Good morning. My name is Darla, and I will be your conference operator today. At this time I want to welcome everyone to Merck's Q2 2017 Sales and Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Teri Loxam. Please go ahead. Teri Loxam - Merck & Co., Inc.: Thank you, Darla, and good morning. Welcome to Merck's Second Quarter 2017 Conference Call. Today I'm joined by Ken Frazier, our Chairman and Chief Executive Officer; Rob Davis, our Chief Financial Officer; Adam Schechter, President of Global Human Health; and Dr. Roger Perlmutter, President of Merck Research Laboratories. Before I turn the call over to Ken, I'd like to point out a few items. You will see that we have items in our GAAP results such as acquisition-related charges, restructuring costs, and certain other items. You should note that we have excluded these from our non-GAAP results and provide a reconciliation of these in our press release. We've also provided a table in our press release to help you understand the sales in the quarter for the business units and products. I would like to remind you that some of the statements that we make during today's call may be considered forward-looking statements within the meaning of the Safe Harbor Provision of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are made based on the current beliefs of Merck's management and are subject to significant risks and uncertainties. If our underlying assumptions prove inaccurate or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Our SEC filings, including Item 1-A in the 2016 10-K,…

Your first question comes from the line of Alex Arfaei with BMO Capital Markets.

Oh great. Thank you very much, folks, and congratulations on the good quarter. A couple on diabetes if I may for Adam. How should we think about the rate of price erosion for JANUVIA? And just overall, in terms of your strategy, you developed – you had filed (22:10) approved in Europe in January and you haven't launched it yet. You developed it once with the JANUVIA, but you didn't proceed with it. So I guess we're all waiting for ertugliflozin. Just help us understand how we should think about how you plan to position that drug, given the substantial lead by JARDIANCE on their cardiovascular benefits data. Thank you very much. Adam H. Schechter - Merck & Co., Inc.: Sure, Alex. Good morning. So if you look at JANUVIA, the IMS-2X (22:37) volume growth in the U.S. was strong. It was about 3%. However, it's not as strong growth as what we experienced last year, where it was about 4.5%. I've been saying for a couple years now that each year, the pricing pressure gets a little bit harder than the year before. And this year is harder than last year. And I expect next year will be harder than this year. It's not discontinuous. It's just continuous pressure that builds in the channel, particularly in the United States. As we look forward, we're excited about the SGLT2 and the SGLT2 combination with JANUVIA. I believe that JANUVIA will continue to be the first choice for add-on therapy after metformin. And I think that will remain the case around the world. But a lot of patients still don't get to their HbA1c goals even with metformin plus JANUVIA. So there are many patients where they look to add on an additional oral agent, of which the SGLT2 sometimes are the right product to add. Therefore, I believe having a combination with an SGLT2 with by far the market leader in the DPP-4 class will be a competitive advantage for us. And that's why we look forward to launching that with a PDUFA date in the United States later this year. Teri Loxam - Merck & Co., Inc.: Next question please, Darla?

Is from the line of David Risinger with Morgan Stanley. David R. Risinger - Morgan Stanley & Co. LLC: Thanks very much. I have three questions. The first is, could you please provide a little bit more color on the downside scenarios that you factored in for the cyberattack in the second half of the year? And also what guidance would've been if not for the cyberattack? Second, with respect to KEYTRUDA chemo combo in lung, could you talk about expectations for ex-U.S. approval and launch timing? And then finally, could you discuss the 15-valent pneumococcal vaccine? And your level of enthusiasm for that? And when we will see data later this year? Thank you. Teri Loxam - Merck & Co., Inc.: Why don't we start with Rob on the cyberattack. Rob? Robert M. Davis - Merck & Co., Inc.: Yes. Good morning, David. So as you look at the cyberattack, we are still assessing the full impact. And we do not have a specific estimate at this time. So I can't give you the specific downside related to that. But I will tell you we have anticipated there will be temporary delays in fulfilling orders And we will incur expenditures related to the remediation efforts. However, based on what we know today, we have considered all of those scenarios into the range of guidance we provided, both sales and EPS. So we feel like we've captured the anticipated scenarios in what we've told you. And I think it's also important to point out that despite the temporary challenge of the cyberattack, our operational momentum is strong, which has enabled us to raise our revenue guidance. And we did maintain EPS guidance for the year, while absorbing both the impact from cyber as well as the dilution from the AZ collaboration. And then with your second question, would guidance have been higher but for cyber? The answer is yes. Teri Loxam - Merck & Co., Inc.: Over to you, Roger. Roger M. Perlmutter - Merck & Co., Inc.: Right. Okay. So, David, a couple of questions. First, KEYTRUDA-chemo combo in lung outside the United States. Obviously we're pursuing the registration of the 021G data in a variety of jurisdictions. Haven't provided any updates on this. We are going through the usual motions. And as more information becomes available, we'll certainly let you know. And we're very enthusiastic about V114, our pneumococcal conjugate vaccine. We have already data from a variety of studies, some of which we've had a chance to present. And we hope to be embarking on registrational studies with V114 in not too long a time. So things are moving along extremely well in that area. Teri Loxam - Merck & Co., Inc.: Okay. Next question, Darla?

Is from the line of Steve Scala with Cowen. Steve Scala - Cowen & Co. LLC: Thank you. Would you provide an estimate of the percent penetration for KEYTRUDA and ALIMTA in first-line lung cancer? And secondly, similar to the deal Merck is doing with AstraZeneca for LYNPARZA, did you consider doing a similar deal for tremelimumab? And if not, perhaps you could tell us why? Thank you. Teri Loxam - Merck & Co., Inc.: We'll start with Adam. Adam H. Schechter - Merck & Co., Inc.: Yes. So with regard to first-line lung cancer, a couple things are important. First of all, we are certainly seeing a strong uptake overall. And in the United States, KEYTRUDA is now the leader in terms of market share in first-line lung cancer. With regard to the combination with ALIMTA, we're certainly starting to see some uptake. But it's still too early to give any specific market share for that portion of the business. But as I mentioned on the call with NCCN recommendation and reimbursement, we think that will continue to be helpful. So we are very pleased right now. About half of the sales for KEYTRUDA in the U.S. are in first-line lung. And that was the largest increase in terms of a percent of our sales. So we continue to believe that KEYTRUDA will be a mainstay for the treatment in lung cancer first-line. Kenneth C. Frazier - Merck & Co., Inc.: And as far as our deal with AstraZeneca goes, we really like the PARP inhibitor and the MEK inhibitor. And that was our primary reason for wanting to engage them in terms of a potential deal. We have our own CTLA-4 in development. And I'll turn that over to Roger for any more comments. Roger M. Perlmutter - Merck & Co., Inc.: Yeah. I mean the LYNPARZA situation and our partnership with AstraZeneca was a very special transaction that reflects the genuine alignment of the two companies. With respect to CTLA-4, we have an interest in CTLA-4. We do believe quite strongly that there will be opportunities for a range of different combinations with KEYTRUDA that will improve – we hope will improve outcomes in individual patients. And it will become very personalized. But we do have our own CTLA-4 antibody MK-1308. And so there's really no reason under the circumstances for us not to pursue. We put a lot of work into developing that molecule. No reason not for us to use that one if that turns out to be the right agent. Teri Loxam - Merck & Co., Inc.: Great. Next question, please, Darla.

It's from the line of Andrew Baum with Citi.

Two questions please. Firstly, for Roger. Could you just outline your longer term commitment to HIV? It seems that you have many of the building blocks, the legacy business, the Organon business, and several promising interesting molecules, such as EFdA. Could you outline the overall strategy there, in particular the plans for EFdA for both treatment and prep? And then second, could you address the question of PD-L1 cut-offs for the combination with CTLA-4. When I look at the 021 data with pembro [pembrolizumab] and YERVOY, it seems to be an inverse relationship if anything in terms of efficacy and PD-L1 expression. So how are you thinking about that as you develop your own CTLA-4 for combination with KEYTRUDA? Thank you. Roger M. Perlmutter - Merck & Co., Inc.: Right. Thank you, Andrew. First of all, we see a lot of opportunity to improve on therapeutic options in HIV. Of course I spent some time talking about doravirine. And we've published those data. And we've also put quite a bit of effort into developing as I mentioned potent long-acting molecules, which potentially could be given with – in an unusual formulation, whether that's depot or something else, to provide a mechanism for infrequent dosing. For EFdA, what we call MK-8591, that molecule has very unusual characteristics. We had the opportunity to present some of the data at the Paris meetings just earlier this week. And first of all, it's enormously potent. But secondly, even single-dose data results in dramatic suppression of viral load that can persist for a long period of time. We actually have the sense that we may be getting at something very important there in terms of the reservoir of HIV infection. But that's for the future for us to investigate. I just – I think we're very enthusiastic about the totality of the portfolio to provide better therapy for HIV infection. And with respect to PD-L1 cut-offs, frankly in the 021 study the sample sizes weren't large enough to be able to look at different PD-L1 levels and try and infer from that which patients would benefit most. And as you know the data that become available from others, including ourselves but also Bristol-Myers [Bristol-Myers Squibb], from other studies, have been a little confusing about how best to use the combination of a CTLA-4 directed therapy in a PD-1-directed therapy. Nevertheless, we continue to study that and to try and develop better indices for which patients would benefit most. The agents are quite different. They have different activities. They have different adverse effect profiles. And we're hopeful that we'll be able to define a patient population that will benefit especially from such a combination. Teri Loxam - Merck & Co., Inc.: Thanks, Roger. Darla, we'll move onto the next question, please.

It's from the line of Seamus Fernandez with Leerink.

Thanks very much and congrats on a great quarter. Just a couple of quick questions. Roger, can you talk a little bit about the competitive environment that you see in first-line lung cancer, more from a additional data perspective? We know there's a lot of additional clinical studies coming. But just wondering if you could give us your thoughts on the prospect of showing a survival benefit in the KEYNOTE-189 study, and its relative importance in the overall landscape? Is it something that you think is likely to be demonstrated and perhaps not demonstrated by other studies? And then separately, Adam, it's our understanding again that the first trial coming from the competitor, Roche, is actually using an Avastin-based regimen. Could you just help us understand a little bit the commercial dynamics that could either impact KEYTRUDA or perhaps have that be a somewhat understated potential regimen if that trial is successful? Thanks. Roger M. Perlmutter - Merck & Co., Inc.: Right. So, Seamus, with respect to the competitive environment, there will be a lot of data coming out for various combination studies, chemo combination studies, combinations with other biologic agents, et cetera, in lung cancer. I think in the general comment, and just you're aware of this, but just to be sure that we highlight it, the general comment is that it becomes increasingly difficult over time to show overall survival differences comparing KEYTRUDA or any other PD-1 or PD-L1 directed agent with chemotherapy because of the crossover problem. In essence, because of the known activity of KEYTRUDA in particular in the lung cancer setting, patients who would fail a chemotherapy regimen will likely be crossed over. And indeed one has to – it is always ethical to pursue studies of a new agent versus standard of care. But…

Is from the line of Tim Anderson with Bernstein. Timothy Minton Anderson - Sanford C. Bernstein & Co. LLC: Thank you. Can you confirm the timing of KEYNOTE-189 data? Are you confident that we'll see that top line release before the end of the year? And is there any chance that we'll see the full data release in 2017? Second question is going back to your development question – your development plan with CTLA-4 and with YERVOY specifically. Earlier in the year you seemed to be leaning towards initiating pivotal trials with a KEYTRUDA/YERVOY combination. And I'm wondering if you've disposed with that or put that on ice? I understand you have your own internal CTLA-4, but it's a YERVOY-specific question. And then on 021G, is there pushback in the prescriber community just based on the facts of that Phase 2 data? And do you think the Phase 3 is really needed to open the floodgates in terms of broad utilization? Teri Loxam - Merck & Co., Inc.: Why don't we start with Roger? Roger M. Perlmutter - Merck & Co., Inc.: Okay. Tim, with respect to KEYNOTE-189, the – as always I mean these are event-drive trials. So as time goes on we look at events. And we ask ourselves when we think the data are going to become available. We do our best to update ClinicalTrials.gov and give our best estimate. Our expectation is based on what we're seeing, that the 189 top line will become available this year. I would think it would be difficult to get full data out in a scientific meeting, just because of the time required once the top line is available to actually prepare the material for presentation. But I can't say. It's just it's event-driven. And with respect to the KEYTRUDA-YERVOY…

It's from the line of Chris Schott with JPMorgan.

Great. Thanks very much for the questions. Just two here. Maybe – and maybe both for Roger. First on the PARP deal. Can you just – I appreciate the comments about how you see PARPs fitting into the I-O landscape. Any tumors in particular where you see the strongest rationale to pursue a combo there with KEYTRUDA? My second question was just on the MYSTIC failure and just some of your thoughts here. KEYTRUDA was obviously able to show a PFS and OS benefit in high expressors. We didn't see that signal with your competitor. Just any thoughts here of this as a trial design issue? A PD-1 versus PD-L1 issue? Or just something more specific to the molecule? Just any comments there would be much appreciated. Thank you. Roger M. Perlmutter - Merck & Co., Inc.: Thanks, Chris. First of all, with respect to LYNPARZA, as I indicated, the data already for LYNPARZA are quite robust in the ovarian cancer setting and the recently presented data at ASCO in lung cancer. They have now – and I guess I should say we have, since it's the two of us together – 10 ongoing registrational trials in a variety of different areas in 14 different tumor types that are being pursued. There's more than 120 studies, many of which are investigator initiated. But nevertheless a lot of studies on ClinicalTrials.gov, so a lot to pursue. I think one of the things that impressed us in our conversations with our colleagues at AstraZeneca is how well they thought through the issue of DNA repair defects generally. And as we know, the expectation is that in tumor cells that have crippling mutations in various parts of the DNA repair process, they should accumulate mutations which are potential targets for immune cells to…

It's from the line of Umer Raffat with Evercore ISI.

Hi. Thanks so much for taking my question. Perhaps first, maybe for you Roger. I just wanted to zoom in on any important differences in trial conduct? So conduct specifically between 021G and how KEYNOTE-189 is being conducted. And perhaps things like whether patients are having to give fresh biopsies, their prior radiation exposure, time from diagnosis to first dose, smoking history. That sort of thing. I just wanted to understand that, number one. And then secondly, in the AstraZeneca deal, a couple follow-ups. One, how do think about the Astra PARP versus some of the other unencumbered PARPS in the marketplace? Just wanted to understand your thought process behind finalizing this specific one. And secondly, just for our housekeeping could you just help explain what will be the biggest trigger of the $6 billion plus in milestones? Just so we understand and model the cash flows appropriately. Thank you. Teri Loxam - Merck & Co., Inc.: Okay. So we'll start with Roger, and then we'll end with Rob on that question. Roger M. Perlmutter - Merck & Co., Inc.: Okay. First of all, with respect to trial conduct of KEYNOTE-189 versus 021G, not a lot to comment on there. I mean the study is pretty straightforward. It's a substantially larger Phase III study. But once again focusing in the same way as we did before on all comers in a comparison of carboplatin, pemetrexed with KEYTRUDA combined. So they're fairly similar kinds of studies in terms of what we're looking at. I don't think there are major differences in terms of trial conduct that should draw your attention. With respect to the AstraZeneca deal, the question you ask is, which PARP? And why we'd want to look at one PARP or another. So let me just tick down. That…

It's from the line of Jami Rubin with Goldman Sachs. Jami Rubin - Goldman Sachs & Co. LLC: Thank you. Just a few. Rob, firstly, you posted a $0.14 beat this quarter. Yet you didn't raise guidance, and understandably due to the uncertainty around the cyberattack. But if you could just kind of share with us what proportion of the absorbing the $0.14 beat for the year relates to the one-time cyberattack? And what proportion relates to additional expenses or second-half comparisons or competition that we should be aware of? Secondly, Roger, we now have a handful of PD-1, PD-L1 drugs on the market. And specifically in lung there's two PD-1s and one PD-L1. Are you seeing at all – or do you believe there is a difference between these two agents? There have been interesting – we've had different outlooks or different results from some of these different trials, some of which have been surprising, some of which haven't been. But just wondering if you could share with us your perspective on whether or not you see a clinical difference between PD-1 and PD-L1? And then just lastly, if you could give us an update on when you plan to initiate your Phase III IDO inhibitor with KEYTRUDA in frontline tumors, including lung? And what would be the comparative? What are you going to compare that combination with? And does the MYSTIC failure help to guide that decision in any way? Thanks. Robert M. Davis - Merck & Co., Inc.: Morning, Jami. Thanks for the question. I don't want to get into specifics, because as I said in – to the prior question, we're still assessing the full impact. But what I would say is as we prepared our guidance and in effect maintained the EPS guidance while raising…

It's from the line of Geoff Meacham with Barclays.

Hey, guys. Morning. And I also wanted to say congrats on the second quarter. For Adam, just a couple. For first-line lung in the U.S., can you talk a little bit about share and testing trends for monotherapy KEYTRUDA? I suspect that most of the sequential uptick was 021G but wanted to check that, versus broader adoption from 024. And then, Roger, with all the tumor types you're exploring in KEYTRUDA, is there something specific on myeloma that makes I-O less attractive as a strategy? I guess more color on 183 or 185 would be helpful. Thanks. Adam H. Schechter - Merck & Co., Inc.: Yeah. Good morning. Hi. This is Adam. So if you look at first-line lung. First, let me give you a sense of testing. Right now in the United States we believe that more than three-quarters of patients are being tested. If you look at Europe, we believe that it's two-thirds of patients are currently being tested, where a country like the UK is about 90%, Germany is about 65%. So there's no doubt that we are seeing on a global basis, including Japan, significant increases in testing. And it's really becoming standard of care to test patients for their status. With regard to first-line lung, we are the leader right now in first-line lung for new patient starts. And we have about a 26% overall share, which is higher than any of the other products in first-line setting. And the majority of it I believe is based on -024, because we're just in the midst of launching the 021G results. Roger M. Perlmutter - Merck & Co., Inc.: And, Geoff, it's Roger. With respect to myeloma, probably not too much additional color I can add beyond what I mentioned in the opening remarks. I mean…

Your final question is from Tony Butler with Guggenheim.

Yes. Thanks very much. Adam, you alluded to in MSI-high for KEYTRUDA, that there was initial interest. And I'm really asking if you could just explore what initial interest means? Because it seems like such a broad indication, I would think that a number – initial interest would be met quite handsomely with open arms. But I'd love for you to explore that. And more importantly what testing really is on that front? Much like for PD-L1. Thanks. And then, Rob, just briefly on the expenses related to cyber, are those one-time in nature? In other words, do you have that as a soft fixed cost for effectively the rest of the calendar year. Or does it actually leak into 2018? Do you – would you know that? Thanks. Adam H. Schechter - Merck & Co., Inc.: Okay. So let me talk about MSI-high just a bit, Tony. So first of all, we're really working hard to increase the awareness for MSI testing and the value of KEYTRUDA across the tumor types. And after the June approval, there's certainly health care professional awareness that were hearing. But it's too early to see that translate into sales. It's really been detected across a lot of different cancer types. Some that are uncommon, like biliary tract cancer. And some that are very common, like colorectal cancer. If you look, MSI-high, it really is an established biomarker. And it's used often in something like colorectal cancer or endometrial cancer. But it's not really done in many of the other tumor types. So we have still a lot of work that we have to do to educate the importance of testing for those other tumor types. And I would expect over time that this will continue to be an interesting and important indication. But…

This concludes today's conference call. You may now disconnect.