What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-02 compared with 2024-11-06 · 271 added, 374 removed, 289 unchanged (69% of the section changed)

2 unchanged sentences

Below is a summary of significant business development activity thus far in 2025.

In September 2024, Merck acquired MK-1045 (formally CN201), a novel investigational clinical-stage bispecific antibody for the treatment of B-cell associated diseases, from Curon Biopharmaceutical (Curon) for an upfront payment of $700 million.

In addition, Curon is eligible to receive future contingent developmental and regulatory milestone payments.

MK-1045 is currently being evaluated in Phase 1 and Phase 1b/2 clinical trials for the treatment of patients with relapsed or refractory non-Hodgkin lymphoma and relapsed or refractory B-cell acute lymphocytic leukemia, respectively.

Merck plans to evaluate MK-1045 as a treatment for B-cell malignancies as well as investigate its potential to provide a novel, scalable option for the treatment of autoimmune diseases.

The transaction was accounted for as an asset acquisition.

Merck recorded a charge of $750 million (reflecting the upfront payment and other related costs) to Research and development expenses, or approximately $0.29 per share in the third quarter and first nine months of 2024.

In connection with the agreement, Merck is also obligated to pay a third party future contingent developmental, regulatory and sales-based milestone payments and tiered royalties on future net sales of MK-1045 if approved.

In July 2024, Merck acquired the aqua business of Elanco Animal Health Incorporated (Elanco aqua business) for total consideration of $1.3 billion.

The Elanco aqua business consists of an innovative portfolio of medicines and vaccines, nutritionals and supplements for aquatic species;

two related aqua manufacturing facilities in Canada and Vietnam;

as well as a research facility in Chile.

The acquisition broadens Animal Health’s aqua portfolio with products such as Clynav , a new generation DNA-based vaccine that protects Atlantic salmon against pancreas disease, and Imvixa , an anti-parasitic sea lice treatment.

This acquisition also brings a portfolio of water treatment products for warm water production, complementing Animal Health’s warm water vaccine portfolio.

In addition to these products, the DNA-based vaccine technology that is a part of the business has the potential to accelerate the development of novel vaccines to address the unmet needs of the aqua industry.

There are no contingent payments associated with the acquisition, which was accounted for as a business combination.

Also in July 2024, Merck acquired Eyebiotech Limited (EyeBio), a privately held ophthalmology-focused biotechnology company for $1.2 billion (including payments to settle share-based equity awards) and also incurred $207 million of transaction costs.

The acquisition agreement also provides for former EyeBio shareholders to receive future contingent developmental, regulatory and sales-based milestone payments.

EyeBio’s development work focused on candidates for the prevention and treatment of vision loss associated with retinal vascular leakage, a known risk factor for retinal diseases.

EyeBio’s lead candidate, Restoret (MK-3000, formerly EYE103), is an investigational, potentially first-in-class tetravalent, tri-specific antibody that acts as an agonist of the Wingless-related integration site signaling pathway, which is in clinical development for the treatment of diabetic macular edema and neovascular age-related macular degeneration.

The transaction was accounted for as an asset acquisition.

Merck recorded net assets of $21 million, as well as a charge of $1.35 billion to Research and development expenses, or $0.52 per share, in the third quarter and first nine months of 2024 related to the acquisition.

Additionally, a $100 million developmental milestone was triggered in the third quarter of 2024 upon initiation of a Phase 2/3 clinical trial evaluating Restoret for the treatment of diabetic macular edema, which was also recorded to Research and development expenses.

Additionally in July 2024, Merck and Orion Corporation (Orion) announced the mutual exercise of an option to convert the companies’ ongoing co-development and co-commercialization agreement for opevesostat (MK-5684/ODM-208), an investigational cytochrome P450 11A1 (CYP11A1) inhibitor, and other candidates targeting CYP11A1, into an exclusive global license for Merck.

With the exercise of the option, Merck assumed full responsibility for all past and future development and commercialization expenses associated with the candidates covered by the original agreement.

In addition, Orion became eligible to receive developmental, regulatory and sales-based milestone payments, as well as annually tiered royalties on net sales for any commercialized licensed product.

Orion retained responsibility for the manufacture of clinical and commercial supply for Merck.

No payment was associated with the exercise of the option, which became effective in September of 2024.

In March 2024, Merck acquired Harpoon Therapeutics, Inc.

(Harpoon), a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases, for $765 million and also incurred $56 million of transaction costs.

Harpoon’s lead candidate, MK-6070 (formerly HPN328), is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small-cell lung cancer (SCLC) and neuroendocrine tumors.

MK-6070 is currently being evaluated as monotherapy in a Phase 1/2 clinical trial in certain patients with advanced cancers associated with expression of DLL3.

The study is also evaluating MK-6070 in combination with atezolizumab in certain patients with SCLC.

The transaction was accounted for as an asset acquisition.

Merck recorded net assets of $165 million, as well as a charge of $656 million, or $0.26 per share, to Research and development expenses in the first nine months of 2024 related to the transaction.

In March 2025, Merck and Jiangsu Hengrui Pharmaceuticals Co., Ltd.

(Hengrui Pharma) announced that the companies have entered into an exclusive license agreement for HRS-5346, an investigational oral small molecule Lipoprotein(a) inhibitor, which is currently being evaluated in a Phase 2 clinical trial in China.

Under the agreement, Hengrui Pharma granted Merck exclusive rights to develop, manufacture and commercialize HRS-5346 worldwide, excluding the Greater China region.

Hengrui Pharma will receive an upfront payment of $200 million and is eligible to receive future contingent payments associated with certain developmental, regulatory and sales-based milestones, as well as tiered royalties on future net sales of HRS-5346, if approved.

Closing of the proposed transaction is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

Merck expects to record a pretax charge of $200 million to Research and development expenses, or approximately $0.06 per share, upon closing, which is anticipated in the second quarter of 2025.

Also in March 2025, Merck acquired the Dundalk, Ireland facility of WuXi Vaccines (a wholly owned subsidiary of WuXi Biologics), which was accounted for as an asset acquisition.

Merck paid $437 million at closing which, combined with previous consideration transferred under a prior manufacturing arrangement with WuXi Vaccines related to this facility, resulted in $759 million being recorded as assets under construction within Property, Plant and Equipment .

There are no future contingent payments associated with the acquisition.

In August 2024, Merck and Daiichi Sankyo expanded their existing global co-development and co-commercialization agreement to include MK-6070.

Pricing and Tariffs

Global efforts toward health care cost containment continue to exert pressure on product pricing and market access worldwide.

Changes to the U.S.

health care system enacted in prior years as part of health care reform, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, have contributed to pricing pressure.

health care system as part of health care reform, as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private sector beneficiaries, have contributed to pricing pressure.

In 2021, the U.S.

Congress passed the American Rescue Plan Act, which included a provision that eliminates the statutory cap on rebates drug manufacturers pay to Medicaid beginning in January 2024.

Accordingly, manufacturers may have to pay state Medicaid programs more in rebates than they receive on sales of particular products.

As a result of this provision, the Company has recognized increased discounts for Januvia (sitagliptin) and Janumet (sitagliptin and metformin HCl) in the first nine months of 2024.

Congress passed the American Rescue Plan Act, which included a provision that eliminated the statutory cap on rebates drug manufacturers pay to Medicaid beginning in January 2024.

As a result of this provision, the Company paid state Medicaid programs more in rebates than it received on Medicaid sales of Januvia (sitagliptin), Janumet (sitagliptin and metformin HCl) and Janumet XR (sitagliptin and metformin HCl extended release) in 2024.

In 2022, the U.S.

Congress passed the Inflation Reduction Act (IRA), which made significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits, and government price-setting for certain Medicare Part D drugs (starting in 2026) and Medicare Part B drugs (starting in 2028).

In August 2023, the U.S.

Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), announced that Januvia would be included in the first year of the IRA’s “Drug Price Negotiation Program” (Program).

Pursuant to the IRA’s Program, discussions with the government have now concluded, with government price-setting becoming effective on January 1, 2026.

Congress passed the Inflation Reduction Act (IRA), which made significant changes to how drugs are covered and paid for under the Medicare program, including the creation of financial penalties for drugs whose prices rise faster than the rate of inflation, redesign of the Medicare Part D program to require manufacturers to bear more of the liability for certain drug benefits (which has taken effect in 2025), and government price-setting for certain Medicare Part D drugs (starting in 2026) and Medicare Part B drugs (starting in 2028).

Government price setting may also impact pricing in the private market negatively affecting the Company’s performance.

In 2023, the U.S.

Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), selected Januvia for the first year of the IRA’s “Drug Price Negotiation Program” (Program).

Pursuant to the IRA’s Program, a government price was set for Januvia , which will become effective on January 1, 2026.

In January 2025, the U.S.

Department of HHS, through the CMS, announced that Janumet and Janumet XR would be in included in the second year of the IRA’s Program, with government price setting to become effective on January 1, 2027.

The Company has sued the U.S.

1 unchanged sentence

Additionally, increased utilization of the 340B Federal Drug Discount Program and restrictions on the Company’s ability to identify inappropriate discounts are having a negative impact on Company performance.

Furthermore, the Biden Administration and Congress continue to discuss legislation designed to control health care costs, including the cost of drugs.

Furthermore, the Executive Branch and Congress continue to discuss legislation designed to control health care costs, including the cost of drugs.

In several international markets, government-mandated pricing actions have reduced prices of generic and patented drugs.

In addition, the Company’s sales performance in the first nine months of 2024 was negatively affected by other cost-reduction measures taken by governments and other third parties to lower health care costs.

The Company anticipates all of these actions and additional actions in the future will negatively affect sales and profits.

In addition, the Company’s sales performance in the first three months of 2025 was negatively affected by other cost-reduction measures taken by governments and other third parties to lower health care costs.

The Company anticipates all of these actions and additional actions in the future will continue to negatively affect sales and profits.

government has implemented tariffs on certain foreign imports into the U.S.

The impact of the tariffs on Merck’s business depends on a number of factors including the duration, scope and amount of the tariffs, as well as the extent of any measures that have been or will be taken by any affected countries, including tariffs imposed by foreign governments.

At this time, the Company anticipates that tariffs implemented to date will result in approximately $200 million of additional expenses in 2025 (which will be primarily reflected within Cost of sales ) the vast majority of which relate to China, largely related to the importation of products into China.

However, future changes to tariffs could have a further adverse effect on the Company’s business.

In particular, the U.S.

government has indicated that it intends to impose tariffs on pharmaceutical products, although the specific amount and timing of any such future tariffs has not been provided.

Operating Results

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

United States $ 8,522 $ 7,478 14 % 14 %

1 unchanged sentence

Total $ 15,529 $ 15,775 (2) % 1 %

plus international may not equal total due to rounding.

Worldwide sales were $16.7 billion in the third quarter of 2024, representing growth of 4% compared with the third quarter of 2023, or 7% excluding the unfavorable effect of foreign exchange.

Approximately 2 percentage points of the negative impact of foreign exchange was due to the devaluation of the Argentine peso, which was largely offset by inflation-related price increases consistent with practice in that market.

Global sales growth in the third quarter of 2024 was primarily due to higher sales in the oncology franchise, largely due to strong growth of Keytruda (pembrolizumab) and Welireg (belzutifan).

Also contributing to revenue growth were higher sales in the cardiovascular franchise, largely attributable to the launch of Winrevair (sotatercept-csrk), and increased sales in the hospital acute care franchise, reflecting in part strong performance of Prevymis (letermovir).

Higher sales of animal health products also contributed to revenue growth in the third quarter of 2024.

Sales growth in the third quarter of 2024 was partially offset by lower sales in the diabetes franchise attributable to Januvia and Janumet , and lower sales in the vaccines franchise largely due to combined Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine and Recombinant) /Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) sales.

Lower sales in the virology franchise largely due to Lagevrio (molnupiravir) also partially offset revenue growth in the third quarter of 2024.

Worldwide sales were $48.5 billion in the first nine months of 2024, an increase of 7% compared with the same period of 2023, or 10% excluding the unfavorable effect of foreign exchange.

Global sales growth in the first nine months of 2024 was primarily due to higher sales in the oncology franchise largely due to Keytruda and Welireg , higher sales in the cardiovascular franchise largely attributable to the launch of Winrevair , and increased sales in the vaccines franchise, reflecting continued uptake of Vaxneuvance (Pneumococcal 15-valent Conjugate Vaccine) for pediatric use.

Also contributing to revenue growth in the first nine months of 2024 were higher sales of animal health products.

Revenue growth in the first nine months of 2024 was partially offset by lower sales in the diabetes franchise attributable to Januvia and Janumet , as well as lower sales in the virology franchise largely due to Lagevrio .

Worldwide sales were $15.5 billion in the first quarter of 2025, a decrease of 2% compared with the first quarter of 2024, reflecting declines in vaccines, virology and immunology, partially offset by growth in oncology, cardiovascular, diabetes and animal health.

The decline in vaccines was primarily due to lower combined Gardasil (Human Papillomavirus Quadrivalent [Types 6, 11, 16 and 18] Vaccine and Recombinant) /Gardasil 9 (Human Papillomavirus 9-valent Vaccine, Recombinant) sales, partially offset by the U.S.

launch of Capvaxive (Pneumococcal 21-valent Conjugate Vaccine).

The decline in virology was primarily due to lower sales of Lagevrio (molnupiravir) and the decline in immunology resulted from the transfer of marketing rights for Remicade and Simponi back to Johnson & Johnson on October 1, 2024.

Growth in the oncology franchise was largely due to the performance of Keytruda (pembrolizumab) and Welireg (belzutifan), growth in the cardiovascular franchise was largely attributable to the ongoing launch of Winrevair (sotatercept-csrk), and the increase in diabetes was due to Januvia .

See Note 14 to the condensed consolidated financial statements for details on sales of the Company’s products.

4 unchanged sentences

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

Keytruda $ 7,205 $ 6,947 4 % 6 %

11 unchanged sentences

See “Research and Development Update” below.

Global sales of Keytruda grew 17% in the third quarter of 2024 and rose 18% in the first nine months of 2024, or 21% and 22%, respectively, excluding the unfavorable effect of foreign exchange.

Approximately 3 percentage points and 4 percentage points of the negative impact of foreign exchange in the third quarter and first nine months of 2024, respectively, was due to the devaluation of the Argentine peso, which was largely offset by inflation-related price increases consistent with practice in that market.

Global sales of Keytruda grew 4% in the first quarter of 2025.

Keytruda sales growth in the U.S.

reflects increased uptake across earlier-stage indications, including in certain types of non-small-cell lung cancer (NSCLC), high-risk early-stage triple-negative breast cancer (TNBC), and certain types of renal cell carcinoma (RCC), as well as higher demand across the multiple approved metastatic indications, in particular for the treatment of certain types of urothelial, endometrial, and head and neck cancers, and higher pricing.

Keytruda sales growth in international markets reflects higher demand predominately for the TNBC, melanoma and RCC earlier-stage indications, as well as uptake in cervical, gastric and renal cancer metastatic indications, particularly in Europe and Latin America.

reflects higher demand and pricing, partially offset by an approximate $250 million negative impact due to the timing of wholesaler purchases.

Demand was driven by increased utilization across earlier-stage indications, including in certain types of high-risk early-stage triple-negative breast cancer (TNBC), renal cell carcinoma (RCC), and non-small-cell lung cancer (NSCLC), as well as higher demand across the multiple approved metastatic indications, in particular for the treatment of certain types of urothelial and endometrial cancers.

Keytruda sales growth in international markets reflects higher demand predominately for the TNBC, NSCLC and RCC earlier-stage indications, as well as uptake in gastric, urothelial, and cervical cancer metastatic indications.

The 2025 launch and reimbursement of new indications for Keytruda in the EU is having a negative impact on pricing in those markets.

Keytruda has received the following regulatory approvals thus far in 2025.

Date Approval

January 2024 U.S.

Food and Drug Administration (FDA) approval in combination with chemoradiotherapy for the treatment of patients with FIGO (International Federation of Gynecology and Obstetrics) 2014 Stage III-IVA cervical cancer, based on the KEYNOTE-A18 trial.

January 2024 FDA full approval for the treatment of patients with hepatocellular carcinoma (HCC) secondary to hepatitis B who have received prior systemic therapy other than a PD-1/PD-L1 containing regimen.

The conversion from an accelerated to full (regular) approval is based on the KEYNOTE-394 trial.

February 2024 China’s National Medical Products Administration (NMPA) approval in combination with gemcitabine and cisplatin for the first-line treatment of patients with locally advanced or metastatic biliary tract carcinoma, based on the KEYNOTE-966 trial.

European Commission (EC) approval in combination with platinum-containing chemotherapy as neoadjuvant treatment, and then continued as monotherapy as adjuvant treatment, for resectable NSCLC at high risk of recurrence in adults, based on the KEYNOTE-671 trial.

Japan’s Ministry of Health, Labor and Welfare (MHLW) approval in combination with fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of patients with locally advanced unresectable or metastatic gastric or gastroesophageal junction (GEJ) adenocarcinoma, based on the KEYNOTE-859 trial.

Japan’s MHLW approval in combination with standard of care chemotherapy (gemcitabine and cisplatin) for the treatment of patients with locally advanced unresectable or metastatic biliary tract cancer, based on the KEYNOTE-966 trial.

FDA approval in combination with carboplatin and paclitaxel, followed by Keytruda as a single agent, for the treatment of adult patients with primary advanced or recurrent endometrial carcinoma, based on the KEYNOTE-868 trial.

China’s NMPA approval in combination with trastuzumab, fluoropyrimidine- and platinum-containing chemotherapy for the first-line treatment of patients with locally advanced unresectable or metastatic human epidermal growth factor receptor 2 (HER2) positive gastric or GEJ adenocarcinoma whose tumors express PD-L1 as determined by a fully validated test, based on the KEYNOTE-811 trial.

September 2024

EC approval in combination with Padcev (enfortumab vedotin-ejfv), an antibody-drug conjugate, for the first-line treatment of unresectable or metastatic urothelial carcinoma in adults, based on the KEYNOTE-A39 trial that was conducted in collaboration with Seagen (now Pfizer Inc.) and Astellas.

September 2024

FDA approval in combination with pemetrexed and platinum chemotherapy for the first-line treatment of adult patients with unresectable advanced or metastatic malignant pleural mesothelioma based on the IND.227/KEYNOTE-483 trial.

September 2024

Japan’s MHLW approval in combination with chemotherapy as a neoadjuvant treatment, then continued as monotherapy as an adjuvant treatment, for patients with NSCLC based on the KEYNOTE-671 trial.

September 2024

Japan’s MHLW approval in combination with Padcev for the first-line treatment of patients with radically unresectable urothelial carcinoma based on the KEYNOTE-A39 trial.

September 2024

Japan’s MHLW approval as monotherapy in patients with radically unresectable urothelial carcinoma who are not eligible for any platinum-containing chemotherapy based on the KEYNOTE-052 trial.

September 2024

China’s NMPA approval for the first-line treatment of adult patients with unresectable or metastatic melanoma, and conversion from conditional to full approval for the second-line treatment of adult patients with unresectable or metastatic melanoma following failure of one prior line of therapy, based on the LEAP-003 trial.

EC approval in combination with chemoradiotherapy for the treatment of FIGO 2014 Stage III-IVA locally advanced cervical cancer in adults who have not received prior definitive therapy, based on the KEYNOTE-A18 trial.

EC approval in combination with carboplatin and paclitaxel followed by Keytruda as a single agent for the first-line treatment of primary advanced or recurrent endometrial carcinoma in adults who are candidates for systemic therapy, based on the KEYNOTE-868 trial.

The Company is a party to certain third-party license agreements pursuant to which the Company pays royalties on sales of Keytruda .

Under the terms of the more significant of these agreements, Merck paid a royalty of 6.5% on worldwide sales of Keytruda through December 2023 to one third party;

this royalty declined to 2.5% in 2024 and will continue through 2026, terminating thereafter.

The Company pays an additional 2% royalty on worldwide sales of Keytruda to another third party, the termination date of which varies by country;

China’s National Medical Products Administration (NMPA) approval in combination with Padcev (enfortumab vedotin-ejfv), an antibody-drug conjugate, for the treatment of adults with locally advanced or metastatic urothelial carcinoma, based on the KEYNOTE-A39 trial that was conducted in collaboration with Seagen (now Pfizer Inc.) and Astellas.

European Commission (EC) approval in combination with pemetrexed and platinum chemotherapy for the first-line treatment of adult patients with unresectable non epithelioid malignant pleural mesothelioma, based on the IND.227/KEYNOTE-483 trial.

The Company is a party to license agreements pursuant to which the Company pays royalties on net sales of Keytruda .

Under the terms of the more significant of these agreements, Merck pays a royalty of 2.5% on worldwide net sales of Keytruda ;

this royalty expires on December 31, 2026.

The Company pays an additional 2% royalty on worldwide net sales of Keytruda to another third party, the termination date of which varies by country;

this royalty expired in the U.S.

1 unchanged sentence

The royalty expenses are included in Cost of sales .

Lynparza (olaparib) is an oral poly (ADP-ribose) polymerase (PARP) inhibitor being developed as part of a collaboration with AstraZeneca PLC (AstraZeneca) (see Note 3 to the condensed consolidated financial statements).

Lynparza (olaparib) is an oral poly (ADP-ribose) polymerase (PARP) inhibitor being developed and commercialized as part of a collaboration with AstraZeneca PLC (AstraZeneca) (see Note 3 to the condensed consolidated financial statements).

Lynparza is approved for the treatment of certain types of advanced or recurrent ovarian, early or metastatic breast, metastatic pancreatic and metastatic castration-resistant prostate cancers.

Alliance revenue related to Lynparza increased 13% and 7% in the third quarter and first nine months of 2024, respectively, primarily due to higher global demand.

Lenvima (lenvatinib) is an oral receptor tyrosine kinase inhibitor being developed as part of a collaboration with Eisai Co., Ltd.

Alliance revenue related to Lynparza increased 7% in the first

quarter of 2025 primarily due to higher demand in the U.S.

and certain international markets.

In January 2025, China’s NMPA approved Lynparza as adjuvant treatment for adult patients with germline BRCA -mutated, human epidermal growth factor receptor 2 (HER2)-negative high-risk early breast cancer, based on the OlympiA trial.

Lenvima (lenvatinib) is an oral receptor tyrosine kinase inhibitor being developed and commercialized as part of a collaboration with Eisai Co., Ltd.

(Eisai) (see Note 3 to the condensed consolidated financial statements).

Lenvima is approved for the treatment of certain types of thyroid cancer, RCC, HCC, in combination with everolimus for certain patients with advanced RCC, and in combination with Keytruda for certain patients with advanced endometrial carcinoma or advanced RCC.

Alliance revenue related to Lenvima declined 3% in the third quarter of 2024 primarily reflecting the timing of sales in China in the prior year, partially offset by higher demand in the U.S.

Alliance revenue related to Lenvima grew 3% in the first nine months of 2024 primarily reflecting higher demand and pricing in the U.S., partially offset by the timing of sales in China in the prior year.

Sales of Welireg , for the treatment of adult patients with certain von Hippel-Lindau (VHL) disease-associated tumors and certain adult patients with previously treated advanced RCC, more than doubled in both the third quarter and first nine months of 2024.

Sales growth in both periods was primarily due to higher demand in the U.S.

largely attributable to the continued uptake of a new indication for previously treated advanced RCC following approval by the FDA in December 2023.

Welireg is under review in the European Union (EU) and Japan both for the treatment of previously treated advanced RCC based on the LITESPARK-005 clinical trial and for the treatment of VHL disease based on the LITESPARK-004 clinical trial.

Lenvima is approved for the treatment of certain types of thyroid cancer, RCC, hepatocellular carcinoma, in combination with everolimus for certain patients with advanced RCC, and in combination with Keytruda for certain patients with advanced endometrial carcinoma or advanced RCC.

Alliance revenue related to Lenvima increased 1% in the first quarter of 2025 primarily reflecting higher demand in the U.S.

Sales growth was primarily due to higher demand in the U.S.

reflecting in part continued uptake of the RCC indication following approval by the U.S.

Food and Drug Administration (FDA) in 2023.

In February 2025, the EC conditionally approved Welireg as monotherapy both for the treatment of adult patients with VHL disease who require therapy for associated, localized RCC, central nervous system hemangioblastomas, or pancreatic neuroendocrine tumors, and for whom localized procedures are unsuitable, and for the treatment of adult patients with advanced clear cell RCC that progressed following two or more lines of therapy that included a PD-1 or PD-L1 inhibitor and at least two vascular endothelial growth factor targeted therapies.

The EC approval of these two indications is based on results from the LITESPARK-004 and LITESPARK-005 trials.

The conditional approval of Welireg will be valid for one year, subject to yearly renewal, pending certain additional clinical data.

Timing for commercial availability of Welireg in individual EU countries will depend on multiple factors, including the completion of national reimbursement procedures.

Reblozyl (luspatercept-aamt) is a first-in-class erythroid maturation recombinant fusion protein that is being commercialized through a global collaboration with Bristol-Myers Squibb Company (BMS) (see Note 3 to the condensed consolidated financial statements).

Reblozyl is approved for the treatment of anemia in certain rare blood disorders.

Alliance revenue related to this collaboration (consisting of royalties) increased 91% and 84% in the third quarter and first nine months of 2024, respectively, due to strong underlying sales performance.

Alliance revenue related to this collaboration (consisting of royalties) increased 68% in the first quarter of 2025 primarily due to strong underlying sales performance, as well a favorable true-up of the previous quarter’s estimated royalty amount.

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

Gardasil/Gardasil 9

4 unchanged sentences

Vaxneuvance 230 219 5 % 7 %

RotaTeq 193 156 24 % 25 % 572 584 (2) % (1) %

Pneumovax 23 68 140 (51) % (51) % 188 327 (42) % (40) %

due to public sector buying patterns, higher pricing and demand, as well as higher demand in most international regions.

Combined worldwide sales of Gardasil and Gardasil 9 were nearly flat in the

first nine months of 2024 primarily due to higher sales in the U.S.

reflecting public sector buying patterns, higher pricing and demand, as well as higher demand in most international regions, offset by lower demand in China.

In the second quarter of 2024, the Company observed a significant decline in shipments from its distributor and commercialization partner in China, Zhifei Biological Products Co., Ltd.

(Zhifei), to disease and control prevention institutions and correspondingly into the points of vaccination compared with prior quarters, resulting in above normal inventory levels in China.

This lower level of Zhifei shipments continued in the third quarter of 2024.

Accordingly, the Company will ship less than its full year 2024 contracted doses to Zhifei and combined sales of Gardasil/Gardasil 9 in China will decline in 2024 compared with 2023, and such sales are also expected to decline in 2025 compared with 2024.

The Company is a party to certain third-party license agreements pursuant to which the Company pays royalties on sales of Gardasil/Gardasil 9.

Under the terms of the more significant of these agreements, Merck pays a 7% royalty on sales of Gardasil/Gardasil 9 in the U.S.

to one third party (this royalty expires in December 2028);

Merck paid an additional 7% royalty on worldwide sales of Gardasil/Gardasil 9 to another third party, which expired in December 2023.

Combined worldwide sales of Gardasil and Gardasil 9, vaccines to help prevent certain cancers and other diseases caused by certain types of human papillomavirus (HPV), declined 41% in the first quarter of 2025 primarily driven by lower demand in China, partially offset by higher demand in most other international markets, particularly in Japan due to a national catch-up immunization program, and by higher pricing and demand in the U.S.

Demand in Japan is expected to decline significantly in future periods given that the last date to initiate the first dose in the national immunization program catch-up cohort was March 2025.

Beginning in mid-2024, the Company observed a significant decline in shipments from its distributor and commercialization partner in China, Chongqing Zhifei Biological Products Co., Ltd.

(Zhifei), to disease and control prevention institutions and correspondingly into the points of vaccination compared with prior quarters of 2024, resulting in above normal inventory levels at Zhifei.

Accordingly, the Company shipped less than its contracted doses to Zhifei in the latter part of 2024.

Lower demand in China persisted and, at the end of 2024, overall channel inventory levels in China remained elevated at above normal levels.

Therefore, the Company made a decision to temporarily pause shipments to China beginning in February 2025 through at least the middle of the year and, as a result, combined sales of Gardasil/Gardasil 9 will decline significantly in 2025 compared with 2024.

In January 2025, China’s NMPA approved Gardasil for use in males 9-26 years of age to help prevent certain HPV-related cancers and diseases.

In April 2025, China’s NMPA approved Gardasil 9 for use in males 16-26 years of age to help prevent certain HPV-related cancers and diseases.

Gardasil 9 is currently indicated in the U.S.

for a two-dose regimen in adolescents aged 9-14 and a three-dose regimen for those aged 15-45.

Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) has stated that at its meeting in June 2025 it intends to discuss and, potentially, vote on a change to the dose recommendation, which could include a reduction in the number of recommended doses.

The Company is a party to license agreements pursuant to which the Company pays royalties on sales of Gardasil/Gardasil 9.

Under the terms of the more significant of these agreements, Merck pays a 7% royalty on net sales of Gardasil/Gardasil 9 in the U.S.;

this royalty expires in December 2028.

The royalty expenses are included in Cost of sales .

Global sales of ProQuad (Measles, Mumps, Rubella and Varicella Virus Vaccine Live), a pediatric combination vaccine to help protect against measles, mumps, rubella and varicella, grew 3% and 6% in the third quarter and first nine months of 2024, respectively, primarily reflecting higher pricing in the U.S.

Worldwide sales of M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live), a vaccine to help prevent measles, mumps and rubella, grew 5% in both the third quarter and first nine months of 2024 largely reflecting timing of tenders in certain international markets, partially offset by lower demand and pricing in the U.S.

Global sales of Varivax (Varicella Virus Vaccine Live), a vaccine to help prevent chickenpox (varicella), declined 7% in the third quarter of 2024 primarily attributable to the timing of sales in Latin America.

Global sales of Varivax grew 2% in the first nine months of 2024 primarily due to higher pricing in the U.S., partially offset by the timing of sales in Latin America.

Worldwide sales of Vaxneuvance , a vaccine to help protect against invasive pneumococcal disease, grew 12% and 33% in the third quarter and first nine months of 2024, respectively, primarily reflecting continued uptake following launches in the pediatric indication in Europe, Japan, and other countries in the Asia Pacific region.

Lower demand in the U.S.

due to competition partially offset Vaxneuvance sales growth in both periods.

Global sales of RotaTeq (Rotavirus Vaccine, Live Oral, Pentavalent), a vaccine to help protect against rotavirus gastroenteritis in infants and children, grew 24% in the third quarter of 2024 largely due to the beneficial impact of public sector buying patterns in the U.S.

coupled with the timing of sales in China.

Worldwide sales of RotaTeq declined 2% in the first nine months of 2024 primarily due to lower tenders in Europe and the timing of sales in China.

The sales decline in the year-to-date period was partially offset by higher sales in the U.S.

due to public sector buying patterns and higher pricing, offset in part by lower demand.

Worldwide sales of Pneumovax 23 (pneumococcal vaccine polyvalent), a vaccine to help prevent pneumococcal disease, declined 51% and 42% in the third quarter and first nine months of 2024, respectively, driven by lower global demand, particularly in the U.S.

as the market has shifted toward newer adult pneumococcal conjugate vaccines.

In June 2024, the FDA approved Capvaxive (Pneumococcal 21-valent Conjugate Vaccine) for the prevention of invasive pneumococcal disease and pneumococcal pneumonia in individuals 18 years of age and older.

The approval was supported by results from multiple Phase 3 clinical studies evaluating Capvaxive in both vaccine-naïve and vaccine-experienced adult patient populations, including STRIDE-3, STRIDE-4, STRIDE-5 and STRIDE-6.

In June 2024, the U.S.

Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) unanimously voted to recommend Capvaxive as an option for adults age 65 and older, among other cohorts, for pneumococcal vaccination.

In October 2024, the CDC’s ACIP voted to update the adult age-based pneumococcal vaccination guidelines and recommended Capvaxive for pneumococcal vaccination in adults 50 years of age and older.

These provisional recommendations were adopted by the CDC director and are now official.

As a result of manufacturing delays, in January 2025, the Company borrowed doses of ProQuad from the CDC Pediatric Vaccine Stockpile.

The borrowing reduced sales of ProQuad in the first quarter of 2025 by approximately $70 million.

These doses are being used to support routine vaccination in the U.S.

Worldwide sales of M-M-R II (Measles, Mumps and Rubella Virus Vaccine Live), a vaccine to help protect against measles, mumps and rubella, grew 62% in the first quarter of 2025 primarily due to higher sales in the U.S.

largely reflecting private sector buy-in due to measles outbreaks, as well as higher pricing.

Global sales of Varivax (Varicella Virus Vaccine Live), a vaccine to help prevent chickenpox (varicella), declined 5% in the first quarter of 2025 primarily due to lower demand in the U.S.

and declines in certain international markets, partially offset by higher pricing in the U.S.

The Company has experienced manufacturing delays related to ProQuad and Varivax .

As a result, the Company anticipates that some international markets will experience supply constraints during 2025.

Worldwide sales of Vaxneuvance (Pneumococcal 15-valent Conjugate Vaccine), a vaccine to help protect against invasive pneumococcal disease caused by certain serotypes, grew 5% in the first quarter of 2025 primarily due to continued uptake following launches in the pediatric indication in Europe and certain countries in the Asia Pacific region, partially offset by lower demand in the U.S.

due to competitive pressure.

Merck is a party to license agreements pursuant to which the Company pays royalties on sales of Vaxneuvance .

Under the terms of the most significant of these agreements, Merck pays a royalty of 7.25% on net sales of Vaxneuvance through 2026;

this royalty will decline to 2.5% on net sales from 2027 through 2035.

The royalty expenses are included in Cost of sales .

Sales of Capvaxive were $107 million in the first quarter of 2025 due to continued uptake following launch in the U.S.

in the third quarter of 2024.

In June 2024, the FDA approved Capvaxive for the prevention of invasive pneumococcal disease and pneumococcal pneumonia caused by certain serotypes in individuals 18 years of age and older.

In March 2025, the EC approved Capvaxive .

The timing of availability of Capvaxive in individual EU countries will depend on multiple factors including the completion of reimbursement procedures.

The FDA and EC approvals were supported by results from the STRIDE clinical program, which evaluated Capvaxive in both vaccine-naïve and vaccine-experienced adult patient populations.

Merck is a party to certain third-party license agreements pursuant to which the Company pays royalties on sales of Capvaxive .

Under the more significant of these agreements, Merck pays a royalty of 7.25% on net sales of Capvaxive through 2026;

Under the terms of the most significant of these agreements, Merck pays a royalty of 7.25% on net sales of Capvaxive through 2026;

this royalty will decline to 2.5% on net sales from 2027 through 2035.

The royalty expenses are included in Cost of sales .

Hospital Acute Care

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

Bridion $ 441 $ 440 — % 1 %

Prevymis 208 174 19 % 22 %

Worldwide sales of Bridion (sugammadex), for the reversal of two types of neuromuscular blocking agents used during surgery, declined 1% and 7% in the third quarter and first nine months of 2024, respectively, primarily driven by lower demand in certain international markets due to generic competition, particularly in the EU and the Asia Pacific region including in Japan, largely offset by higher demand and pricing in the U.S.

Worldwide sales of Bridion (sugammadex), for the reversal of two types of neuromuscular blocking agents used during surgery, were nearly flat in the first quarter of 2025 as higher demand and pricing in the U.S.

was offset by lower demand in several international markets due to generic competition, particularly in Japan and the EU.

The patents that provided market exclusivity for Bridion in the EU and Japan expired in July 2023 and January 2024, respectively.

Accordingly, the Company is experiencing sales declines of Bridion in these markets and expects the declines to continue.

Worldwide sales of Prevymis , a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in certain high risk adult and pediatric recipients of an allogenic hematopoietic stem cell transplant and for prophylaxis of CMV disease in certain high risk adult and pediatric recipients of a kidney transplant, grew 32% and 33% in the third quarter and first nine months of 2024, respectively, largely due to higher global demand, particularly in the U.S., China, Europe and Japan.

Worldwide sales of Prevymis (letermovir), a medicine for prophylaxis (prevention) of cytomegalovirus (CMV) infection and disease in certain high risk adult and pediatric recipients of an allogenic hematopoietic stem cell transplant and for prophylaxis of CMV disease in certain high risk adult and pediatric recipients of a kidney transplant, grew 19% in the first quarter of 2025 largely due to higher demand in the U.S.

Cardiovascular

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

Alliance Revenue - Adempas/

March 31, % Change

($ in millions) 2025 2024 % Change

$ 280 $ — — —

Adempas 72 65 11 % 13 % 214 189 13 % 15 %

Alliance Revenue - Adempas/Verquvo (1)

106 98 8 % 8 %

(1) Alliance revenue represents Merck’s share of profits from sales in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs (see Note 3 to the condensed consolidated financial statements).

Adempas (riociguat) and Verquvo (vericiguat) are part of a worldwide collaboration with Bayer AG (Bayer) to market and develop soluble guanylate cyclase (sGC) modulators (see Note 3 to the condensed consolidated financial statements).

Adempas is approved for the treatment of certain types of pulmonary arterial hypertension (PAH) and chronic pulmonary hypertension (PH).

Verquvo is approved to reduce the risk of cardiovascular death and heart failure hospitalization following a hospitalization for heart failure or need for outpatient intravenous diuretics in adults with symptomatic chronic heart failure and reduced ejection fraction.

Alliance revenue from the collaboration grew 11% and 18% in the third quarter and first nine months of 2024, respectively, primarily due to higher demand in Bayer’s marketing territories.

Revenue also includes sales of Adempas and Verquvo in Merck’s marketing territories.

Sales of Adempas in Merck’s marketing territories grew 11% and 13% in the third quarter and first nine months of 2024, respectively, primarily due to higher demand.

In March 2024, the FDA approved Winrevair for the treatment of adults with PAH (World Health Organization [WHO] Group 1) to increase exercise capacity, improve WHO functional class (FC), and reduce the risk of clinical worsening events.

Adempas 68 70 (3) % 1 %

(1) Alliance revenue for Adempas and Verquvo represents Merck’s share of profits from sales in Bayer’s marketing territories, which are product sales net of cost of sales and commercialization costs (see Note 3 to the condensed consolidated financial statements).

Sales of Winrevair were $280 million in the first quarter of 2025 primarily reflecting continued uptake in the U.S.

since launch in the second quarter of 2024.

In March 2024, the FDA approved Winrevair for the treatment of adults with pulmonary arterial hypertension (PAH) (World Health Organization [WHO] Group 1) to increase exercise capacity, improve WHO functional class (FC), and reduce the risk of clinical worsening events.

In August 2024, the EC approved Winrevair , in combination with other PAH therapies, for the treatment of PAH in adult patients with WHO FC II to III, to improve exercise capacity.

The FDA and EC approvals were based on the STELLAR trial.

Winrevair has since launched in Germany.

Timing for commercial availability of Winrevair in the remaining EU countries will depend on multiple factors, including the completion of national reimbursement procedures, which should occur in most other major EU markets in the second half of 2025.

Additional worldwide regulatory filings for Winrevair are underway.

Winrevair is the subject of a licensing agreement with BMS pursuant to which Merck pays a 22% royalty on sales of Winrevair to BMS.

Winrevair has since launched in certain international markets, including certain markets in the EU.

Timing for commercial availability of Winrevair in the remaining EU countries will depend on multiple factors,

including the completion of national reimbursement procedures, which is expected to occur in the second half of 2025.

Winrevair is the subject of a licensing agreement pursuant to which Merck pays a 22% royalty on net sales of Winrevair to BMS.

The royalty expenses are included in Cost of sales .

Adempas is approved for the treatment of certain types of PAH and chronic pulmonary hypertension.

Alliance revenue from the collaboration grew 8% in the first quarter of 2025 primarily reflecting higher demand in Bayer’s marketing territories.

Revenue also includes sales of Adempas and Verquvo in Merck’s marketing territories.

Sales of Adempas in Merck’s marketing territories were nearly flat in the first quarter of 2025.

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

Lagevrio $ 102 $ 350 (71) % (69) %

Lagevrio is an investigational oral antiviral COVID-19 medicine being developed in a collaboration with Ridgeback Biotherapeutics LP (Ridgeback) (see Note 3 to the condensed consolidated financial statements).

Sales of Lagevrio declined 40% in the third quarter of 2024 primarily due to lower demand and pricing in Japan, partially offset by uptake from commercial distribution in the U.S.

Sales of Lagevrio declined 32% in the first nine months of 2024 primarily due to lower demand and pricing in several markets in the Asia Pacific region, particularly in Japan and China, partially offset by uptake from commercial distribution in the U.S.

Sales of Lagevrio declined 71% in the first quarter of 2025 primarily due to lower demand in several markets in the Asia Pacific region, particularly in Japan.

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

$ — $ 184 (100) % (100) %

1 unchanged sentence

Simponi (golimumab) and Remicade (infliximab) are treatments for certain inflammatory diseases that the Company marketed in Europe, Russia and Türkiye.

The Company’s marketing rights with respect to these products reverted to Johnson & Johnson Innovative Medicine on October 1, 2024.

The Company’s marketing rights with respect to these products reverted to Johnson & Johnson on October 1, 2024, subsequent to which the Company is no longer recognizing sales of these products.

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

Januvia/Janumet $ 796 $ 670 19 % 21 %

Worldwide combined sales of Januvia and Janumet , medicines that help lower blood sugar levels in adults with type 2 diabetes, declined 42% and 31% in the third quarter and first nine months of 2024, respectively, primarily due to lower sales in the U.S., largely reflecting lower pricing and lower demand due to competitive pressures, as well as the ongoing impact of the loss of exclusivity in most markets in Europe and the Asia Pacific region, as well as in Canada.

Worldwide combined sales of Januvia and Janumet , medicines that help lower blood sugar levels in adults with type 2 diabetes, increased 19% in the first quarter of 2025 primarily due to higher net pricing in the U.S., including a favorable true-up to customer discounts, partially offset by the ongoing impact of the loss of exclusivity in most international markets, as well as continuing volume declines in the U.S.

due to competitive pressure.

The American Rescue Plan Act enacted in the U.S.

in 2021 included a provision that eliminated the statutory c ap on rebates drug manufacturers pay to Medicaid beginning in January 2024.

Accordingly, manufacturers may have to pay state Medicaid programs more in rebates than they receive on sales of particular products.

As a result of this provision, the Company has recognized increased discounts for Januvia and Janumet in the first nine months of 2024.

In A ugust 2023, the U.S.

Department of HHS, through the CMS, announced that Januvia would be included in the first year of the IRA’s Program.

Pursuant to the IRA’s Program, discussions with the government have now concluded, with government price-setting becoming effective on January 1, 2026.

The Company has sued the U.S.

government regarding the IRA’s Program.

As a result of this provision, the Company paid state Medicaid programs more in rebates than it received on Medicaid sales of Januvia , Janumet and Janumet XR in 2024.

In early 2025, Merck lowered the list price of the Januvia family of products to more closely align them with net prices.

The lower list price has reduced the rebate amount Merck pays to Medicaid, resulting in higher realized net pricing.

The Company expects higher U.S.

net sales of these products for full year 2025 compared with full year 2024.

While the key U.S.

patent for Januvia and Janumet claiming the sitagliptin compound expired in January 2023, as a result of favorable court rulings and settlement agreements related to a later expiring patent directed to the specific sitagliptin salt form of the products (see Note 8 to the condensed consolidated financial statements), the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S.

patent for Januvia , Janumet and Janumet XR claiming the sitagliptin compound expired in January 2023, as a result of favorable court rulings and settlement agreements related to a later expiring patent directed to the specific sitagliptin salt form of the products (see Note 7 to the condensed consolidated financial statements), the Company expects that Januvia and Janumet will not lose market exclusivity in the U.S.

until May 2026 and Janumet XR will not lose market exclusivity in the U.S.

until July 2026, although a non-automatically substitutable form of sitagliptin that differs from the form in the Company’s sitagliptin products has been approved by the FDA .

The Company anticipates pricing and volume declines for Januvia and Janumet in the U.S.

for the remainder of 2024.

The Company lost market exclusivity for Januvia in all of the EU and for Janumet in some European countries in September 2022.

Exclusivity for Janumet was lost in other European countries in April 2023.

Accordingly, the Company is experiencing sales declines in these markets and expects the declines to continue.

Generic equivalents of Januvia and Janumet have also launched in China.

Additionally, in 2023, the U.S.

Department of HHS, through the CMS, announced that Januvia would be included in the first year of the IRA’s Program.

Pursuant to the IRA’s Program, a government price was set for Januvia , which will become effective on January 1, 2026.

Also, in January 2025, the U.S.

The Company has sued the U.S.

government regarding the IRA’s Program.

As a result of the anticipated patent expiries in 2026, the government price setting in 2026 and 2027 noted above, as well as ongoing competitive pressure, the Company anticipates significant sales declines for Januvia , Janumet and Janumet XR in the U.S.

in 2026 and thereafter.

Animal Health Segment

Three Months Ended

September 30, % Change

Exchange Nine Months Ended

September 30, % Change

($ in millions) 2024 2023 % Change 2024 2023 % Change

March 31, % Change

($ in millions) 2025 2024 % Change

Livestock $ 924 $ 850 9 % 16 %

1 unchanged sentence

$ 1,588 $ 1,511 5 % 10 %

Animal Health sales grew 6% in the third quarter of 2024, or 11% excluding the unfavorable effect of foreign exchange, and increased 3% in the first nine months of 2024, or 7% excluding the unfavorable effect of foreign exchange.

Approximately 2 percentage points and 3 percentage points of the negative impact of foreign exchange in the third quarter and first nine months of 2024, respectively, was due to the devaluation of the Argentine peso, which was largely offset by inflation-related price increases consistent with practice in that market.

Sales of livestock products grew 1% and 2% in the third quarter and first nine months of 2024, respectively, primarily due to higher pricing, increased demand for poultry and swine products, as well as the inclusion of sales from the July 2024 acquisition of the Elanco aqua business.

Lower sales of ruminant products due to timing partially offset livestock sales growth in both the third quarter and first nine months of 2024.

Sales of companion animal products grew 14% in the third quarter of 2024 primarily due to uptake from new product launches, including the injectable formulation of Bravecto (fluralaner) in certain international markets, as well as higher pricing across the product portfolio.

Sales of companion animal products grew 5% in the first nine months of 2024 primarily due to higher pricing.

Sales of Bravecto , a line of oral, topical and injectable parasitic control products, were $266 million for the third quarter of 2024, representing growth of 13% compared with the third quarter of 2023, or 16% excluding the unfavorable effect of foreign exchange.

Sales of Bravecto were $929 million for the first nine months of 2024, representing growth of 6% compared with the corresponding prior year period, or 8% excluding the unfavorable effect of foreign exchange.

Sales of livestock products grew 9% in the first quarter of 2025 primarily due to higher demand across all species, a benefit from the timing of ruminant product sales, as well as the inclusion of sales from the July 2024 acquisition of the aqua business of Elanco Animal Health Incorporated.

Sales of companion animal products were essentially flat in the first quarter of 2025.

Sales of the Bravecto (fluralaner) line of products were $327 million for the first quarter of 2025, representing a decline of 1% compared with the corresponding prior year period, or growth of 2% excluding the unfavorable effect of foreign exchange.

Costs, Expenses and Other

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2024 2023 % Change 2024 2023 % Change

($ in millions) 2025 2024 % Change

Cost of sales $ 3,419 $ 3,540 (3) %

5 unchanged sentences

Cost of Sales

Cost of s ales declined 4% and 7% in the third quarter and first nine months of 2024, respectively.

Cost of s ales includes the amortization of intangible assets recorded in connection with acquisitions, collaborations, and licensing arrangements, which totaled $625 million and $552 million in the third quarter of 2024 and 2023, respectively, and $1.7 billion and $1.6 billion in the first nine months of 2024 and 2023, respectively.

Amortization expense in the third quarter and first nine months of 2023 includes $81 million and $154 million, respectively, of cumulative catch-up amortization related to Merck’s collaboration with Eisai.

See Note 3 to the condensed consolidated financial statements for more information on Merck’s collaborative arrangements.

Also included in Cost of s ales are expenses associated with restructuring activities, which amounted to $192 million and $33 million in the third quarter of 2024 and 2023, respectively, and $374 million and $94 million in the first nine months of 2024 and 2023, respectively, primarily reflecting accelerated depreciation and asset impairments related to the planned sale or closure of manufacturing facilities.

Cost of s ales declined 3% in the first quarter of 2025.

Cost of s ales includes the amortization of intangible assets recorded in connection with acquisitions, collaborations, and licensing arrangements, which totaled $620 million and $462 million in the first quarter of 2025 and 2024, respectively.

Also included in Cost of s ales are expenses associated with restructuring activities, which amounted to $36 million and $116 million in the first quarter of 2025 and 2024, respectively, primarily reflecting accelerated depreciation and asset impairment charges related to the planned sale or closure of manufacturing facilities.

Separation costs associated with manufacturing-related headcount reductions have been incurred and are reflected in Restructuring costs as discussed below.

Gross margin was 75.5% in the third quarter of 2024 compared with 73.3% in the third quarter of 2023.

Gross margin was 76.6% in the first nine months of 2024 compared with 73.1% in the first nine months of 2023.

The gross margin improvement in both periods was primarily due to the favorable effect of product mix (including lower royalty rates related to Keytruda and Gardasil/Gardasil 9 sales), partially offset by higher restructuring costs (primarily reflecting asset impairment charges), as well as increased amortization of intangible assets.

Gross margin was 78.0% in the first quarter of 2025 compared with 77.6% in the first quarter of 2024.

The gross margin improvement was primarily due to the favorable effects of product mix and lower restructuring costs, partially offset by higher amortization of intangible assets and the unfavorable effect of foreign exchange.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses increased 8% and 3% in the third quarter and first nine months of 2024, respectively, primarily due to higher administrative, selling, promotional and acquisition-related costs, partially offset by the favorable effect of foreign exchange and lower restructuring costs.

Selling, general and administrative (SG&A) expenses increased 3% in the first quarter of 2025 primarily due to higher administrative and promotional costs, partially offset by the favorable effect of foreign exchange.

Research and Development

Research and development (R&D) expenses grew 77% in the third quarter of 2024 primarily due to higher charges related to business development transactions, which included charges of $1.35 billion for the acquisition of EyeBio and $100 million for a related developmental milestone, as well as $750 million for the acquisition of MK-1045 (formerly CN201) from Curon.

Also contributing to the increase in R&D expenses in the third quarter of 2024 were higher compensation and benefit costs, as well as higher clinical development spending.

The increase in R&D expenses in the third quarter of 2024 was partially offset by the favorable effect of foreign exchange.

R&D expenses declined 36% in the first nine months 2024 primarily due to lower charges related business development transactions, which in 2024 included charges of $1.35 billion for the acquisition of EyeBio and $100 million for a related developmental milestone, $750 million for the acquisition of MK-1045, as well as $656 million for the acquisition of Harpoon, compared with charges in 2023 of $10.2 billion for the acquisition of Prometheus Biosciences, Inc.

(Prometheus), $1.2 billion for the acquisition of Imago BioSciences, Inc.

(Imago) and $175 million for a license and collaboration agreement with Kelun-Biotech.

The favorable effect of foreign exchange also contributed to the decline in R&D expenses in the first nine months of 2024.

The decline in R&D expenses in the first nine months of 2024 was partially offset by increased clinical development spending, as well as higher compensation and benefit costs.

R&D expenses are comprised of the costs directly incurred by Merck Research Laboratories (MRL), the Company’s research and development division that focuses on human health-related activities, which were $2.5 billion and $2.3 billion for the third quarter of 2024 and 2023, respectively, and $7.4 billion and $6.6 billion for the first nine months of 2024 and 2023, respectively.

Also included in R&D expenses are Animal Health research costs, upfront payments for collaboration and licensing agreements, charges for transactions accounted for as asset acquisitions (including charges for the acquisitions of EyeBio, MK-1045, Harpoon, Prometheus and Imago as noted above), and costs incurred by other divisions in support of R&D activities, including depreciation, production and general and administrative, which in the aggregate were $3.3 billion and $1.0 billion for the third quarter of 2024 and 2023, respectively, and $5.9 billion and $14.3 billion for the first nine months of 2024 and 2023, respectively.

Research and development (R&D) expenses declined 9% in the first quarter of 2025 primarily due to a $656 million charge in the first quarter of 2024 for the acquisition of Harpoon Therapeutics, Inc.

(Harpoon) and the favorable effect of foreign exchange.

The decline in R&D expenses was partially offset by a $100 million charge in the first quarter of 2025 associated with the achievement of a developmental milestone related to the 2024 acquisition of Eyebiotech Limited, higher compensation and benefit costs (reflecting in part increased headcount), as well as higher clinical development spending, and increased investment in discovery research and early drug development.

R&D expenses are comprised of the costs directly incurred by Merck Research Laboratories (MRL), the Company’s research and development division that focuses on human health-related activities, which were $2.5 billion and $2.4 billion for the first quarter of 2025 and 2024, respectively.

Also included in R&D expenses are Animal Health research costs, upfront and milestone payments for collaboration and licensing agreements, charges for transactions accounted for as asset acquisitions (including the charge for the acquisition of Harpoon noted above), and costs incurred by other divisions in support of R&D activities, including depreciation, production and general and administrative, which in the aggregate were $1.1 billion and $1.6 billion for the first quarter of 2025 and 2024, respectively.

Restructuring Costs

In January 2024, the Company approved a new restructuring program (2024 Restructuring Program) intended to continue the optimization of the Company’s Human Health global manufacturing network as the future pipeline shifts to new modalities and also optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency.

In January 2024, the Company approved a restructuring program (2024 Restructuring Program) intended to continue the optimization of the Company’s Human Health global manufacturing network as the future pipeline shifts to new modalities

and also optimize the Animal Health global manufacturing network to improve supply reliability and increase efficiency.

The actions contemplated under the 2024 Restructuring Program are expected to be substantially completed by the end of 2031, with the cumulative pretax costs to be incurred by the Company to implement the program estimated to be approximately $4.0 billion.

1 unchanged sentence

The remainder of the costs will result in cash outlays, relating primarily to facility shut-down costs.

The Company expects to record charges of approximately $900 million in 2024 related to the 2024 Restructuring Program.

The Company anticipates the actions under the 2024 Restructuring Program will result in cumulative annual net cost savings of approximately $750 million by the end of 2031.

In 2019, Merck approved a global restructuring program (2019 Restructuring Program) as part of a worldwide initiative focused on optimizing the Company’s manufacturing and supply network, as well as reducing its global real estate footprint.

The actions under the 2019 Restructuring Program were substantially complete at the end of 2023 and, as of January 1, 2024, any remaining activities are being accounted for as part of the 2024 Restructuring Program.

Restructuring costs , primarily representing separation and other costs associated with these restructuring activities, were $56 million and $126 million for the third quarter of 2024 and 2023, respectively, and $258 million and $344 million for the first nine months of 2024 and 2023, respectively.

The Company expects to record charges of approximately $550 million in 2025 related to the 2024 Restructuring Program and anticipates the actions under the 2024 Restructuring Program will result in cumulative annual net cost savings of approximately $750 million by the end of 2031.

As Merck continues to assess its business, it is likely to take further actions in 2025 to drive productivity across the Company while continuing to make disciplined investments in its expansive pipeline to drive growth.

Restructuring costs , primarily representing separation and other costs associated with these restructuring activities, were $69 million and $123 million for the first quarter of 2025 and 2024, respectively.

Separation costs incurred were associated with actual headcount reductions, as well as estimated expenses under existing severance programs for involuntary headcount reductions that were probable and could be reasonably estimated.

2 unchanged sentences

Additional costs associated with the Company’s restructuring activities are included in Cost of sales , Selling, general and administrative expenses and Research and development costs.

The Company recorded aggregate pretax costs of $279 million and $199 million in the third quarter of 2024 and 2023, respectively, and $701 million and $532 million for the first nine months of 2024 and 2023, respectively, related to restructuring program activities (see Note 4 to the condensed consolidated financial statements).

The Company recorded aggregate pretax costs of $105 million and $246 million in the first quarter of 2025 and 2024, respectively, related to restructuring program activities.

See Note 4 to the condensed consolidated financial statements for additional details.

Other (Income) Expense, Net

Other (income) expense, net was $162 million of income in the third quarter of 2024 compared with $126 million of expense in the third quarter of 2023 primarily due to the receipt of a $170 million upfront payment from Daiichi Sankyo in 2024 related to the expansion of the existing development and commercialization agreement.

The favorability in Other (income) expense, net in the third quarter of 2024 also reflects lower exchange losses and lower net interest expense in 2024.

Other (income) expense, net was $151 million of income in the first nine months of 2024 compared with $388 million of expense in the first nine months of 2023.

The favorability was primarily due to a $572.5 million charge in 2023 related to settlements with certain plaintiffs in the Zetia antitrust litigation and the receipt of an upfront payment in 2024 from Daiichi Sankyo as noted above, partially offset by higher net interest expense in 2024.

Other (income) expense, net was $35 million of income in the first quarter of 2025, comparable with $33 million of income in the first quarter of 2024.

For details on the components of Other (income) expense, net see Note 10 to the condensed consolidated financial statements.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions) 2025 2024

1 unchanged sentence

Animal Health segment profits 634 555

Other (7,967) (5,208) (19,459) (26,918)

Non-segment activity

(5,443) (5,789)

Income Before Taxes

5 unchanged sentences

Also excluded from the determination of segment profits are costs related to restructuring activities and acquisition- and divestiture-related costs, including the amortization of intangible assets and amortization of purchase accounting adjustments, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration.

Additionally, segment profits do not reflect other expenses from corporate and manufacturing cost

centers and other miscellaneous income or expense.

These unallocated items are reflected in “Other” in the above table.

Also included in “Other” are miscellaneous corporate profits (losses), as well as operating profits (losses) related to third-party manufacturing arrangements.

Pharmaceutical segment profits grew 11% and 14% in the third quarter and first nine months of 2024, respectively, primarily due to higher sales, partially offset by higher administrative and promotional costs, as well as the unfavorable effect of foreign exchange.

Animal Health segment profits rose 21% and 8% in the third quarter and first nine months of 2024, respectively, primarily due to higher sales and lower manufacturing-related costs, partially offset by increased administrative and promotional costs, as well as the unfavorable effect of foreign exchange.

Additionally, segment profits do not reflect other expenses from corporate and manufacturing cost centers and other miscellaneous income or expense.

These unallocated items are reflected in “Non-segment activity” in the above table.

Also included in “Non-segment activity” are miscellaneous corporate profits (losses), as well as operating profits (losses) related to third-party manufacturing arrangements.

Pharmaceutical segment profits declined 2% in the first quarter of 2025 primarily due to lower sales, higher promotional costs and the unfavorable effect of foreign exchange, partially offset by lower administrative and selling costs.

Animal Health segment profits rose 14% in the first quarter of 2025 primarily due to higher sales, partially offset by the unfavorable effect of foreign exchange.

Taxes on Income

The effective income tax rate of 22.7% for the third quarter of 2024 reflects a 7.2 percentage point combined unfavorable impact of charges related to the acquisitions of EyeBio and MK-1045, which had minimal tax benefits.

The effective income tax rate of 15.1% for the first nine months of 2024 reflects a 2.1 percentage point combined unfavorable impact of charges related to the acquisitions of Harpoon, EyeBio and MK-1045, which had minimal tax benefits.

The effective income tax rate for the first nine months of 2024 also reflects a 1.6 percentage point favorable impact due to a $259 million reduction in reserves for unrecognized income tax benefits resulting from the expiration in June 2024 of the statute of limitations for assessments related to the 2019 federal tax return year.

The effective income tax rate of 15.5% for the third quarter of 2023 reflects the favorable mix of income and expense.

The effective income tax rate of 59.3% for the first nine months of 2023 includes a 44.0 percentage point combined unfavorable impact of charges for the acquisitions of Prometheus and Imago for which no tax benefits were recognized, as well as higher foreign taxes, the impact of the R&D capitalization provision of the Tax Cuts and Jobs Act of 2017 (TCJA) on the Company’s U.S.

global intangible low-taxed income inclusion, and net unrealized gains from investments in equity securities, which were taxed at the U.S.

tax rate, partially offset by higher foreign tax credits.

The effective income tax rate of 13.9% for the first quarter of 2025 reflects the favorable impacts of geographical mix of income and expense, as well as certain discrete items.

The effective income tax rate of 15.9% for the first quarter of 2024 reflects a 1.6 percentage point unfavorable impact of a charge for the acquisition of Harpoon for which no tax benefit was recognized.

While many jurisdictions in which Merck operates have adopted the global minimum tax provision of the Organization for Economic Cooperation and Development (OECD) Pillar 2, effective for tax years beginning in January 2024, it resulted in a minimal impact to the Company’s 2024 effective income tax rate due to the accounting for the tax effects of intercompany transactions.

The Company expects the impact of the global minimum tax to be approximately 2% for full year 2025.

In addition, beginning in 2026, the tax rates on foreign earnings and export income are scheduled to increase under existing provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) and may result in an increase to the Company’s effective income tax rate.

The Internal Revenue Service (IRS) is currently conducting examinations of the Company’s tax returns for the years 2017 and 2018, including the one-time transition tax enacted under the TCJA.

If the IRS disagrees with the Company’s transition tax position, it may result in a significant tax liability.

The statute of limitations for assessments with respect to the 2019 and 2020 federal tax return years expired in June 2024 (as noted above) and October 2024, respectively.

Merck expects to record a benefit of approximately $270 million in the fourth quarter of 2024 due to a reduction in reserves for unrecognized tax benefits resulting from the expiration of the statute of limitations related to the 2020 federal tax return year.

While many jurisdictions in which Merck operates have adopted the global minimum tax provision of the Organisation for Economic Co-operation and Development (OECD) Pillar 2, effective for tax years beginning in January 2024, the Company anticipates there will be a reduced impact to its 2024 tax rate due to the accounting for the tax effects of intercompany transactions.

The Company expects the impact of the global minimum tax will increase its tax rate to a greater extent in 2025 and thereafter.

Also, in the event that the provision of the TCJA requiring capitalization and amortization of R&D expenses for tax purposes is repealed along the lines proposed in the Tax Relief for American Families and Workers Act of 2024, the Company will again be able to realize the benefit of U.S.

R&D expenses as incurred but expects no material impact to its effective income tax rate.

On April 21, 2025, Merck received Notices of Proposed Adjustment (NOPAs) that would increase the amount of the one-time transition tax on certain undistributed earnings of foreign subsidiaries by approximately $1.3 billion.

In addition, the NOPAs included penalties of approximately $260 million.

These amounts are exclusive of any interest that may be due.

The Company disagrees with the proposed adjustments and will vigorously contest the NOPAs through all available administrative and, if necessary, judicial proceedings.

It is expected to take a number of years to reach resolution of this matter.

If the Company is ultimately unsuccessful in defending its position, the impact could be material to its financial statements.

The statute of limitations for assessments with respect to the 2019 and 2020 federal tax return years expired in June 2024 and October 2024, respectively.

The IRS is also currently conducting examinations of the Company’s tax returns for the years 2021 and 2022.

In addition, various state and foreign examinations are in progress.

Non-GAAP Income and Non-GAAP EPS

11 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

($ in millions except per share amounts) 2025 2024

4 unchanged sentences

Restructuring costs 105 246

Loss (income) from investments in equity securities, net

58 17 (107) (218)

Charge for Zetia antitrust litigation settlements — — — 573

Income from investments in equity securities, net

Non-GAAP income before taxes

5,106 6,391 18,168 6,465

Income tax provision as reported under GAAP 818 903

Estimated tax benefit on excluded items (1)

188 89 445 350

Tax benefit resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year

Non-GAAP income tax provision 931 1,012

Non-GAAP net income

3,989 5,432 15,087 3,783

Net income attributable to noncontrolling interests as reported under GAAP 6 5

7 unchanged sentences

(1) The estimated tax impact on the excluded items is determined by applying the statutory rate of the originating territory of the non-GAAP adjustments.

(2) GAAP and non-GAAP EPS were negatively affected in the third quarter of 2024 by $0.79 per share, and for the first nine months of 2024 and 2023 by $1.05 per share and $4.52 per share, respectively, of net charges for certain upfront payments and receipts related to collaborations and licensing agreements, as well as charges related to pre-approval assets (including milestone payments) obtained in transactions accounted for as asset acquisitions.

(2) GAAP and non-GAAP EPS were negatively affected in the first quarter of 2024 by $0.26 per share for a charge related to pre-approval assets obtained in a transaction accounted for as an asset acquisition.

Acquisition- and Divestiture-Related Costs

14 unchanged sentences

Typically, these items are unusual in nature, significant to the results of a particular period or not indicative of future operating results.

Excluded from non-GAAP income and non-GAAP EPS in 2024 is a benefit due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year.

Excluded from non-GAAP income and non-GAAP EPS in 2023 is a charge related to settlements with certain plaintiffs in the Zetia antitrust litigation.

There were no such items in either the first quarter of 2025 or 2024.

Research and Development Update

7 unchanged sentences

Merck is working with Daiichi Sankyo to address FDA feedback.

MK-6482, Welireg is under review in the EU and Japan both for the treatment of VHL disease based on the LITESPARK-004 clinical trial and for the treatment of previously treated advanced RCC based on the LITESPARK-005 clinical trial.

V116, Capvaxive , the Company’s 21-valent pneumococcal conjugate vaccine designed to help prevent invasive pneumococcal disease and pneumococcal pneumonia in adults, is under review in the EU and Japan.

The applications are supported by results from multiple Phase 3 clinical studies evaluating V116 in both vaccine-naïve and vaccine-experienced adult patient populations, including STRIDE-3, STRIDE-4, STRIDE-5 and STRIDE-6.

MK-3475A, pembrolizumab with berahyaluronidase alfa (MK-5180) for subcutaneous administration (subcutaneous pembrolizumab), is being evaluated for noninferiority with respect to pharmacokinetics to intravenous Keytruda in metastatic NSCLC.

The FDA accepted for review a BLA seeking approval of MK-3475A across all previously approved solid tumor indications for Keytruda and set a Prescription Drug User Fee Act (PDUFA), or target action, date of September 23, 2025.

The application is supported by data from the pivotal 3475A-D77 Phase 3 trial.

Additionally, the European Medicines Agency (EMA) has validated an extension application to introduce a new pharmaceutical form and new route of administration for Keytruda .

MK-6482, Welireg , is under review in Japan both for the treatment of adults with VHL disease based on the LITESPARK-004 clinical trial and for the treatment of certain adults with previously treated advanced RCC based on the LITESPARK-005 clinical trial.

Additionally, in January 2025, the FDA accepted for priority review a supplemental New Drug Application seeking approval of Welireg for the treatment of adult and pediatric patients (12 years and older) with advanced, unresectable, or metastatic pheochromocytoma and paraganglioma, based on the LITESPARK-015 trial.

The FDA set a PDUFA date of May 26, 2025.

V116, Capvaxive , a 21-valent pneumococcal conjugate vaccine designed to help prevent invasive pneumococcal disease and pneumococcal pneumonia caused by certain serotypes in adults, is under review in Japan.

The application is supported by results from the STRIDE clinical program, which evaluated V116 in both vaccine-naïve and vaccine-experienced adult patient populations.

MK-7962, Winrevair , Merck’s novel activin signaling inhibitor, is under review in Japan for the treatment of adult patients with PAH based on the Phase 3 STELLAR trial.

MK-1654, clesrovimab, is an investigational prophylactic long-acting monoclonal antibody designed to protect infants from respiratory syncytial virus (RSV) disease during their first RSV season.

In December 2024, the FDA accepted the BLA for clesrovimab and set a PDUFA date of June 10, 2025.

Clesrovimab is also under review in the EU.

MK-3475, Keytruda , is an anti-PD-1 therapy approved for the treatment of many cancers that is in clinical development for expanded indications.

These studies encompass more than 30 cancer types including:

biliary, estrogen receptor positive breast cancer, cervical, colorectal, cutaneous squamous cell, endometrial, esophageal, gastric, glioblastoma, head and neck, hepatocellular, Hodgkin lymphoma, non-Hodgkin lymphoma, non-small-cell lung, small-cell lung, melanoma, mesothelioma, ovarian, prostate, renal, triple-negative breast, and urothelial, several of which are currently in Phase 3 clinical development.

Further trials are being planned for other cancers.

Keytruda is under review in the EU and Japan for the first-line treatment of adult patients with unresectable advanced or metastatic malignant pleural mesothelioma, based on the Phase 2/3 IND.227/KEYNOTE-483 trial.

Additionally, Keytruda is under review in Japan in combination with chemotherapy (carboplatin and paclitaxel), followed by Keytruda as a single agent, for the first-line treatment of adult patients with primary advanced or recurrent endometrial carcinoma, based on the KEYNOTE-868 trial.

Keytruda is also under review in Japan in combination with chemoradiotherapy for the treatment of patients with high-risk locally advanced cervical cancer, based on the KEYNOTE-A18 trial.

In July 2024, Merck acquired EyeBio, a privately held ophthalmology-focused biotechnology company.

MK-7264, gefapixant, is a non-narcotic, oral selective P2X3 receptor antagonist for the treatment of refractory or unexplained chronic cough in adults.

In December 2023, the FDA issued a second CRL regarding the resubmission of Merck’s New Drug Application for gefapixant.

In the CRL, the FDA concluded that Merck’s application did not meet substantial evidence of effectiveness for treating refractory or unexplained chronic cough.

The CRL was not related to the safety of gefapixant.

Merck has withdrawn its application for gefapixant from the FDA and does not plan to refile.

The Phase 2b clinical trial for MK-8189 as a monotherapy for acute schizophrenia did not meet its primary efficacy endpoint and further development in schizophrenia, bipolar, and dementia indications has stopped.

Potential alternative indications for MK-8189 are being explored.

Merck is currently working to incorporate guidance from regulatory authorities into the Company’s clinical trial design for its two prospective Gardasil 9 single-dose trials.

Consequently, the trials will not be started in 2024.

The Company will continue to engage with regulatory authorities along with the broader network of critical stakeholders as its clinical development plan matures.

In August 2024, Merck provided updates on two Phase 3 trials, KEYNOTE-867 and KEYNOTE-630.

Merck is discontinuing the KEYNOTE-867 trial evaluating Keytruda , in combination with stereotactic body radiotherapy (SBRT) for the treatment of patients with stage I or II (stage IIB N0, M0) NSCLC, including those who are medically inoperable or have refused surgery.

This decision is based on the recommendation of an independent Data Monitoring Committee (DMC), which reviewed data from a planned interim analysis.

At the pre-specified interim analysis, Keytruda in combination with SBRT did not demonstrate an improvement in event-free survival or overall survival, the study’s primary endpoint and key secondary endpoint, respectively, compared to placebo plus SBRT, and the benefit/risk profile of the combination did not support continuing the trial.

Merck is also discontinuing the KEYNOTE-630 trial evaluating Keytruda for the adjuvant treatment of patients with high-risk locally advanced cutaneous squamous cell carcinoma (cSCC) following surgery and radiation, based on the recommendation of an independent DMC.

The DMC recommended that the study should be stopped for futility as the risk/benefit profile did not support continuing the trial.

Also in August 2024, Merck announced the discontinuation of the Phase 3 KeyVibe-008 trial based on the recommendation of an independent DMC.

The trial was evaluating the investigational fixed-dose combination (coformulation) of vibostolimab, an anti-TIGIT antibody, and pembrolizumab ( Keytruda ) in combination with chemotherapy compared to atezolizumab in combination with chemotherapy, for the first-line treatment of patients with extensive-stage SCLC.

At a pre-planned analysis, data showed that the primary endpoint of overall survival met the pre-specified futility criteria.

Additionally, when compared to patients in the control arm, patients in the vibostolimab and pembrolizumab fixed-dose combination arm experienced a higher rate of adverse events and immune-related adverse events.

A comprehensive analysis of this study is ongoing and Merck will work with investigators to share the results with the scientific community.

In September 2024, Merck announced that the Phase 3 KEYFORM-007 trial evaluating the investigational fixed-dose combination of favezelimab, Merck’s anti-LAG-3 antibody, and Keytruda did not meet its primary endpoint of overall survival for the treatment of patients with previously treated PD-L1 positive microsatellite stable metastatic colorectal cancer.

At the final pre-specified analysis, the favezelimab and pembrolizumab fixed-dose combination did not demonstrate an improvement in overall survival compared to standard of care (regorafenib or TAS-102 [trifluridine and tipiracil hydrochloride]).

A full evaluation of the data is ongoing and Merck will work with investigators to share the results with the scientific community.

The chart below reflects the Company’s research pipeline as of November 1, 2024.

biliary, estrogen receptor positive breast, triple-negative breast, cervical, colorectal, endometrial, esophageal, gastric, glioblastoma, head and neck, hepatocellular, Hodgkin lymphoma, non-Hodgkin lymphoma, non-small-cell lung, small-cell lung, melanoma, malignant pleural mesothelioma, ovarian, prostate, renal, and urothelial, several of which are currently in Phase 3 clinical development.

Keytruda is under priority review by the FDA and also under review in Japan for the treatment of patients with resectable locally advanced head and neck squamous cell carcinoma as neoadjuvant treatment, then continued as adjuvant treatment in combination with standard of care radiotherapy with or without cisplatin and then as a single agent.

The FDA set a PDUFA date of June 23, 2025.

The supplemental BLA is based on data from the Phase 3 KEYNOTE-689 trial.

Keytruda is under review in Japan for the first-line treatment of adult patients with unresectable advanced or metastatic malignant pleural mesothelioma, based on the Phase 2/3 IND.227/KEYNOTE-483 trial.

The chart below reflects the Company’s research pipeline as of April 30, 2025.

Candidates shown in Phase 3 include the date such candidate entered into Phase 3 development.

1 unchanged sentence

Small molecules and biologics are given MK-number designations and vaccine candidates are given V-number designations.

Except as otherwise noted, candidates in Phase 1, additional indications in the same therapeutic area (other than with respect to cancer) and additional claims, line extensions or formulations for in-line products are not shown.

Except as otherwise noted, candidates in Phase 1, additional indications in the same therapeutic area (other than with respect to cancer and immunology) and additional claims, line extensions or formulations for in-line products are not shown.

MK-1022 (patritumab deruxtecan) (1)(3)

Head and Neck

Hepatocellular

MK-1308 (quavonlimab) (2)

Non-Small-Cell Lung

MK-1308A (quavonlimab+pembrolizumab)

MK-2400 (ifinatamab deruxtecan) (1)

Head and Neck

Hepatocellular

MK-2870 (sacituzumab tirumotecan) (1)(3)

2 unchanged sentences

Advanced Solid Tumors

MK-3475A (pembrolizumab+hyaluronidase subcutaneous)

MK-3475A (subcutaneous pembrolizumab)

Cutaneous Squamous Cell

Hematological Malignancies

MK-4280 (favezelimab) (2)

Non-Small-Cell Lung

MK-4280A (favezelimab+pembrolizumab)

Cutaneous Squamous Cell

MK-5890 (boserolimab) (2)

Neoplasm Malignant

MK-5909 (raludotatug deruxtecan) (1)

MK-6482 Welireg (3)

Hepatocellular

MK-7339 Lynparza (1)(3)

Advanced Solid Tumors

MK-7684A (vibostolimab+pembrolizumab)

Cutaneous Squamous Cell

Small-Cell Lung

V940 (intismeran autogene) (1)(2)

Dengue Fever Virus Vaccine

2 unchanged sentences

HIV-1 Pre-Exposure Prophylaxis

Nonalcoholic Steatohepatitis (NASH)

MK-7240 (tulisokibart)

Systemic Sclerosis

Metabolic Dysfunction-Associated Steatohepatitis (MASH)

MK-6024 (efinopegdutide)

15 unchanged sentences

MK-2400 (ifinatamab deruxtecan) (1)

Esophageal (March 2025)

Small-Cell Lung (July 2024)

5 unchanged sentences

Non-Small-Cell Lung (November 2023)

Ovarian (April 2025)

MK-3475 Keytruda

2 unchanged sentences

Small-Cell Lung (May 2017)

MK-3475A (pembrolizumab+hyaluronidase subcutaneous)

Non-Small-Cell Lung (February 2023)

MK-3543 (bomedemstat)

Myeloproliferative Disorders (December 2023)

MK-4280A (favezelimab+pembrolizumab)

Hematological Malignancies (October 2022)

MK-5684 (opevesostat)

3 unchanged sentences

Small-Cell Lung (December 2020)

MK-7684A (vibostolimab+pembrolizumab)

Non-Small-Cell Lung (April 2021)

MK-7902 Lenvima (1)(2)

Esophageal (July 2021)

Gastric (December 2020)

V940 (intismeran autogene) (1)(2)

Melanoma (July 2023)

1 unchanged sentence

Diabetic Macular Edema

MK-3000 Restoret (7)

HIV-1 Infection

3 unchanged sentences

MK-0616 (enlicitide decanoate) (August 2023)

Respiratory Syncytial Virus

MK-1654 (clesrovimab) (November 2021)

Ulcerative Colitis

MK-7240 (tulisokibart) (October 2023)

MK-7240 (tulisokibart)

Crohn’s Disease (June 2024)

Ulcerative Colitis (October 2023)

New Molecular Entities

1 unchanged sentence

Non-Small-Cell Lung (U.S.)

MK-3475A ( subcutaneous pembrolizumab )

Previously Approved Solid Tumors (U.S.)

Previously Approved Tumors (EU)

MK-6482 Welireg

Renal Cell (EU) (JPN)

Von Hippel-Lindau (VHL) Disease (EU) (JPN)

Renal Cell (JPN)

Von Hippel-Lindau (VHL) Disease (JPN)

Pneumococcal Vaccine Adult

V116 Capvaxive (EU) (JPN)

V116 Capvaxive (JPN)

Pulmonary Arterial Hypertension

MK-7962 Winrevair (JPN)

Respiratory Syncytial Virus

MK-1654 (clesrovimab) (U.S.) (EU)

Certain Supplemental Filings

MK-3475 Keytruda

• Resectable Locally Advanced Head and Neck Squamous Cell Carcinoma

(KEYNOTE-689) (U.S.) (JPN)

• First-Line Unresectable Advanced or Metastatic Malignant Pleural Mesothelioma

(KEYNOTE-483) (EU) (JPN)

• Primary Advanced or Recurrent Endometrial Carcinoma

(KEYNOTE-483) (JPN)

• High-Risk Locally Advanced Cervical Cancer

(KEYNOTE-A18) (JPN)

MK-6482 Welireg

• Advanced, Unresectable, or Metastatic Pheochromocytoma and Paraganglioma

(LITESPARK-015) (U.S.)

(1) Being developed in a collaboration.

1 unchanged sentence

(3) Being developed as monotherapy and/or in combination with Keytruda.

(4) On FDA clinical hold.

(5) On FDA partial clinical hold for higher doses than those used in current clinical trials.

(4) Available in the U.S.

1 unchanged sentence

(5) Program is in a Phase 2/3 study that commenced in August 2024.

(6) On FDA partial clinical hold for higher doses of islatravir than those used in current clinical trials.

(7) In June 2024, the FDA issued a CRL for the BLA for patritumab deruxtecan.

1 unchanged sentence

Analysis of Liquidity and Capital Resources

($ in millions) September 30, 2024 December 31, 2023

($ in millions) March 31, 2025 December 31, 2024

Cash and investments $ 9,844 $ 14,152

1 unchanged sentence

Total debt to total liabilities and equity 30.3 % 31.7 %

Cash provided by operating activities was $18.0 billion in the first nine months of 2024 compared with $12.8 billion in the first nine months of 2023 reflecting stronger operating performance.

Cash provided by operating activities was reduced by milestone and option payments related to certain collaborations of $370 million and $240 million in the first nine months of 2024 and 2023, respectively.

Cash provided by operating activities continues to be the Company’s primary source of funds to finance operating needs, with excess cash generally serving as the primary source of funds to finance business development transactions, capital expenditures, dividends paid to shareholders and treasury stock purchases.

Cash used in investing activities was $6.3 billion in the first nine months of 2024 compared with $14.1 billion in the first nine months of 2023.

The lower use of cash in investing activities was primarily due to lower cash used for acquisitions, lower purchases of securities and other investments, as well as lower capital expenditures, partially offset by lower proceeds from sales of securities and other investments.

Cash used in financing activities was $4.0 billion in the first nine months of 2024 compared with $2.6 billion in the first nine months of 2023.

The higher use of cash in financing activities was primarily due to lower proceeds from the issuance of debt

and higher dividends paid to shareholders, partially offset by lower payments on long-term debt, lower purchases of treasury stock and higher proceeds from the exercise of stock options.

Cash provided by operating activities was $2.5 billion in the first three months of 2025 compared with $3.1 billion in the first three months of 2024.

Cash provided by operating activities was reduced by milestone payments related to certain collaborations of $700 million and $245 million in the first three months of 2025 and 2024, respectively.

Cash provided by operating activities continues to be the Company’s primary source of funds to finance operating needs, with excess cash serving as the primary source of funds to finance business development transactions, capital expenditures, dividends paid to shareholders and treasury stock purchases.

Cash used in investing activities was $1.5 billion in the first three months of 2025 compared with $1.4 billion in the first three months of 2024.

The higher use of cash in investing activities was primarily due to higher purchases of securities and other investments, and higher capital expenditures (including the acquisition of a facility from WuXi Vaccines discussed in Note 2 to the condensed consolidated financial statements), partially offset by lower cash used for acquisitions and higher proceeds from sales of securities and other investments.

Cash used in financing activities was $5.8 billion in the first three months of 2025 compared with $2.8 billion in the first three months of 2024.

The higher use of cash in financing activities was primarily due to higher payments on long-term debt, higher purchases of treasury stock, higher dividends paid to shareholders and lower proceeds from the exercise of stock options.

The Company has accounts receivable factoring agreements with financial institutions in certain countries to sell accounts receivable.

The Company factored $3.1 billion and $3.0 billion of accounts receivable at September 30, 2024 and December 31, 2023, respectively, under these factoring arrangements, which reduced outstanding accounts receivable.

The Company factored $1.7 billion and $2.1 billion of accounts receivable at March 31, 2025 and

December 31, 2024, respectively, under these factoring arrangements, which reduced outstanding accounts receivable.

The cash received from the financial institutions is reported within operating activities in the Condensed Consolidated Statement of Cash Flows.

1 unchanged sentence

The net cash flows relating to these collections are reported as financing activities in the Condensed Consolidated Statement of Cash Flows.

In May 2024, MSD Netherlands Capital B.V., a wholly-owned finance subsidiary of Merck, completed a registered public offering of €3.4 billion in aggregate principal amount of euro-dominated senior notes comprised of €850 million of 3.25% senior notes due 2032, €850 million of 3.50% senior notes due 2037, €850 million of 3.70% senior notes due 2044 and €850 million of 3.75% senior notes due 2054.

The net cash proceeds from the offering were used for general corporate purposes.

In February 2025, the Company’s $2.5 billion, 2.75% notes matured in accordance with their terms and were repaid.

In March 2024, the Company’s $750 million, 2.90% notes matured in accordance with their terms and were repaid.

Dividends paid to stockholders were $5.9 billion and $5.6 billion for the first nine months of 2024 and 2023, respectively.

In May 2024, Merck’s Board of Directors declared a quarterly dividend of $0.77 per share on the Company’s outstanding common stock for the third quarter that was paid in July 2024.

In July 2024, Merck’s Board of Directors declared a quarterly dividend of $0.77 per share on the Company’s outstanding common stock for the fourth quarter that was paid in October 2024.

Dividends paid to stockholders were $2.1 billion and $2.0 billion for the first three months of 2025 and 2024, respectively.

In November 2024, Merck’s Board of Directors declared a quarterly dividend of $0.81 per share on the Company’s outstanding common stock for the first quarter that was paid in January 2025.

In January 2025, Merck’s Board of Directors declared a quarterly dividend of $0.81 per share on the Company’s outstanding common stock for the second quarter that was paid in April 2025.

In 2018, Merck’s Board of Directors authorized purchases of up to $10 billion of Merck’s common stock for its treasury.

The treasury stock purchase authorization has no time limit and will be made over time in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.

During the first nine months of 2024, the Company purchased $817 million (7 million shares) of its common stock for its treasury under this program.

As of September 30, 2024, the Company’s remaining share repurchase authorization was $2.9 billion.

During the first three months of 2025, the Company purchased $1.2 billion (13 million shares) of its common stock for its treasury under this program.

The Company expects the pace of share repurchases to continue at this level for the remainder of 2025.

In January 2025, Merck’s Board of Directors authorized purchases of up to an additional $10 billion of Merck’s common stock for its treasury.

As of March 31, 2025, the Company’s remaining share repurchase authorization was $11.2 billion.

The Company has a $6.0 billion credit facility that matures in May 2028.

3 unchanged sentences

The Company’s significant accounting policies, which include management’s best estimates and judgments, are included in Note 2 to the consolidated financial statements for the year ended December 31, 2024 included in Merck’s Form 10‑K filed on February 25, 2025.

See Note 1 to the condensed consolidated financial statements for information on the adoption of a new accounting standard during 2024.

A discussion of accounting estimates considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates is included in the Critical Accounting Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Merck’s Form 10-K.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis