort of I/O sort of space, we're interested in moving the PD-1 into earlier stages, and that's been really important.

And that gives us a platform to drive these other combos into the earlier stage because right now, I think we have 9 approvals with 4 with OS. We have 4 positive studies that will turn over. It's not just about KEYTRUDA. It is about KEYTRUDA, but it allows combination on the basis of KEYTRUDA to go into earlier stage. So I think all of those are exciting for us.

Chris Schott

And maybe just another one on the target updates. HIV, you're highlighting, is one of the underappreciated parts of the portfolio. I know islatravir, there was a lot of excitement then less excitement. It seems like it's back on the table. Can you just elaborate a little bit more of what pieces of the HIV portfolio, in particular, you're most excited about at this point?

Dean Li

Well, I would just say that the initial driver is islatravir and doravirine, that combination is once a day, but it sets up the stage for q week treatment. We have a q week treatment program with Gilead and their lenacapavir, but we also have internal agents that we're combining to also be q week.

I think what would be really transformational is if you could do PrEP, you could give HIV PrEP in 12 pills over a year, and we're very eager to move that as we move into Phase III. I mean you just think of whether it be in the inner city or whether it be in the rural area of the United States, but also globally, 12 pills to protect you from HIV for those who are high risk, I just think that would just be phenomenal.

Chris Schott

Yes. Yes. And safety-wise, you feel like the issues of islatravir have been addressed at this point?

Dean Li

Yes. I mean just -- there's lots of doravirine data will be, I think, become more public. We are advancing islatravir with lenacapavir with Gilead. They've seen every piece of data, and I think we're all very comfortable with the fact that we have the dose right with islatravir in a way that we can combine it.

Chris Schott

Great. Maybe just pivoting to the in-line portfolio, a few GARDASIL questions, I'm sure you have -- the first time you've heard this, but yes. I know the team has discussed several factors that maybe contributed to the slowdown that we saw in 2024. I guess just as you've had more time to digest these, just your latest thoughts on what has been really the key factor and how Merck is looking to address those?

Robert Davis

Yes. So as we sit here today, maybe just to set context for everyone, we're seeing the situation stabilizing in the marketplace there and -- which is important. There's more to do, but we are very much actively working with our partner, [Jerfey], to engage and drive demand to make sure that we can continue to penetrate the female cohort that remains, which is still significant. And importantly, as you saw in the presentation, prepare for the fact that we're now going to be launching the male indication.

The issue we continue to watch, and I would say, probably encompasses a lot of the different things that happened in that marketplace, the macroeconomic situation in China continues to struggle. You see that continuing to affect consumer spending. We are driving demand through our actions in the face of that. But as we pointed out in the past, this is going to take time. But we're feeling confident that we're going to put the work in to get there.

Chris Schott

And that -- I think on the third quarter call, you kind of laid out a $2 billion to $3 billion kind of range for the foreseeable future. Is that still a reasonable...

Robert Davis

Yes. So if you look, what we had said is that we expect, over the next few years, to have $2 billion to $3 billion of revenue coming from GARDASIL in China, with approximately $2 billion kind of as the anchor in 2025. So really $2 billion in '25, approximately, and then growth thereafter driven by the male indication.

Chris Schott

Great. Can you talk about the male indication? Like how should we think about the size of that opportunity versus the female opportunity in China? And how quickly do you think that could ramp?

Robert Davis

Yes. So maybe on the female side, just to give context, when we started in that marketplace, it was about 200 million females that we felt were in the eligible cohorts of what we were going after, including demographics and the ability to cash pay in the private market. We're now, from a penetration perspective from vaccination completion rates, we're approaching 40% vaccination completion rates on the female side. We need to continue to drive, and we're thinking we can go further, but we're going to have to do that work. So there's about 120 million females still yet left to go after.

The male population size is roughly the same. So it's about 200 million males that we're going after. The initial indication is the 9 to 26, and that's where we're going to go. It's going to take longer. We don't think you're going to see the uptake as fast on the male side as we did on the female.

Although increasingly, what's important, if you go back in time, most of the male vaccinations were seen as a way to protect the female population. Increasingly, there is an appreciation that there are multiple, male-specific HPV-related cancers. So by being vaccinated as a male, you're protecting the female population from cervical cancer, but you're also protecting yourself from male-dominated cancers, and many of those are on the rise, especially in Asia Pacific.

So we need to continue to educate on that point. But you are going to see the ramp come, it's going to be a little bit slower. Most of the growth, therefore, is really going to be driven more probably as you get into 2026 and beyond. We're launching now, but it's -- the ramp is going to take time.

Chris Schott

Maybe just a couple more on this. In terms of your distributor and the inventory situation, any updates there in terms of how much inventory there is to work through?

Robert Davis

Yes. So I don't want to be specific to [Jerfey] because they're a public company. They -- I'll let them speak to themselves. But I would tell you, if you look at kind of what's happened, the trajectory over time, in the third quarter, we did see total channel inventory. So this would include all forms, including at the CDC and the POVs and at [Jerfey] and others come down. In the fourth quarter, we've not seen it come down. It's kind of held where it was still at an elevated level. So we're going to have to see that do better as we move into 2025.

We're working with [Jerfey] now to work through the schedule of how can we help both make sure we can meet the demand in the marketplace, ship into the market, but then allow them to manage their inventory situation, but understanding it's going to take time. So we're not trying to solve the inventory situation overnight. It's really balancing it with how do we manage the demand in the marketplace.

Chris Schott

And my last GARDASIL question, just maybe beyond China, I know it's been like questions, but just how do you think about the ex-China growth opportunity for that back?

Robert Davis

Yes. So if you look at -- and maybe I'll use the third quarter because it is the last data we reported, every market, but one, I think Canada was the only one that didn't, grew strong double digits in the third quarter. And as we look forward, we continue to expect strong growth pretty much coming from all markets around the world. So we are seeing meaningful growth in the United States. We're seeing it. And if you look at what's driving it, it's really several fold factors.

One, across both the U.S., but across most of the globe, the opportunity to move into the mid-adult space, much like we've done in China, is a real opportunity. And China showed us how to activate that mid-adult population. We're doing it now in the U.S. We're doing that across Europe, and that's a real opportunity. So we're going to continue to do that. Gender-neutral vaccination rates. If you look, males, overall, still lag females. Real opportunity there, and we're really pushing that hard. And then moving into the low and middle income markets is -- continues to be a real opportunity.

So as we look forward, we continue to see a real opportunity, and we do think you will continue to see us growing strongly everywhere outside of China. And then obviously, what we need to do is continue to push to drive the demand. We talked about to hit that $2 billion to $3 billion in China. If we can do that and do what we're looking to elsewhere, that's why we continue to believe we can still achieve the $11 billion by 2030.

Chris Schott

And maybe a question for Dean. Just as you think about the vaccine pipeline more broadly, what are you most excited about in terms of the development activities?

Dean Li

Well, there's a lot to be excited about. But I mean, if you just look at the near term outside of GARDASIL, you just look at the pneumococcal with VAXNEUVANCE and then CAPVAXIVE, We're very excited about the launch of the adult CAPVAXIVE. And I'm hoping it shows up in CVS in the next week or so, so I can get mine. But it also validates the strategy that we had about looking at the infant and looking at the adult differently. So we're -- we're going to build on VAXNEUVANCE and CAPVAXIVE by having age-appropriate serotypes and increasing those age-appropriate serotypes with V117, V118.

We clearly have clesrovimab coming in RSV for infants. We intend to have that available, as Rob said, for the next season. We have a dengue vaccine going through. We've announced stuff in relationship to EBV vaccine. So there's a lot for us to be excited in the vaccine space.

Chris Schott

Great. Maybe just pivoting over to oncology. I think the subcu KEYTRUDA time lines get pulled forward. It's good to see. Just remind us in terms of how big of a role you see subcu playing with regards to that franchise?

Robert Davis

Yes. And so maybe we, as a team, thought it'd probably be good as we're -- especially now if we potentially have the opportunity to launch sometime before the end of this year to be a little bit more clear on what our expectation is. So maybe to say it as plainly as possible, we expect to be able to see adoption of about 30% to 40% of all KEYTRUDA into subcutaneous pembrolizumab. So you should assume 30%, 40% is what will be the -- what we have as the opportunity that we are going to realize in subcutaneous pembrolizumab as we go forward which is meaningful.

Chris Schott

Yes, like how do I -- one of the questions I get from investors is how do we think about -- let's say you get that 30% or 40% converted over, what does that product look like in a post biosimilar world for the IV product? Is that -- can you maintain those volumes? Is there a price degradation? Just how are you envisioning that?

Robert Davis

So our strategy has been very much to focus on how can we get maximum conversion or I should say, adoption because it's not only -- conversion implies, it's bringing patients over. It's actually we're bringing new patients on that we'll be bringing on. So it's adoption to that 30% to 40%.

It starts with focusing on patients in their early stage where we think there is a real need, and we can drive and value created for patients who are trying to treat their cancer as a chronic disease, and we're going to drive that. Everywhere where you see monotherapy and also anywhere where you see KEYTRUDA or subcutaneous pembrolizumab in combination with an oral agent. So that's our areas of primary focus.

We do think there's an opportunity to get some of the metastatic patients who are going to be on chemotherapy, but we see that as a much smaller opportunity. And the way we're going to manage it from a price perspective is we're going to price to drive the adoption. So you should assume that -- and the price will evolve over time. So as we -- obviously, we were launching now with KEYTRUDA still patent protected, but then as you think about the IRA and as you think about post LOE, we'll make sure that the price is competitive because our goal is to maintain share. And we think we can still do that at a value that's going to be meaningful to protect the revenue that we think we need to try to have post the LOE.

Chris Schott

I just want to follow up on the patients you're identifying here. How quickly should we expect this conversion to -- it sounds like it's a mix of conversion in new patients. But how quickly should we expect to get to that 30% or 40%?

Robert Davis

It's probably going to take us 12 to 18 months to achieve it. That's why it was so important that we got the approval and we get to launch as soon as possible. A lot of questions we've received from investors is if we look at past analogs, they've not done as well. But in most of those cases, they launched the subcu pretty much right at the LOE. That's why we thought it was so important to get well ahead of the LOE so that you can have a meaningful portion of the patients already adopted into the subcu, then I think you manage through the brand loyalty post the LOE and if you're smart about how you price the drug.

Chris Schott

Great. Maybe just staying on the PD-1. PD-1/VEGF, I know it's been a big topic of discussion. Can you just talk a little bit about the role you see the bispecifics playing relative to KEYTRUDA? And maybe just talk a little bit about your recent in-licensing in the space.

Dean Li

Yes. I mean we've actually had a long history of studying PD-1 in VEGF. We have these LEAP studies that we do with KEYTRUDA and Lenvima. So we have a wall of data and relationship to PD-1/VEGF. We also have other colleagues who have studied PD-L1 with, for example, Avastin.

And one of the things that you see is you see in many cases, clear evidence of PFS. But then as we go longer out, we're not able to hit OS as often as we wish to. And when one looks back at that data, you sit there and go, I wish I had a little bit more PFS advantage. And I wish I had a situation where the adverse effects of the combinatory adverse effects allows you to stay on the drug longer.

So when we look at the data of others, such as Akeso and BioNTech, we get a sense of maybe the PD-1/VEGF, PD-L1/VEGF might give you that. So we're really eager to explore this. And we believe that if we're able to navigate that, we're the advantage explore for this because it will have a broad impact wherever you saw a PD-1 and VEGF be effective, and -- or where it makes sense. And we've already had a -- we've had how many LEAP studies that give us a total playbook as to how to play that out. So we're very eager to explore the PD-1 VEGF, and we're very grateful that [Lenovo] has partnered with us.

Chris Schott

Okay. Big pipeline readouts this year, one of the ones you're highlighting is the oral PCSK9. Can you just talk a little bit about where that -- an oral plays a role in this market? It seems like the injectables are up to a slow start, but they really seem to be gaining momentum. How do you think an asset like what you have changes, I guess, the market dynamics for that?

Robert Davis

Maybe I will give some of the commercial view and Dean can jump into from a scientific perspective. I think a lot of it is you have to look at the characteristics of the drug, the profile of what it's bringing and then how can you price it into the marketplace to understanding that the biggest challenge, we believe, to why you never saw the PCSK9s have the uptake we think they should have was the reimbursement hurdles put in place when they first launched, and they never frankly overcame that.

So from our perspective, it's important that we bring a very cost-effective oral pill that we can price in a way that we think won't create the excess challenges.

So what does that require? It requires that we have a manufacturing approach, not only that we have the macrocyclic peptide, but frankly, we have a manufacturing approach that can do it at low cost. We believe we have that. We've invested as much in our CMC work as we have, frankly, in building the molecule itself. And that, we believe, is a competitive advantage and a differential for us.

So if we can come in a situation where we are able to bring a very cost-effective drug that's oral, then I think it becomes making sure that we drive an understanding in the patient population and in the prescriber population of the importance of driving down your LDL. And that's going to mean that we need to focus on what are the quality metrics and other metrics that are out there today. We're working to define that and help refine that, which I think will be important. So if we can achieve that and if we can have the price structure, I think we bring something that's unique not only to the United States and Europe, but frankly, to the world. I don't know if you would add to that.

Dean Li

The top line is this is going to be the most potent oral LDL-lowering cholesterol medicine. I'm -- I was a practicing cardiologist before I came to Merck. And I would guess around 70% of my patients weren't at goal. And many of them were on statins. So there's an enormous unmet need.

What was laid out to the team is we need to create a situation where we're going to have the most potent LDL-lowering medicine that is out there, but we needed to create a situation that it could be at the level not of a biologic that's out there, but at the level of a branded statin. And that's what the teams have achieved.

My excitement is that I think it's a pipeline and a product because if we can -- as we get enlicitide over the line as monotherapy, there are different subsegments of population where you can easily see appropriate combinations that you would do. So it's a pipeline and a product, but also the technology of being able to take a biologic and essentially create a pill, if that's true for PCSK9, then our confidence of this platform and applying it to other biologics, I think will increase as well.

Chris Schott

Excellent. Maybe just moving over to the obesity market. I know you recently announced a preclinical oral GLP-1. Can you just update us a little bit about how you're thinking about Merck's role in obesity? What are the priorities at this point as we think about -- as you continue to look external or internal?

Dean Li

Yes. I mean, clearly, there's been investments by incumbents that have changed the field in relationship to GLP and what they do for really important outcomes such as cardiovasc outcomes and weight loss and sleep apnea.

The place that we're playing in terms of injectable sort of biologics or peptides, we've said is we're not going to play in those outcomes because there's a lot of competition, and there's a lot of -- that's not where we can make the biggest contribution. So we focused in a market where we think is important. Those patients with a lot of liver fat who are at risk of MASH and who also need to lose weight 9% to 10%. And that's our efinopegdutide that Rob talked about, and that's going to read out in Phase II.

When we look at it, it has really leading role -- a leading profile and reduction of liver fat, being able to -- being able to be tolerable and also in relationship to weight loss.

In the oral market, what we've been saying is we're interested in the oral small molecule, not the oral peptide. And what we said is that we're going to look at combos. And then obvious combos are GIP, Amylin, Apelin. So we're interested in those combos, but we're also interested in other mechanisms.

In order to create those combos, you need a base GLP that has a certain PK/PD certain sort of profile that you can easily combine with these other segments. And that's why we went out to get this molecule of this GLP because we think it has the profile to easily combine with either those molecules that we have internally or as we look externally at other compounds, this is a base for us to combine.

Chris Schott

And then maybe a bigger picture of BD one. I think you've talked about deals up to $15 billion kind of being the range you're looking at. Is that -- just an update now, is that still the reasonable target to think about for the...

Robert Davis

So if you look at where we've been and from what we showed with the progress we've made, I don't see any need to change our strategy. So we continue to look science first. So we ask, is there a scientific opportunity that addresses an unmet need where we think there's value to be had. And if so, we'll move. That 0 to 15 continues to probably be the sweet spot of what we're looking at. And when I think about it from a phase of development, we've been doing some stuff in Phase I. We've done stuff in Phase II, Phase III. We've not really done anything in the commercialized asset space, not because we're opposed to it, just because we haven't found one that has the scientific merits for an unmet need. If we find that, we'd also be open to the commercial space, too, but always usually within the range of that 1 to 15 is what we're thinking about.

Chris Schott

Great. Maybe the last question here as we run out of time. 2025, pushes and pulls in the business we should be thinking about?

Robert Davis

So if you look at, obviously, building on the momentum of 2024, we believe you're going to see solid top line growth in 2025 driven by continued growth in oncology and then importantly, with the new launches augmenting that as well as Animal Health.

So as I think about it, all of what you've seen in oncology, lung cancer, triple-negative breast cancer, other women's cancers, bladder cancer will be important growth drivers. Those are really what I would see as a lot of the tailwinds, if you will.

From a headwind perspective, probably the biggest headwind we're going to see is going to be GARDASIL because of the China situation. And we will continue to address that. And then you're seeing the dollar strengthening across pretty much every currency. So FX is going to be a headwind that we're going to have to work through. We're focused on that as well. So those would probably be the major pushes and pulls I would point you to as we think about 2025.

Chris Schott

Great. I think we're all out of time. Thank you so much for the comments. Appreciate it.

Robert Davis

Thank you very much. Appreciate it.