Core Viewpoint - Merck (MRK) reported mixed second-quarter results, beating earnings estimates while meeting sales expectations, and narrowed its sales guidance for 2025 despite a less negative impact from currency fluctuations [1][2]. Financial Guidance - Merck now expects revenues to be between $64.3 billion and $65.3 billion, down from the previous range of $64.1 billion to $65.6 billion, reflecting a revised negative impact from foreign exchange of approximately 0.5% [2][10]. - Adjusted EPS is projected to be between $8.87 and $8.97, an increase from the prior range of $8.82 to $8.97, with a revised negative impact of foreign exchange estimated at around 15 cents per share [2][10]. Acquisition Plans - The guidance does not account for the upcoming acquisition of Verona Pharma for approximately $10 billion, expected to close in Q4 2025, which will add Ohtuvayre for chronic obstructive pulmonary disease treatment [3]. Growth Expectations - After a weak sales performance in the first half of 2025, Merck anticipates a return to growth in the second half, driven by oncology drugs like Keytruda, the Animal Health segment, and new products, although lower sales of Gardasil in China and Japan may offset some growth [4][6]. Key Product Performance - Keytruda generated $7.96 billion in sales in Q2 2025, a 9% year-over-year increase, accounting for about 50% of Merck's pharmaceutical sales [5][10]. - The Animal Health segment reported revenues of $1.65 billion, up 11% year-over-year, driven by increased demand for livestock products [5]. New Product Contributions - Winrevair, a new pulmonary arterial hypertension drug, achieved $336 million in sales, a 20% sequential increase, while Capvaxive, a new pneumococcal conjugate vaccine, posted sales of $129 million, up 20.1% [7]. - Both products are viewed as key revenue drivers for long-term growth, especially as Keytruda's exclusivity ends in 2028 [7]. Competitive Landscape - Winrevair is expected to face significant competition in the pulmonary arterial hypertension market from United Therapeutics and Johnson & Johnson, which have established products in this space [8][9][11]. Stock Performance and Valuation - Year-to-date, Merck's shares have declined by 18.8%, compared to an 8.2% decrease in the industry [12]. - Merck's shares trade at a forward price/earnings ratio of 8.64, lower than the industry average of 13.71 and its 5-year mean of 12.79, indicating attractive valuation [13]. Earnings Estimates - The Zacks Consensus Estimate for 2025 earnings has increased from $8.88 to $8.92 per share, while the estimate for 2026 has decreased from $9.70 to $9.61 over the past 30 days [14].

Core Viewpoint - Merck's pharmaceutical business is experiencing a significant slowdown due to declining sales of its key products, Keytruda and HPV vaccine, leading to a comprehensive cost-cutting plan and large-scale layoffs [1][2][3]. Financial Performance - In the first half of 2025, Merck reported total revenue of $31.3 billion, a 2% year-over-year decline, with pharmaceutical revenue at $27.7 billion, down 3% [2]. - Revenue from the China region plummeted to approximately $1.1 billion, a staggering 70% decrease year-over-year [2]. Cost-Cutting Measures - Merck announced a plan to save $3 billion annually by 2027, which includes laying off about 6,000 employees, representing 8% of its global workforce [6]. - The layoffs are expected to save approximately $1.7 billion annually, with the first quarter of 2025 already accounting for $649 million in related expenses [6]. HPV Vaccine Sales Decline - Sales of Merck's HPV vaccine fell sharply, with first-half sales at $2.453 billion, a 48% year-over-year decline, and second-quarter sales dropping 55% to $1.126 billion [8]. - The decline in sales is primarily attributed to decreased demand in China, where revenue from the HPV vaccine was only $193 million in Q1 2025 and $0 in Q2 2025 due to a supply suspension [9][10]. Market Dynamics in China - The Chinese market, once a stronghold for Merck, saw its contribution to global revenue drop from 12.5% in 2023 to less than 4% in the first half of 2025 [11]. - The introduction of competing HPV vaccines at significantly lower prices has intensified market pressure on Merck's offerings [10]. Key Product Performance - Keytruda, which generated $15.2 billion in sales in the first half of 2025, has seen its growth rate slow to 7%, down from nearly 20% in previous years [13]. - The looming expiration of Keytruda's patents by 2028 raises concerns about future revenue, necessitating the identification of new blockbuster products [15]. Strategic Acquisitions - Merck has been actively pursuing acquisitions to bolster its product pipeline, including a $10 billion acquisition of Verona Pharma, which offers a promising COPD treatment [15][16]. - Other significant acquisitions include Acceleron for $11.5 billion and Prometheus Biosciences for $10.8 billion, aimed at expanding into new therapeutic areas [16].

Core Viewpoint - Merck's disappointing performance in the first half of 2025 has led to a significant cost-cutting plan, including a global layoff of approximately 6,000 employees, which is about 8% of its workforce. The company aims to save $3 billion annually by 2027 through this initiative [2][3][4]. Financial Performance - Merck reported total revenue of $31.3 billion for the first half of 2025, a 2% year-over-year decline. The pharmaceutical business generated $27.7 billion, down 3% year-over-year. Revenue from the China region plummeted by 70% to approximately $1.1 billion [2][11]. - The sales of Merck's HPV vaccine in the first half of 2025 were $2.453 billion, a staggering 48% decrease year-over-year, with a 55% drop in the second quarter alone [7][8]. Layoff and Cost-Cutting Measures - The company plans to cut around 6,000 jobs globally, which is expected to save approximately $1.7 billion annually by 2027. The layoffs will primarily affect administrative, sales, and research positions [3][4]. - Merck has already accounted for $649 million in expenses related to the layoff plan in its GAAP earnings for the second quarter of 2025 [5]. Market Dynamics - The decline in HPV vaccine sales is attributed mainly to decreased demand in China, where Merck has paused supply due to market conditions and high inventory levels [9][10]. - Merck's revenue from China, which had previously been a strong market, has seen a drastic decline from $6.7 billion in 2023 to approximately $1.1 billion in the first half of 2025, representing less than 4% of its global pharmaceutical business [11]. Product Pipeline and Future Outlook - Merck's key product, Keytruda, generated $15.2 billion in sales in the first half of 2025, accounting for 48% of total revenue, but its growth rate has slowed significantly compared to previous years [12][13]. - The company is actively seeking new blockbuster products to replace Keytruda, which faces patent expiration in 2028. Recent acquisitions, such as Verona Pharma for $10 billion, aim to bolster its product pipeline [14][15][16].

Safe Harbor Statement and Disclaimers • This presentation contains forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, by Ligand and its partners thatinvolve risks and uncertainties and reflect Ligand's and its partners' judgmentasofthedateofthispresentation.All statements,otherthan statementsof historicalfact, couldbedeemedtobeforward-lookingstatements, includingstatements thatexpress Ligand'sorits partners'opinions, expectations,objectives, assumptions,plans orpro ...

Core Insights - The U.S. stock market is anticipated to remain volatile due to stalled trade talks with China and uncertainty surrounding the Federal Reserve's interest rate decision, prompting a focus on low-beta stocks as a strategic investment approach [1][2] Group 1: Market Conditions - The U.S. stock market is expected to experience volatility as trade discussions with China have stalled, leading to investor uncertainty [1] - Investors are apprehensive ahead of the Federal Reserve's interest rate decision, which may negatively affect borrowing costs and business growth [1] Group 2: Investment Strategy - Creating a curated portfolio of low-beta stocks is recommended as a prudent strategy to navigate market volatility [1][2] - Stocks such as Vipshop Holdings Limited (VIPS), GDS Holdings Limited (GDS), Futu Holdings Limited (FUTU), and Verona Pharma plc (VRNA) are highlighted as potential investment opportunities [2][9] Group 3: Stock Characteristics - Beta measures the volatility of a stock relative to the market, with a beta of less than 1 indicating lower volatility compared to the market [3][4] - A screening criterion for low-beta stocks includes a beta between 0 and 0.6, ensuring less volatility [5][6] Group 4: Company Highlights - **Vipshop Holdings**: Utilizes a strategy called "Made for Vipshop," offering exclusive products from over 200 brands, which are in high demand [7] - **GDS Holdings**: Recently secured a 152 MW AI data center order and plans to expand its 900 MW capacity in key markets, indicating strong demand [9][10] - **Futu Holdings**: A tech-driven company enhancing its platform with Futubull AI, a smart assistant for investment-related queries [11] - **Verona Pharma**: Its drug Ohtuvayre is a novel COPD treatment, combining bronchodilation and anti-inflammatory effects, marking a significant advancement in therapy [12]

Core Insights - Merck (MRK) announced a multi-year optimization initiative aimed at saving $3 billion in annual costs by the end of 2027, coinciding with its second-quarter results on July 29 [1][12] - The restructuring will involve job cuts in administrative, sales, and R&D sectors, as well as a reduction in global real estate footprint, with savings reinvested into high-growth areas of pipeline development [2][12] - The initiative is part of Merck's strategy to diversify its revenue base, which is currently heavily reliant on Keytruda, a PD-L1 inhibitor that accounts for approximately 50% of its pharmaceutical sales [3][4] Financial Performance - Keytruda generated sales of $7.96 billion in Q2 2025, reflecting a 9% year-over-year increase [4] - Sales of Gardasil, Merck's second-largest product, fell by 55% in Q2 2025 to $1.13 billion, primarily due to decreased demand in China and timing of public-sector purchases [5] - Merck's new products, including Capvaxive and Winrevair, are showing promising sales growth, with Capvaxive generating $129 million (up 20.6% sequentially) and Winrevair generating $336 million (up 20% sequentially) in Q2 2025 [10] Strategic Initiatives - Merck is actively pursuing mergers and acquisitions (M&A) to bolster its pipeline, with its phase III pipeline nearly tripling since 2021 [6] - The company announced a definitive agreement to acquire Verona Pharma for approximately $10 billion, expected to close in Q4 2025, which will enhance its cardio-pulmonary portfolio [7][8] - Recent multi-billion-dollar deals with Chinese biotechs aim to diversify Merck's product offerings across various therapeutic areas [9] Market Position - Year-to-date, Merck's shares have declined by 16.9%, contrasting with a 1% increase in the industry [15] - Merck's price/earnings ratio stands at 8.87, which is lower than the industry average of 15.11 and its 5-year mean of 12.80, indicating an attractive valuation relative to peers [16] Earnings Estimates - The Zacks Consensus Estimate for Merck's 2025 earnings has decreased from $8.93 to $8.87 per share, while the estimate for 2026 has dropped from $9.74 to $9.64 over the past 60 days [19]

Core Insights - Merck (MRK) reported Q2 2025 adjusted EPS of $2.13, exceeding estimates, but a 7% decline year-over-year on a reported basis due to a $200 million upfront payment for a license agreement with Hengrui Pharma [2][9][17] - Revenues decreased 2% year-over-year to $15.81 billion, aligning with consensus estimates [3][9] Sales Performance of Oncology Drugs - Keytruda sales reached $7.96 billion, a 9% increase, driven by strong uptake in various cancer indications, surpassing estimates [4][9] - Alliance revenues from Lynparza and Lenvima contributed positively, with Lynparza sales up 15% to $370 million and Lenvima revenues totaling $265 million, up 5% [5] Sales Performance of Other Key Products - HPV vaccine sales (Gardasil and Gardasil 9) fell 55% to $1.13 billion due to reduced demand in China, missing estimates [7] - Sales of other vaccines showed mixed results, with Vaxneuvance increasing 20% to $229 million, while Rotateq and Pneumovax 23 saw significant declines [8][10] Animal Health Segment - The Animal Health segment generated $1.65 billion in revenues, an 11% increase year-over-year, driven by higher demand and the inclusion of Elanco aqua business sales [12] Cost and Margin Discussion - Adjusted gross margin improved to 82.2%, up 130 basis points year-over-year, attributed to a favorable product mix [13] - Adjusted R&D spending rose 15% to $3.99 billion, influenced by the upfront payment to Hengrui Pharma and increased compensation costs [14] 2025 Guidance - Merck narrowed its 2025 revenue guidance to $64.3-$65.3 billion, reflecting a less negative currency impact [15] - Adjusted EPS guidance is now between $8.87 and $8.97, accounting for a revised negative impact from foreign exchange [16] Acquisition Plans - Merck announced plans to acquire Verona Pharma for approximately $10 billion, expected to close in Q4 2025, which will enhance its portfolio in chronic obstructive pulmonary disease [19]

Core Viewpoint - The collaboration between Heng Rui Medicine and GlaxoSmithKline (GSK) marks a significant shift in the innovative drug monetization landscape, moving from oncology to chronic diseases, particularly chronic obstructive pulmonary disease (COPD) [2][3][4] Group 1: Partnership Details - GSK will pay Heng Rui Medicine a total of $500 million as an upfront payment, and Heng Rui will license its PDE3/4 inhibitor HRS-9821 and up to 11 additional projects to GSK for global rights outside of Greater China [1] - If all projects are successfully developed and commercialized, Heng Rui could receive up to $12 billion in milestone payments, along with sales royalties [1][7] - HRS-9821 has shown strong PDE3 and PDE4 inhibition effects and is expected to be developed as a convenient dry powder inhaler (DPI) formulation [6] Group 2: Market Context - The global COPD patient population exceeds 390 million, with around 100 million in China, where the disease is the third leading cause of death [4] - Traditional COPD treatments have been limited, but recent innovations, such as Merck's acquisition of Verona Pharma for $10 billion, highlight a renewed focus on this therapeutic area [4][5] Group 3: Industry Trends - The oncology sector is experiencing saturation, with over 60% of global cancer drug pipelines featuring similar target drugs, prompting companies to seek new growth areas [2] - The collaboration between Heng Rui and GSK represents a strategic move for GSK to strengthen its respiratory disease portfolio, aligning with its focus on core business areas [8] Group 4: Future Implications - The partnership signifies a qualitative leap in Heng Rui's international strategy, moving beyond single project licensing to a platform-based collaboration model [7] - The global pharmaceutical industry is facing a "patent cliff," with significant revenue risks as patents expire, leading companies to accelerate external collaborations for new revenue streams [9][10]

Core Viewpoint - Merck is set to report its second-quarter 2025 earnings on July 29, with consensus estimates for sales at $15.77 billion and earnings per share (EPS) at $1.99, reflecting a decline in earnings estimates over the past month [1][6]. Earnings Estimates and Trends - The current EPS estimate for Q2 is $1.99, down from $2.03 30 days ago, indicating a downward trend in earnings expectations [2]. - The average earnings surprise over the last four quarters is 3.82%, with the last quarter showing a surprise of 3.26% [3]. Factors Influencing Upcoming Results - Keytruda, Merck's leading cancer drug, is expected to drive top-line growth in Q2, with sales estimates for Keytruda at $7.90 billion [5][7]. - Other drugs like Lynparza and new products such as Capvaxive are anticipated to contribute positively to pharmaceutical sales [6][14]. Performance of Specific Products - Sales of Keytruda are likely boosted by its uptake in early-stage non-small cell lung cancer and continued demand in metastatic indications [7]. - The HPV vaccine Gardasil is expected to see mixed results, with lower demand in China but increased sales in other markets [10]. - Generic competition is impacting sales of certain products, such as Bridion, while new drugs like Winrevair and Capvaxive are showing promising sales growth [11][13]. Valuation and Market Performance - Merck's shares have underperformed the industry and the S&P 500, with a year-to-date loss of 13.9% [16][22]. - The company's price/earnings ratio of 9.05 is lower than the industry average of 15.25, suggesting potential attractiveness from a valuation perspective [17]. Strategic Developments - Merck's acquisition of Verona Pharma for approximately $10 billion is expected to enhance its cardio-pulmonary pipeline [21][23]. - Despite the strength of Keytruda, there are concerns regarding the company's reliance on this drug and the need for diversification [20][24]. Long-Term Outlook - While Merck faces challenges such as declining sales for Gardasil in China and potential competition for Keytruda, the company is expected to maintain strong sales until Keytruda's patent expiration in 2028 [26][27]. - Long-term investors are encouraged to stay invested, while short-term investors may consider selling due to immediate challenges [27].

Core Viewpoint - AstraZeneca's Trixeo Aerosphere, an environmentally friendly inhaler for chronic lung diseases, has received a positive recommendation from the European Medicines Agency's expert committee for approval [1][2] Group 1: Product Development - The new version of Trixeo Aerosphere will utilize a next-generation propellant developed by Honeywell, aimed at delivering medication effectively to patients' lungs while reducing carbon footprint [1][2] - The previous version of the inhaler has already been approved in Europe for treating adult patients with Chronic Obstructive Pulmonary Disease (COPD) [1] Group 2: Regulatory Approval - The Committee for Medicinal Products for Human Use (CHMP) recommended the product's approval based on clinical trial results, which showed comparable drug delivery to the current version without new safety risks [1][2] - If the European Commission grants formal approval, Trixeo Aerosphere will become the first inhaler in the EU to use this new delivery mechanism [2] Group 3: Market Impact - The inhaler is projected to generate $978 million in revenue for AstraZeneca in 2024 [2] - Competing products in the COPD market include Sanofi/Regenron's Dupixent, GlaxoSmithKline's Trelegy Ellipta, and Verona Pharma's Ohtuvayre [2]