Merck & Co., Inc. - Jefferies Group 1500 2...Merck & Co., Inc. Jefferies Global Healthcare...
Transcript of Merck & Co., Inc. - Jefferies Group 1500 2...Merck & Co., Inc. Jefferies Global Healthcare...
Merck & Co., Inc.
Jefferies Global Healthcare Conference
November 20, 2014
Adam H. SchechterExecutive Vice President and President
Global Human Health
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. Forward looking statements include statements
regarding the timing and closing of the tender offer and the merger transactions, the ability of Merck to complete
the transactions considering the various closing conditions, and any assumptions underlying any of the foregoing.
These statements are based upon the current beliefs and expectations of Merck’s 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; Merck’s ability to accurately predict
future market conditions; manufacturing difficulties or delays; financial instability of international economies and
sovereign risk; dependence on the effectiveness of Merck’s patents and other protections for innovative products;
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 Merck’s 2013 Annual Report on Form 10-K and the
company’s other filings with the SEC available at the SEC’s Internet site (www.sec.gov).
Forward-Looking Statement
Merck is Delivering Focused Results in 2014
Strategic Actions for Growth
Driving Portfolio Growth
Advancing the Innovative Pipeline
Returning Cash to Shareholders
Fo
cu
sed
On
Being the Premier Research-Driven Biopharmaceutical Company
Merck Has the Right Strategy to Drive Growth and Productivity
New,
Focused Model
Suite of
Opportunities
Harnessing
Immuno-Oncology
Merck Has the Right Strategy to Drive Growth and Productivity
• Investing Behind the Best Sources of Growth
• Divesting Non-Core Assets
• $2.5B Annual Cost Savings by end of 2015
New,
Focused Model
Suite of
Opportunities
Harnessing
Immuno-Oncology
Merck Is Sharpening Its Strategic Focus
Top 10
Markets
& Core
Commercial
Therapeutic
Areas
Breakthrough
R&D
Including I-O
and HCV
Non-Focus
Areas
Investments weighted to priority areas of focus.
Key Strategic Accomplishments
• Portfolio prioritization led to divestiture of $3 billion in revenue
– Completed sale of $2B Consumer Care business to Bayer
– Completed divestiture of $1B non-core human health products and business
areas
• Acquired Idenix for key Hepatitis C assets
• Determined to augment and grow Animal Health
– YTD Animal Health grew +9%1
• Significant progress redesigning operating model / reducing cost base
– Remain on track to achieve target of $2.5 billion net reduction in annual
operating expenses by the end of 2015
1 YTD sales growth through September 30; excludes impact from foreign exchange and Zilmax.
Merck Is Steadily Improving Cost Efficiencies Continuing efforts to Reduce Costs by $2.5B
1 Non-GAAP SG&A + Non-GAAP R&D 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 Q3 earnings reports – group made up of 8 large pharmaceutical companies.
2
SG&A + R&D1
3
20152009 201238%
40%
42%
44%
46%
48%
50%
52%
9M20142010 20112008 2009 2012 2013
Peer AverageMerck
Merck Made Clear Choices to Deliver on Our Mission and Win…
• We are focusing even more explicitly on:
Therapeutic areas
where payers will pay for innovation
Top global and local
customers
Markets with the greatest
opportunities
Obtaining and
maintaining prices
Preparingfor
launches
Total deaths from diabetes are
projected to increase by 50% in the
next 10 years
Antibiotic-resistant bacteria infects
over 2 million Americans annually,
resulting in 23,000 deaths
ACUTE CARE HOSPITAL
DIABETES
Cervical cancer is the second most
common cancer in women
worldwide
VACCINES
Every year, 8 million people die from
cancer worldwide
ONCOLOGY
Focus: These Areas Give Us a Strong Platform for Growth
Sources: CDC, WHO
Diabetes: We Are a Leader in the DPP-4 Market
• Focusing resources on this important brand with ~$6 billion annual sales
• Macro trends support a growing Diabetes market
JANUVIA Franchise 12-Wk Rolling TRx
YoY Change %
1 YTD sales growth through September 30; excludes impacts from foreign exchange.2 Source: IMS (Nov 15, 2013 through Nov 7, 2014).
$4.8
$4.4
$3.2
$2.8
$3.6
$4.0
20142013
2014 YTD Sales Growth1 JANUVIA TRx Trend2
+4%
Vaccines: We Are a Leader in the Global Vaccines Market
+14% CAGR
• Merck ranked #1 in global sales2
• Broad portfolio
• GARDASIL market share leader at >90% globally
• V503, 9-valent HPV vaccine currently under FDA review, increases protection to almost 90%
1 Excludes SPMSD joint venture sales.2 Merck and Peer revenue as reported, FY 2013 and YTD 2014.
Merck Vaccine Sales1
Acute Care Hospital: An Area of Significant Unmet Need
• Portfolio of products with annual
sales >$2 billion
• Key products include:
− Antibiotics (INVANZ, PRIMAXIN)
− Antifungals (NOXAFIL,
CANCIDAS)
− BRIDION
• Well-positioned longer term with
several Phase 3 pipeline
opportunities
1 YTD sales growth through September 30; excludes impacts from foreign exchange.
$1.0
$0.5
$1.5
$2.0
20142013
2014 YTD Sales Growth1
+11%
Oncology: Launching in Immuno-Oncology
• First Anti-PD-1 launched in the US
• ~1,200 eligible patients at launch, with a few hundred additional
patients eligible each month
• 900+ patients treated since approval (Sept. 2014)
• Most payers are covering cost of current indication without restrictions
• Reached top ipilimumab prescribers within days of approval
• Numerous Launches and Filing Opportunities in
2014 and 2015
• Launching into Large Markets with Unmet Needs
• Opportunities in Immuno-Oncology and HCV
• Leveraging Global Presence to Accelerate Growth
Merck Has the Right Strategy to Drive Growth and Productivity
New,
Focused Model
Suite of
Opportunities
Harnessing
Immuno-Oncology
Merck is Launching New Molecular Entities into Large Markets
Recent Approvals
Oncology:
• KEYTRUDA for advanced
melanoma
Insomnia:
• BELSOMRA
Cardiovascular:
• ZONTIVITY
Allergy Immunotherapy:
• GRASTEK
• RAGWITEK
Hepatitis C Virus:
• VANIHEP, in Japan
Vaccines:
• V503, HPV-related cancers
• V419, pediatric hexavalent
combination vaccine in US
Acute Care Hospital:
• Sugammadex in US
Diabetes:
• Omarigliptin, once-weekly DPP-4
Inhibitor in Japan
Cardiovascular:
• ZETIA / VYTORIN, plan to submit
sNDA with IMPROVE-IT data in
mid-2015
Regulatory Action Upcoming
Merck Also Has Many Attractive Programs in Registrational Trials
2015 2016 2017 2018 20192014
Actoxumab / Bezlotoxumab (C. Diff. Infection)
KEYTRUDA – NSCLC (KN-010)
Grazoprevir / Elbasvir (Hepatitis C)
KEYTRUDA – Bladder Cancer (KN-045)
Anacetrapib (Atherosclerosis)
Omarigliptin (once weekly DPP-4)
Ertugliflozin (SGLT-2 Inhibitor)
Letermovir (HCMV prophylaxis)
BACE Inhibitor (Alzheimer’s Disease)
V212 (Inactivated VZV vaccine)
Earliest study primary completion date per clinicaltrials.gov
Latest study primary completion date per clinicaltrials.gov
There is an unmet medical need for an interferon-free, ribavirin-free, short duration HCV
therapy that is highly effective across all patient populations, including patients with cirrhosis.
HCV: Fast-growing Market with High Unmet Need
The number of patients with cirrhosis will peak
in the next 7-10 years
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1950
1960
1970
1980
1990
2000
2010
2020
2030
Nu
mb
er
of
Cases
Year
Cirrhosis
M 50+
M 31-50
M 0-30
F 50+
F 31-50
F 0-30
Source. Hepatitis C in the United States, Holmberg, NEJM 2013; Decision Resources (2013), Health care reform and
Hepatitis C: a convergence of risk and opportunity - Milliman , 2013; CDC Draft Recommendations – May 18, 2002
• In US, 3.2 million people with
chronic HCV
– 50% diagnosed
– ~170,000 – 200,000 cured
– >450,000 may get insurance
between 2014 and 2020
• Without changes to historical
diagnosis and treatment
paradigm, annual medical costs
expected to rise to $85 billion in
5 years
Merck’s HCV Doublet will be Filed in 2015
Grazoprevir
(MK-5172)Highly Potent HCV
Protease Inhibitor
Elbasvir
(MK-8742)Highly Potent HCV
NS5A Inhibitor
Grazoprevir/ElbasvirFixed Dose
Combination Tablet
High rates of efficacy demonstrated against key genotypes
High barrier to resistance and activity against common
resistance-associated variants of HCV
Single tablet given once-daily, no significant food effect
Breakthrough therapy designation from FDA
Merck's HCV Triplet to Start Phase 2 in Q1 2015 Direct-acting therapies including a nucleotide inhibitor
GrazoprevirHighly Potent
HCV
Protease
Inhibitor
Elbasvir
or
MK-8408Highly Potent
HCV
NS5A Inhibitors
MK-3682Highly Potent
HCV
NS5B NI
• Phase 2 C-CREST program evaluates two different 3-drug regimens
• Designed to target broad range of genotypes
• Starts with 8 week regimens in non-cirrhotics, proceeding to harder-
to-treat patients and shorter durations of therapy
• KEYTRUDA is first FDA-approved Anti-PD-1
• Breakthrough Therapy Designation for NSCLC1
• Growing Utility in Multiple Tumor Types
• Building Partnerships and Collaborations
• Expanding Into Combination Therapy
Harnessing
Immuno-Oncology
New,
Focused Model
Suite of
Opportunities
1 KEYTRUDA has Breakthrough Therapy designation for advanced melanoma following ipilimumab and/or BRAF inhibitor
failure and EGFR negative and ALK negative NSCLC following platinum based therapy failure.
Merck Has the Right Strategy to Drive Growth and Productivity
Cancer is a Significant Global Burden
Select Cancer Type 2013 Sales ($mm)
Breast cancer $11,530
CRC 7,501
NSCLC 6,757
NHL 6,211
Multiple myeloma 6,210
CML 5,952
Prostate cancer 5,384
RCC 3,749
Melanoma 1,388
ALL 1,304
Liver cancer 868
Glioblastoma 846
Stomach cancer 692
Head & neck 659
Pancreatic 541
Source: Globocan (2012) Source: EvaluatePharma
KEYTRUDA: Evidence of Response in Seven Tumor Types
OTHERS
BLADDER
MELANOMA
HEAD & NECK
NON-SMALL-CELL LUNG
GASTRIC
CLASSICAL HODGKINS LYMPHOMA
TRIPLE NEGATIVE BREASTCANCER
• Initial market entry in metastatic melanoma
• Second indication in non-small-cell lung cancer
• Showed data in 7 tumor types in 2014
• 35+ ongoing or planned clinical trials in more than 30
tumor types, with over 8,000 patients estimated to enroll
CO
MB
INA
TIO
N
Merck has a Robust Immuno-Oncology Pipeline
REGISTRATIONPHASE 1 / 2PRECLINICAL
Other
antagonists
Anti-LAG3
RCC with pazopanib (GSK) (KN018)
RCC with axitinib (PFE)
HER2+ breast with trastuzumab
Solid tumors with 41BB (PFE)
MM with lenalidomide & dexamethasone (KN-023)
Melanoma with IPI/Sylatron (KN029) Melanoma with T-VEC (AMGN)
NSCLC with abraxane (KN026)
NSCLC with chemo, IPI, & TKI (KN021)
Melanoma IPI naïve (KN006)
Melanoma IPI refractory (KN002)
2/3 NSCLC (KN010)
Head & neck (KN040)
Bladder (KN045)
Melanoma adjuvant
NSCLC 1st line (KN024 & 042)
Biomarker +
20 multiple
solid tumors
(KN028)
Melanoma & NSCLC (KEYNOTE001)
Head & neck, bladder, triple neg breast & gastric (KN012)
Hematologic malignancies (KN013)
MSI-high Colerectal and noncolon (KN016)
Melanoma brain metastasis (KN027)
MO
NO
TH
ER
AP
Y
Ongoing
Planned
STUDIES
Anti-GITR: Solid tumors
Melanoma BRAF & MEK Inh (GSK) (KN022)
*Phase 1 unless otherwise noted; KN = Keynote.
Other
agonists
NSCLC with IDO1 (INCY) (KN-037) Prostate with Lm-LLO (ADXS)
Phase 2
Gastric
Delivering on Our Commitment to Shareholders
• Returned over $11 billion to shareholders over the last 12 months
• Returned ~90% free cash flow in the last 5 years
• Increased the dividend 3 times in the past 3 years
• After-tax proceeds from Consumer Care divestiture, net of Idenix
acquisition, deployed by year end for share repurchase
Merck is Delivering Focused Results in 2014
Strategic Actions for Growth
Driving Portfolio Growth
Advancing the Innovative Pipeline
Returning Cash to Shareholders
Fo
cu
sed
On
Being the Premier Research-Driven Biopharmaceutical Company
Focusing on the Future