Good morning. My name is Darla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Merck's Third Quarter 2018 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, SVP, Investor Relations and Global Communications. Please go ahead. Teri Loxam - Merck & Co., Inc.: Thank you, Darla, and good morning, everyone. Welcome to Merck's Third Quarter 2018 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 Labs. 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 have 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…

And your first question is from Vamil Divan with Credit Suisse. Vamil K. Divan - Credit Suisse Securities (USA) LLC: Hi. Great. Thanks for taking the question. So and my first one is just a broader question for Ken. There was obviously the announcement recently that you won't be retiring at the end of next year. And I'm just curious how we should think about how that might impact your views on the longer term outlook for Merck or the company's strategy as we think about business development? Or a lot of questions around Animal Health and how you guys see that business in your company. Does the fact that you're staying on longer as a CEO impact how you guys are thinking about maybe doing something more transformational from a strategic perspective? And then, the second one is a more specific question for Roger. And it's just around your STING asset you presented data (28:27) for last weekend. Just curious how you think about – I think in the data we saw the monotherapy impact was more limited than I was expecting. So how do you think about the need for monotherapy impact before moving forward with a combination approach, whether it's for STING or some of the other approaches you have in your pipeline? Thanks so much. Kenneth C. Frazier - Merck & Co., Inc.: Okay. Thanks, Vamil, for the questions. Let me start by talking about whether or not my extended tenure will affect how I think about transformational deals one way or the other. So our responsibility, as a management, team is to continue to focus on the best opportunities to put together the best portfolio to drive sustainable value. That remains our focus. While we remain disciplined in our approach, we're also committed to identifying…

It's from Chris Schott with JPMorgan.

Great. Thanks very much for the questions, and also appreciate the additional color you guys are providing in the slide deck. So I just had a couple of questions here. Maybe first, first-line renal. Just would be interested in your perspective with some data at ESMO, and obviously your data pending, how you see the PD-1/PKI combos fitting into the treatment landscape, particularly relative to OPDIVO/YERVOY? Second question I had was on KEYTRUDA in first-line lung in Europe. I know you've got a recommendation there. But can you just elaborate a bit more in terms of where we stand today in terms of penetration? And how quickly you are expecting a ramp, given the positive recommendation on KEYNOTE-189, as we think about the rest of this year and into 2019? And if I can slip a third really quick one in there. Could we just get an update on KEYTRUDA usage by tumor type in U.S. and ex-U.S. as you've done in the past? Thanks so much. Roger M. Perlmutter - Merck & Co., Inc.: So, Chris, this is Roger. Let me try the renal first. And then Adam can take on the other issues. With respect to first-line renal, of course we haven't presented the KEYNOTE-426 data. We announced top line results. And it's important to recognize that those top line results came from the first interim analysis, where KEYTRUDA in combination with axitinib met its endpoints in terms of progression-free survival and overall survival both, as well as the key secondary endpoint of response rate. Those are important results at this first interim. And they speak to the power of the combination. Obviously what people are going to be interested in is, how much treatment effect is there and at what level are there adverse effects? In this…

It's from Jami Rubin with Goldman Sachs. Jami Rubin - Goldman Sachs & Co. LLC: Thank you. Just a couple for you, Ken. I noticed that at a recent competitive conference, you characterized margin expansion potential as being meaningful. And I think that's the first time you've actually used the word meaningful. Can you just elaborate a bit on what you mean by that? And if at any point in time you would expect the company to provide a line in the sand in terms of where you see that going? And second question, you won't be at all surprised I'm asking. But while we recognize and you've been very clear that Animal Health is a strong pillar for Merck's growth and diversification, based on the math that we done – we have done, we see an approximate $12 per share upside if the market were to value your Animal Health business in line with Zoetis and Elanco, both of which have obviously been hugely successful. If you don't consider spinning this business, which it sounds like you're not, what steps can you take to highlight its value? And what conditions are you looking for in order to consider changing your mind? Or should we expect that Animal Health will be part of Merck indefinitely? Thanks. Kenneth C. Frazier - Merck & Co., Inc.: So the thing I would say about this, Jami, is that, first of all, we actively evaluate our portfolio on an ongoing basis. So you shouldn't expect that any decision that we are making today will necessarily be the decision that we make forever. But we are actively evaluating our portfolio to decide what we think makes sense in terms of our overall strategy of driving sustainable value and growth for our shareholders. I also want…

It's from Alex Arfaei with BMO Capital Markets.

Great. Thank you very much. Ken, given your demonstrated confidence in your long-term growth prospects now, why do you still see business development as a priority? I appreciate that you have the capacity. But just because you can doesn't mean you should. So is business development a key? Are you looking at it as a priority because of risk management reasons, given your KEYTRUDA exposure? Or is something else driving this? And if I could, a follow up for Roger. Just wondering about your updated CTLA-4 data. Some interesting activity. Seems to have better safety than what we're seeing with the YERVOY combination. But just as this field evolves and as you get more information from CheckMate-227 and other competitive agents, I'm just wondering where your CTLA-4 ranks as a priority for you. Thank you. Kenneth C. Frazier - Merck & Co., Inc.: So on business development, let me start by saying that we're pleased with the way in which our business is growing now, particularly in the Oncology field. But that doesn't make us comfortable. At the end of the day, we know that we have to continue to build our portfolio and build on our pipeline. And that's why it's an important priority for us going forward. Going back to the question that was asked a few questions ago, that's the situation that we face as a company. Our pipeline is never going to be strong enough. We can always add to our pipeline. And that's not just a question of de-risking, it's a question of driving our future growth. Roger M. Perlmutter - Merck & Co., Inc.: Yeah, and, Alex, on MK-1308, you're right. I mean, our molecule looks pretty good. I mean, we've worked quite hard to select a CTLA-4 directed molecule and to try and establish what the appropriate dose and schedule would be for such a molecule. And we are interested in the question. Not sure why, but the combination looks a little promising. And so we think that there may be a possibility for it. We're sort of still stepping through it. Haven't made explicit decisions. But it looks like there may be an opportunity there. We wanted to make sure that people were aware of what we were seeing. And we did present the data at ESMO for that reason. Teri Loxam - Merck & Co., Inc.: Great. Let's move on to the next question, please.

It's from Seamus Fernandez with Guggenheim.

Thanks very much for the questions. So maybe the first question is really around business development. A number of times on the BD, in your prepared comments, I think about six times, you mentioned business development as a priority. So maybe, Ken, if you can just give us a little bit of an incremental sense, or perhaps Roger could opine as well, on the areas where you think adding to the pipeline and really targeting the timeframe, the sort of post-JANUVIA timeframe, as a key opportunity. Yeah. Kenneth C. Frazier - Merck & Co., Inc.: So I – let me just – oh, I'm sorry. I'm sorry. Go ahead and finish. I'm sorry.

No. That's okay. I'll follow up with my second question after you go. Kenneth C. Frazier - Merck & Co., Inc.: No, I think you should go ahead and ask it, so that way we can have them all.

Okay. Then you can proceed. So and then maybe, Roger, just two quick questions for you. Maybe you can just give us a sense of, in the wake of the first-line kidney cancer result as you've seen it, do you see a meaningful opportunity to improve upon the data with other TKIs like LENVIMA in the same setting? And then just my last question. The KEYNOTE-522 study, we're on the cusp of it. Maybe you could just help us understand the opportunity in the adjuvant and neoadjuvant TNBC setting. Thanks so much. Kenneth C. Frazier - Merck & Co., Inc.: Okay. Thanks, Seamus, and I apologize for interrupting. So with respect to business development, it remains an important priority for us, because it's our job to find the best scientific innovations that will enhance our pipeline. We think building a best-in-class pipeline is ultimately what generates long-term growth and value for shareholders. And that's what we intend to do. And let me turn it over to Roger now. Roger M. Perlmutter - Merck & Co., Inc.: Right. Well, I mean, if I could, on the business development side, I think everybody recognizes that for any pharmaceutical company at our scale, it will always be the case that business development contributes materially to our pipeline. It must be the case. And typically something over a majority of the molecules that we develop are licensed in from the outside or acquired in some way. If we can acquire those in a way which also adds meaningful revenue right from the beginning, terrific. But we're fundamentally interested in the best science, the best opportunities that could have the biggest impact on patient care. I think that should be clear. With respect to first-line renal, I don't want to pre-judge any data that we…

It's from Andrew Baum with Citi.

Thank you. So a couple of questions for – well, one for Roger and then a couple for Adam. So you recently – Merck published a paper in the JCO [Journal of Clinical Oncology] commenting on inflammatory signatures in TMB as biomarkers for responsiveness. In light of the recent disclosure from CheckMate-227 around TMB as a predictive factor for overall survival, how does that influence how you're thinking about the future role of TMB in various combinations within your own studies? Second, for Adam. Ken has referenced business development as being critical part of Merck's focus. Obviously, the reimbursement outlook in the U.S. is very dynamic. The President's going to address, what looks like, Part B this afternoon. I'm interested how you think about that dynamism and valuation in light of business development? And where you're leaning in terms of where you see the most risk from proposed and potentially enacted reform? And then, finally, just a couple of quick comments on the future expansion of GARDASIL that you alluded to, both from China, but also from vaccination of males throughout Europe and the timelines for that? Thank you. Teri Loxam - Merck & Co., Inc.: All right. Let's start with Roger. Roger M. Perlmutter - Merck & Co., Inc.: So, yeah, Andrew, thanks for the question. With respect to TMB, I have to say I'm not much influenced by reports from a single study like CheckMate-227, where there was relatively modest ascertainment. We didn't have a lot of information from patients and patient subsets. We've done quite large studies on TMB, comparing TMB to inflammatory signature. The JCO paper you referenced is one of those. There's quite a large series coming out in the Frontline journal very soon that describes a more comprehensive analysis. You and I could talk…

It's from Tim Anderson with Wolfe Research.

Thank you. A few questions. You talked about spending more on capital projects, with part of that going towards manufacturing. One of those products is KEYTRUDA, though there is GARDASIL. And my question is, whether as you look forward over the next couple of years is there the chance that demand will outstrip supply? I know with Vaccines, for example, manufacturing can be very tricky. So is there any sort of risk we should anticipate in terms of sales kind of being capped until manufacturing is fully up and running? And then, going back to GARDASIL, you guys seem to be flagging that that could be an under-appreciated opportunity. So you just touched on this I think in your last comment. But can you just talk about where you are with health authorities and payers in the various markets in terms of a broad embrace on vaccinating both boys and girls as a way of preventing different cancers? And if that product this year is going to sell $3 billion, is it unrealistic to think that over time it could do something like double in size? I'm trying to quantify what you think is the opportunity that you guys keep highlighting. Teri Loxam - Merck & Co., Inc.: Great. Let's start with Rob on the CapEx. Robert M. Davis - Merck & Co., Inc.: Yeah. Morning, Tim. Thanks for the question. So if you look at where our capacity is expanding, you are correct; it is around Vaccines, GARDASIL in particular, but frankly our broader Vaccines portfolio, KEYTRUDA and Animal Health. So it is really spread across all of the key growth areas of the company. And it's important to point out, and I'll let Adam speak specifically to what we see as the long-term demand in the marketplace. But…

It's from Umer Raffat with Evercore ISI.

Hi. Thanks so much for taking my question. I had three if I may. First, we're seeing some proposals come out of Trump administration, not formally proposed. But KEYTRUDA and the other I-Os are being proposed as some of the top Part B priorities, where they're seeing a price disconnect between U.S. and ex-U.S. So I'm just curious how you guys see this play out? One. And secondly, Ken, for you on margins. I guess the question really is, when investors hear you speak about margin expansion, there's this assumption that perhaps what it's implying is a margin expansion that may be beyond what's in consensus already. Because consensus has it going up 500 bps, 600 bps from current levels. I'm not sure how much granular you want to get there. But just wanted to get your temperature on that in general. And then finally, Roger, we noticed for your upcoming neoadjuvant triple negative breast trial, the powering was increased by 35% a few months ago. Just wanted to get some color around the thought process behind that decision? Thank you. Kenneth C. Frazier - Merck & Co., Inc.: So let me start with the pricing question. So let me start by saying, I think right now there's a lot that's being talked about in Washington. But we really need to see further details to better understand how all this is expected to be implemented. What we do agree with is that we need to find ways of getting patients more meaningful access to these Part B drugs. But at the end of the day, while we're open to that, we would be opposed to anything that would actually create a problem from the standpoint of patient access or innovation. But again, it's really early to try to comment on…

It's from David Risinger with Morgan Stanley. David R. Risinger - Morgan Stanley & Co. LLC: Thanks very much. I will follow the instructions from Teri very closely, unlike some of my competitors. So my two questions are, number one, could you please provide the percentages of U.S. sales that Merck generates from Medicare, including Medicare Part B? And second, could you talk a little bit more about Animal Health growth? It was 6%, which is solid organically. But I just don't have a sense for what we should expect going forward in that business. I think there was some moderation in the organic growth. And if you could give us a sense for how we should think about future organic growth prospects, that would be great. Thank you. Teri Loxam - Merck & Co., Inc.: We'll start with Adam. Adam H. Schechter - Merck & Co., Inc.: Yeah. So, David, thanks for the question. We don't really break out segment growth. And the reason why is because if you look at our portfolio, it's changing every quarter and growth is coming from different areas, some of which are much bigger in Medicaid than Medicare. And we don't – it's very hard, because a lot of the data you also get is retroactive versus where you are today. But in general, you know that KEYTRUDA is reimbursed through Part B. You can tell that Vaccines are reimbursed differently. And I think as we go forward, obviously Oncology is going to play a much bigger role for us. Robert M. Davis - Merck & Co., Inc.: Yeah. And to your question about Animal Health, as I commented in the prepared remarks, I wouldn't look at what you see as the – what could appear to be the slower growth in the…

This concludes Merck's Third Quarter 2018 Sales and Earnings Conference Call. You may now disconnect.