Merck hosts R&D and Business Briefing

Merck & Co., Inc.May 12 2010

Merck & Co., Inc. (NYSE:MRK) today hosted its first R&D and Business Briefing since the completion of the Merck and Schering-Plough merger. The event included a comprehensive review of the company's late-stage pipeline, as well as the company's commercial strategy and progress made in the integration of Merck's worldwide operations. In addition, the company outlined how its growth strategy is designed to meet the evolving needs of the global health care environment.

“This merger was about creating a new global health care leader, and we are well on our way”

Chairman and Chief Executive Officer Richard T. Clark told investors and analysts today that the company has already made substantial progress in creating the new Merck and has begun delivering on the promise of the merger.

"This merger was about creating a new global health care leader, and we are well on our way," said Mr. Clark. "Today's Merck has excellent capabilities across pharmaceuticals, vaccines and biologics; a robust late-stage pipeline with the potential to sustain near- and long-term growth; a broader product portfolio and an expanded global footprint. The combination of these capabilities with our strategic vision and our people will enable us to achieve our goals.

"We also have made considerable progress in executing our integration plans while continuing to drive revenue growth, maintain our business momentum and reduce our cost structure," said Mr. Clark.

During his presentation, Mr. Clark outlined many of the company's achievements since the Nov. 3, 2009 close of the merger, including prioritizing Merck's clinical research programs; completing the integration of the majority of the company's top 20 markets; and announcing plans to create a new animal health joint venture with sanofi-aventis. The company also has been successfully launching new products and growing key brands during the last two quarters. In fact, Merck is growing faster than the competition in many markets and has multiple launches underway in key countries. Mr. Clark also introduced new senior leaders who have recently joined the company with responsibilities linked to the company's growth strategy.

"Merck's mission is to make a difference in the lives of people and maximize shareholder return by providing innovative medicines, vaccines and consumer and animal health products around the world," said Mr. Clark. "This mission, and all the hard work being done to accomplish it every day by Merck colleagues in more than 140 countries around the world, is what makes me so excited about the opportunity we have before us."

Research and Development Update

Peter S. Kim, executive vice president and president, Merck Research Laboratories (MRL), described the company's newly integrated pipeline, which includes several innovative and differentiated candidates targeting unmet medical needs, such as atherosclerosis and thrombosis, hepatitis C, insomnia, migraine, osteoporosis and Parkinson's disease.

Merck's integrated pipeline is composed of near-term as well as long-term opportunities that are balanced across therapeutic franchises and include both partnered and internally discovered molecules.

Four new molecular entities are currently under regulatory review, including the mometasone/formoterol combination for asthma in the United States and European Union (EU), BRINAVESS (vernakalant IV) for atrial fibrillation in the EU, NOMAC/E2 (nomegestrol acetate/17 beta-estradiol) for contraception in the EU, and asenapine for schizophrenia and bipolar I disorder in the EU. In 2010, the company anticipates five new major market filings for new molecular entities and combination products — boceprevir, JANUMET XR (sitagliptin/metformin HCL) (U.S.), NOMAC/E2 (U.S.), MK-0431D (sitagliptin and simvastatin) (Worldwide) and ridaforolimus (Worldwide) - and five additional major market filings for new indications or new formulations. In addition, Merck plans to file for marketing approval for daptomycin (for injection) and ZOLINZA (vorinostat) in Japan.

"I believe Merck has the best pipeline in the industry," said Dr. Kim. "We continue to lead the way in creating innovative and differentiated candidates designed to address major unmet medical needs. Additionally, our strong life-cycle management strategy aims to take advantage of the full value of our approved products. The combination of Merck Research Laboratories' deep drug development expertise and our ability to tap innovation through external partnerships positions us to sustain our pipeline far into the future."

Demonstrating Value with a Strong Life-Cycle Management Strategy

Dr. Kim described how Merck is realizing the full value of its in-line products through its life-cycle management strategy. Over the past 16 months, the company has received approvals for additional indications for GARDASIL [Human Papillomavirus Quadrivalent (Types 6, 11, 16 and 18) Vaccine, Recombinant], an expansion for ISENTRESS (raltegravir tablets) to support use in treatment-naïve HIV patients, new uses for JANUVIA and JANUMET in the treatment of diabetes, as well as an expanded indication for PEGINTRON (peginterferon alfa-2b) and a new formulation for TEMODAR (temozolomide). Additionally new indications or new formulations are under review for GARDASIL, IMPLANON NXT (etonogestrel implant) and NASONEX (mometasone furoate monohydrate).

Merck's Ongoing Commitment to Biologics

Dr. Kim also underscored that Merck is well positioned to advance its biologics strategy to create a balanced biologics portfolio made up of both biosimilars and novel biologics.

With the passage of U.S. health care reform legislation, Merck anticipates access to an accelerated development pathway for biosimilar candidates that employ the same biologic expression platform used for manufacturing the originator molecule, which will be the focus of Merck BioVentures. Additionally, MRL will develop biologics designed to improve upon existing successful therapies and continue to expand its novel biologics capabilities.

Following the company's recent portfolio prioritization, Merck has five novel biologics and two biosimilar candidates in clinical development. The company continues to anticipate having five biosimilar programs in Phase III development by 2012.

As part of its prioritization process, Merck has discontinued development of MK-2578, Merck's PEGylated erythropoietin candidate.

Merck's Robust Pipeline

Merck's late-stage pipeline has more than 20 ongoing Phase III candidates including new molecular entities and combination programs. The company also has eight ongoing programs for major new indications or formulations for marketed products. The Phase III pipeline reflects the strong science rationale for the merger, with significant contributions from the pipelines of both legacy companies. About 55 percent of the molecules originated from legacy Merck and 45 percent came from legacy Schering-Plough.

A detailed overview of ongoing late-stage development programs for the company's seven disease franchise areas and Merck Vaccines was presented by Dr. Kim and Dr. Luciano Rossetti, senior vice president, Global Scientific Strategy, MRL.

Notable Developmental Candidates Highlighted Within Merck's Disease Franchise Areas

Bone, Respiratory, Immunology and Dermatology

• Allergen Immunotherapy (SCH 697243, SCH 039641) are fast-dissolving tablets being investigated for the treatment of grass pollen and ragweed allergies. The clinical development programs are continuing with New Drug Application (NDA) filings for grass pollen and ragweed allergies anticipated in 2010/2011 and 2012, respectively.
• Odanacatib (MK-0822) is a novel candidate cathepsin K inhibitor being evaluated in Phase III studies for the treatment of osteoporosis. Merck anticipates filing an NDA for odanacatib in 2012.

Cardiovascular

• Vorapaxar (SCH 530348) is an investigational protease activated receptor-1 (PAR-1) antagonist for the treatment of thrombosis. Phase III studies for acute coronary syndrome (TRA CER) and the secondary prevention of thrombosis (TRA 2P) are ongoing. Merck anticipates filing an NDA in the U.S. in 2011.
• Anacetrapib (MK-0859) is an investigational cholesteryl ester transfer protein inhibitor. It is currently being evaluated in a Phase III study (DEFINE study). Merck anticipates starting enrollment in a cardiovascular outcomes trial in 2011.
• TREDAPTIVE (ER niacin/laropiprant, MK-0524A) is an investigational fixed-dose combination of nicotinic acid (niacin) and laropiprant, a selective prostanoid DP1 inhibitor, designed to selectively block the binding of prostaglandin, PGD(2), to its receptor, DP1. Enrollment in HPS2-THRIVE, a Phase III cardiovascular outcomes study, has been completed and Merck anticipates filing an NDA in 2012.

Diabetes and Obesity

• Following initial approval of JANUVIA (sitagliptin), Merck's first in-class DPP-4 inhibitor, the company is pursuing new indications and evaluating combinations with other diabetes therapies. Ongoing Phase III trials of sitagliptin in fixed-dose combinations include MK-431C (sitagliptin and pioglitazone) and MK-431D (sitagliptin and simvastatin).

Infectious Disease

• Boceprevir (SCH 503034) is a potent oral protease inhibitor candidate for the treatment of hepatitis C. Ongoing Phase III studies (SPRINT-2 and RESPOND-2) are designed to evaluate boceprevir as an addition to current therapy and its impact on treatment duration. Merck anticipates filing an NDA for boceprevir in the U.S. in 2010.
• MK-3415A is two monoclonal antibodies targeting Clostridium difficile toxins A and B. The company is currently in the process of designing the Phase III program to evaluate MK-3415 for the treatment of Clostridium difficile infection.

Neuroscience and Ophthalmology

• Preladenant (SCH 420814) is a novel adenosine A-2 receptor antagonist being evaluated for the treatment of Parkinson's disease. Phase III clinical trials are scheduled to start in 2010.
• MK-4305 is a novel orexin receptor antagonist being evaluated in Phase III studies for the treatment of insomnia. Phase IIb data are scheduled to be presented in June 2010.

Oncology

• Ridaforolimus (MK-8669) is an oral mTOR inhibitor to which Merck recently announced it had acquired a full exclusive license. The SUCCEED trial evaluating ridaforolimus in soft tissue sarcoma is fully enrolled. Merck anticipates filing for the sarcoma indication in the U.S. in 2010. Further studies are ongoing evaluating ridaforolimus alone and in combination for multiple other cancer types.
• Dalotuzumab (MK-0646) is an antibody targeting the insulin-like growth factor receptor-1 (IGF-1r). Interim analysis of the ongoing Phase II study for colorectal cancer and the decision to proceed into Phase III are scheduled for 2010.

Women's Health and Endocrinology

• Corifollitropin alfa (SCH 900962) is a novel biologic being evaluated for controlled ovarian stimulation in women undergoing assisted reproductive treatment. Merck anticipates filing in the U.S. in 2012.

Vaccines

• V503 is a 9-valent HPV vaccine designed to target HPV types 6, 11, 16, 18, 31, 33, 45, 52 and 58. The Phase III trial is ongoing and Merck anticipates filing a Biologics License Application (BLA) in 2012.

Pipeline Chart

A new interactive pipeline chart lists investigational candidates in Phase II and Phase III of clinical development as well as four compounds currently under regulatory review. The interactive chart also details mechanism of action, partners and marketing rights in specific geographic regions for Phase III candidates. The chart may be accessed at: www.merck.com.

Merck 2010 Financial Targets

On May 4, Merck provided financial targets for 2010. The company anticipates its full-year 2010 non-GAAP (generally accepted accounting principles) earnings per share (EPS) to be in the range of $3.27 to $3.41, excluding certain items, and a 2010 GAAP EPS range of $1.15 to $1.50. The 2010 non-GAAP guidance excludes purchase accounting adjustments, restructuring and merger-related costs, a pretax gain from AstraZeneca's asset option exercise, and the first-quarter tax charge related to the recently enacted health care reform legislation. EPS and other financial targets assume for 2010 that Merck retains full rights to REMICADE (infliximab) and SIMPONI (golimumab) in the applicable markets.

Merck continues to target a high single-digit non-GAAP EPS compound annual growth rate for the combined company from 2009 to 2013 when compared to Merck 2009 non-GAAP EPS. As the company has previously said, the longer-term targets are applicable regardless of the assumptions made for the REMICADE and SIMPONI business.