Dean Li: Yes. So, I will just answer more broadly in relationship to TROP2 as an ADC and specifically our compound. One of the things that is extremely useful to us is its adverse effect profile, especially for lung cancer patients and relationship to lung toxicity is readily manageable. It’s a quite good profile. In terms of your question about the paper that I think that you talked about internalization and this I think those are interesting and important papers for us to consider. But I think one of the things that’s also important for us to do is to do the clinical experiment and see what the results are in relationship. We are confident that TROP2 ADC will have an impact. TROP2 ADCs in breast cancer has had an impact.
And we believe that our TROP2 ADC, especially with the linker and payload, will have an important impact in lung cancer. And then the question that you have is, how do you combine it, do you combine it with chemo, do you combine it with PD-1, how do you think through that, I think those are questions that our clinical team thinks deeply about, but we also think deeply about what line of therapy and also what the standard of care is. And if you want to move to first line standard of care is KEYNOTE-189 with a chemo/pembro basis. So, one has to think about how one would advance a TROP2 from different lines all the way to first line. So, those considerations come in quite heavily.
Peter Dannenbaum: Thank you, Andrew. Next question, please Ivy.
Operator: Next, we will go to the line of Seamus Fernandez from Guggenheim Securities. Please go ahead.
Seamus Fernandez: Thanks very much for the question and congrats on the quarter and the guidance. Can you just talk a little bit about subcutaneous KEYTRUDA, how you anticipate payers’ acceptance of this new delivery modality as well as potential economic benefits to patients given the shift from Part B to Part D? I think there could be some benefits from the updated catastrophic cap being drivers there. But struggling in the face of potential biosimilars of KEYTRUDA after 2028 to see how payers would treat this, just interested to have a little bit more color on the economic benefits, not just the benefits of the patients of subcutaneous KEYTRUDA. Thanks so much.
Dean Li: So, this is Dean. I will take the first question and then I will hand it over to Rob and Caroline because the economic question and the payer is also related to the innovation that you provide. I just want to make sure that our way of thinking about something like pembro with hyaluronidase given as subcu is really there is going to be a call for that innovation. I will just emphasize, we constantly speak about the earlier-stage cancer. And right now, we have nine approvals. And as I have said in relationship in the prepared remarks, of those approvals, two – the only two that have checkpoint inhibitors that have OS benefit is KEYTRUDA base, which is early lung cancer and RCC. I actually just came from a meeting speaking to a bunch of thoracic oncologists in this, and it’s quite interesting to hear how they speak for those who are thoracic oncologists, who are linked to setting with medical oncologists, and they very clearly understand why KEYNOTE-671 perioperative is the category one.
In situations where you may have a CT surgeon outside of a major care plan or a care – a major medical center sometimes you have CT surgeons moonlighting doing lobectomies and resection, for that, the KEYNOTE-091. And constantly, what we hear from the physicians and the provider, and many of them are in provider systems of all different types, is the need to have an alternative way to get the KEYTRUDA to them, either Q3, Q6 given the regimen. So, I just want to emphasize that the subcu pembro plus hyaluronidase is an innovation that is going to be demanded and is being demanded by the field.
Rob Davis: Yes. Thanks Dean. And to the questions on the economics, and I think we have commented on this a little bit in various settings. But as we think about our strategy for bringing this to the market from a commercial perspective, our view is the quality-of-life benefits this brings does demonstrate and afford us the ability to get a premium price. But we also are very cognizant that any subcu pembro will have to be considered in the context of a generic IV version. So, we will price our subcu to drive for volume and to do for conversion, which means we will be looking at prices really more in line with where you would see the generic version at a premium that history has shown is very manageable and expected and covered by payers today when you look at the different delivery for them.
So, in that sense, we think we will be able to manage this. The whole question of Part B versus Part D, we will have to see how it plays out as far as the ultimate side of administration. But if it does end up being into the Part D category, which is a reasonable chance, you are correct and that some of the new coverages that are out there in catastrophic and with the cap, also then from a patient perspective, should lower the burden they are going to face, which we also think could help with conversion.
Peter Dannenbaum: Alright. Thanks Seamus. Next question please.
Operator: Next, we will go to the line of Geoff Meacham from Bank of America. Please go ahead.
Geoff Meacham: Hi guys. Good morning. Thanks for the question. Caroline, on margins, you highlighted a benefit from KEYTRUDA and GARDASIL this year, which I think was expected. But looking forward, is the guidance this year a reasonable target until the KEYTRUDA LOE? I wasn’t sure if there is other drivers going forward or whether mix could impact margins as well. Thank you.
Caroline Litchfield: Thank you for the question, Geoff. So, as you all know, our company has made great progress in expanding operating margin over a number of years. As we look to 2024, we expect operating margin to improve. And that’s really driven by the strength of the top line and mix of revenue by the roll-off of royalties that we have noted on KEYTRUDA and GARDASIL. Being disciplined in our expenses, while we do invest fully behind our expansive pipeline, as we go beyond 2024, we still point to an operating margin of greater than 43% in 2025. But our focus as a company and as a team is to really ensure that we are fueling the pipeline supporting the portfolio of products that we are launching to drive growth into the long-term.
Peter Dannenbaum: Great. Thanks Geoff. Next question please.
Operator: Next, we will go to the line of Steve Scala from TD Cowen. Please go ahead.
Steve Scala: Thank you. I believe the Merck RSV monoclonal antibody Phase 2/3 study is registrational and reads out this year, is that correct? And assuming positive, how soon could Merck be on the market? And how might this product be differentiated from by Fortis? It’s just a little odd that this could be a $1 billion opportunity, not that far off, and Merck never talks about it. Thank you.
Dean Li: I really appreciate the question. So, I will talk about it. In relationship to the RSV monoclonal antibody, it’s for the early birth, it’s an antibody, it’s passive immunization, and it’s for the pediatric population. This is a single shot. This is not weight-based. And we believe it has a longer season in relationship to other choices. And so we think it’s an important readout, and we are very excited and interested to move on this RSV monoclonal antibody. I would also emphasize that the New England Journal of Medicine just published a series of papers, not in RSV, but also in dengue that also we are very excited about. And we are moving that forward quickly. And then more broadly from the ID vaccine, I have said previously that I am very intrigued to see the results of our NRTTI islatravir and our other NRTTI, MK-8527.
So, that will also be coming out this year. We will be able to see those. So, it is the RSV. It is the dengue that was just out there, and it is the HIV data that we are going to be very interested in seeing across this year.
