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Cowen annual healthcare conferenceMarch 5, 2015

Transcript of Cowen Hcc Slides Final

  • Cowen Annual Healthcare Conference March 5, 2014

    Peter Kellogg EVP and Chief

    Financial Officer

  • 1

    Forward-Looking Statement

    This presentation includes forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of Mercks management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline products that the products will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.

    Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; Mercks ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of Mercks patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions.

    Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in Mercks 2013 Annual Report on Form 10-K and the companys other filings with the Securities and Exchange Commission (SEC) available at the SECs Internet site (www.sec.gov).

  • 2

    Merck Is Accelerating Strategic Actions for Growth

    Returning Cash to Shareholders

    Reducing Costs - Increasing Focus

    Advancing the Innovative Pipeline

    Driving Portfolio Growth

    Building Momentum

    for Long-Term Growth

  • 3

    Merck Is Steadily Improving Cost Efficiencies Continuing to Reduce Costs by $2.5B

    40%

    42%

    44%

    46%

    48%

    50%

    52%

    2008 2009 2010 2011 2012 2013

    Merck Peer Average

    1. Non-GAAP SG&A expense ratio as a % of sales + Non-GAAP R&D expense ratio as a % of sales 2. 2008 Operating expense ratio represents Merck standalone; 2009 represents 12 months of Merck + 2 months of Schering-Plough 3. Peer group results based on Non-GAAP results reported by peers in Q4 earnings reports - group made up of 8 large

    pharmaceutical companies.

    2

    SG&A + R&D1

    3

    2015 2009 2012

  • 4

    Merck Is Sharpening Its Strategic Focus

    Top 10 Markets & Core

    Commercial Therapeutic

    Areas

    Breakthrough R&D

    Non-Focus Areas

    Investments weighted to priority areas of focus.

  • 5

    Mercks Implementation Underway

    Core Markets and Therapeutic Area Focus Building Mercks Oncology Business Unit to execute launch of MK-3475 Clustering of small and mid-sized markets to leverage country level operations

    Pipeline in Focus Initiated rolling submission of MK-3475 for patients with advanced melanoma

    previously treated with ipilimumab Advanced HCV regimen into Phase IIB in a diverse range of patients Advanced BACE inhibitor for Alzheimers Disease into Phase III

    Unlocking Value in Non-Core Areas Divested Saphris and Ophthalmic products in the U.S. Evaluating role of Animal Health and Merck Consumer Care in Mercks strategy

    - Action to be taken, if any, in 2014

  • 6

    Merck Is Advancing Its Innovative Pipeline Developing Near-Term Late-Stage

    Partnered Programs: SGLT2 ertugliflozin for

    diabetes in Phase III

    Samsung Bioepis biosimilars agreement

    Business development is a priority for Merck in 2014

    Many Other Programs, Including: MK-3475 trials in 30 cancer

    types

    MK-7622 symptomatic treatment for AD

    House Dust Mite AIT

    Oncology: MK-3475 (Anti-PD-1) for

    advanced melanoma1

    Vintafolide for platinum resistant ovarian cancer (EU)

    Insomnia: Suvorexant

    Cardiovascular: Vorapaxar

    Vaccines: V503 for HPV-related cancers

    Allergy Immunotherapy: Grass and Ragweed

    Hepatitis C Virus: Vaniprevir filed in Japan

    Hepatitis C Virus: MK-5172/MK-8742 in Phase IIB

    Oncology: MK-3475 potential registration

    studies in melanoma and NSCLC

    Alzheimers Disease (AD): BACE Inhibitor in Phase III

    Other: Odanacatib in Phase III Sugammadex additional

    study required for filing Anacetrapib in PIII MK-3102, once-weekly DPP-4

    in Phase III

    1. In January 2014, the Company announced it has started a rolling submission to the FDA of a BLA for MK-3475 for patients with advanced melanoma who have previously been treated with ipilimumab.

  • 7

    Mercks Programs with Breakthrough Designation

    Initiated rolling submission in patients with advanced melanoma previously treated with ipilimumab

    13 clinical trials in over 30 cancer types ongoing

    5 collaborations announced over the last 3 months

    Phase IIB data in a diverse range of patients in 1H 2014

    Anticipate beginning Phase III in 2014

    MK-3475 Anti-PD-1 for oncology

    MK-5172 / MK-8742 for hepatitis C virus

  • 8

    2013

    Pipeline to Potentially Supplement Underlying Growth Drivers

    1. FY2013 growth; excludes sales of recent patent expiries, including SINGULAIR, MAXALT & TEMODAR, and foreign exchange.

    2. FY2013 growth; excludes impacts from foreign exchange. 3. Emerging Market sales include sales from products in other core areas noted on

    this slide (e.g. Diabetes)

    Oncology MK-3475, anti-PD-1 Vintafolide

    Diabetes MK-3102, weekly DPP4 Ertugliflozin, SGLT2 Insulin glargine

    Hosp, Spec, Acute Care Sugammadex (U.S.) MK-5172/8742, HCV

    Vaccines V503, 9-valent HPV V419, 6-valent pediatric

    3% growth1 of underlying portfolio revenue

    Immunology2

    +13%

    Diabetes2 +5%

    Emerging Mkts3 +7%

    Vaccines2 +11%

    Opportunistic Odanacatib Suvorexant & BACE Vorapaxar & Anacetrapib Allergy Immunotherapy

    Top 10 Markets Emerging Markets

    Future

  • 9

    Merck Has Created Shareholder Value

    0

    2

    4

    6

    8

    10

    12

    14

    2010 2011 2012 2013

    Share Repurchase Dividends Paid Over $11 billion in cash returned to shareholders through share repurchases and the dividend in 2013, inclusive of $5 billion ASR

    2013 share repurchases reduced share count by ~5%

    Dividend increased 3 years in a row

    $ b

    illio

    ns

  • 10

    2014: Merck Looking Forward to.

    Completing MK-3475 rolling submission in 1H Additional data and new clinical studies beginning

    Odanacatib study completion and anticipated filing

    HCV data in a diverse range of patients in 1H Starting Phase III in 2014

    Regulatory actions for V503, Vaniprevir(Japan), Vintafolide(EU), Vorapaxar, and AIT-Grass and Ragweed

    Resubmission of sugammadex data to the FDA

    Complete strategic review of Animal Health & Merck Consumer Care businesses

    R&D Day & Business Briefing on May 6th

  • 11

    R&D Day & Business Briefing: Boston

  • 12

    Merck Is Positioned for Long-Term Growth

    Sharpening focus to increase and unlock value

    Promising, innovative, late-stage pipeline

    Growth with patent protected assets in core areas

    Favorable macro trends in core businesses, geographies, and therapeutic areas

    Strong financial flexibility to execute business development and drive shareholder returns

  • Merck Committed to

    Innovation

    Slide Number 1Forward-Looking StatementMerck Is Accelerating Strategic Actions for GrowthMerck Is Steadily Improving Cost Efficiencies Continuing to Reduce Costs by $2.5BSlide Number 5Mercks Implementation UnderwayMerck Is Advancing Its Innovative PipelineMercks Programs with Breakthrough DesignationPipeline to Potentially Supplement Underlying Growth DriversSlide Number 102014: Merck Looking Forward to.R&D Day & Business Briefing: BostonMerck Is Positioned for Long-Term GrowthSlide Number 14