Merck Highlights Progress on Its Strategic Initiative to Sharpen Commercial and R&D Focus; Drive Growth and Productivity

Merck (NYSE:MRK), known as MSD outside the United States and Canada, today is hosting an Investor Briefing at the company’s research facility in Boston. The briefing is also available via webcast at www.merck.com starting at 9:00 a.m. EDT.

Members of the company’s senior management team provided updates on the progress Merck has made on its multi-year, strategic initiative to sharpen its commercial and research and development (R&D) focus, bolster its innovative pipeline and accelerate efforts to redesign its operating model and reduce its cost base.

New, Focused Operating Model

Merck has implemented a focused, more agile operating model and a more flexible cost structure in order to drive growth and productivity for the long term. This has allowed the company to reduce costs, while at the same time take proactive steps to further sharpen its R&D and commercial focus and bolster its innovative pipeline. This includes greater integration between the company’s commercial and R&D organizations and improved therapeutic, pipeline and market prioritization to focus on the best opportunities for growth.

“We’re focusing on improving our growth opportunities by investing in the right programs, products and markets,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. “Merck is about translating cutting-edge science into medicines and vaccines that save and improve lives throughout the world. By bringing to market new products that make a meaningful difference to patients, payers and providers, we’ll continue to drive value for our shareholders and society.”

Merck announced in January that it was evaluating strategic options for all areas of the business, including Consumer Care and Animal Health, to determine whether or not they are core to its strategy. As a result, Merck today announced the sale of its Consumer Care business to Bayer AG for $14.2 billion and entered into a worldwide collaboration with Bayer to market and develop a novel portfolio of soluble guanylate cyclase (sGC) modulators for the treatment of pulmonary arterial hypertension (PAH) and chronic thromboembolic pulmonary hypertension (CTEPH). As part of the collaboration, Bayer will receive a $1 billion up-front payment with the potential for additional milestone payments upon the achievement of agreed-upon sales goals.

During today’s Investor Briefing, Merck said it will continue to explore ways to augment its Animal Health business. The company continues to view the business as one that will generate long-term shareholder value.

Advancing a Suite of Opportunities

Merck’s pipeline contains many promising candidates that represent a suite of near- and long-term opportunities that will drive growth and shareholder value. The company has prioritized its R&D efforts to focus on innovative candidates with meaningful, differentiated attributes. At the same time, Merck has increased its commercial focus on key therapeutic areas that provide the best opportunities for the business and deliver the greatest value for customers, including diabetes, acute hospital care, vaccines and oncology.

During the meeting, company executives reaffirmed Merck's objective of being the premier research-intensive biopharmaceutical company. The executives also discussed progress made towards prioritizing the company’s R&D portfolio and provided updates on advances in the company’s late-stage pipeline and plans for expanding its clinical programs to advance its novel candidates in hepatitis C, HIV, diabetes and immuno-oncology.

Merck said it also anticipates several regulatory actions and potential product launches in 2014 including:

• Launches
  • GRASTEK (Timothy Grass Pollen Allergen Extract), a sublingual allergen immunotherapy tablet for grass pollen-induced allergic rhinitis
  • RAGWITEK (Short Ragweed Pollen Allergen Extract), a sublingual allergen immunotherapy tablet for ragweed pollen-induced allergic rhinitis
• Under Review
  • MK-3475, an investigational anti-PD-1 antibody for advanced melanoma
  • Suvorexant, an investigational orexin inhibitor for the treatment of insomnia
  • ZONTIVITY (vorapaxar), an investigational, novel PAR-1 antagonist for reduction of atherothrombotic events in patients with a prior heart attack or with peripheral arterial disease and no history of stroke or transient ischemic attack
  • V503, an investigational 9-valent HPV vaccine
  • Vaniprevir, an investigational, novel protease inhibitor for the treatment of hepatitis C (under review in Japan)

• Filings Anticipated in 2014
  • Sugammadex, an investigational medicine for the reversal of neuromuscular blockade
  • Odanacatib, an investigational, novel cathespin K inhibitor for the treatment of osteoporosis

The company confirmed plans to submit a New Drug Application (NDA) for odanacatib in the second half of 2014 and said that data from its large fracture outcomes study have been submitted for presentation at a medical meeting later this year. In the Phase 3 fracture study, odanacatib substantially reduced the risk of osteoporotic fractures vs. placebo, including vertebral, non-vertebral and hip fractures, and the risk reduction was robust and sustained. Adverse experiences were generally balanced between the odanacatib and placebo groups. Among adjudicated adverse effects associated with odanacatib, morphea (areas of skin thickening with itching) was reported uncommonly (<0.2%), with improvement after discontinuation of treatment, and femoral shaft fractures of an atypical type were rare (<0.1%). Both were higher than placebo. There were no reported cases of osteonecrosis of the jaw. Numerical imbalances were also seen for adjudicated atrial fibrillation and strokes, though major cardiovascular events were balanced overall.

Additional late-stage pipeline opportunities where Merck has a legacy of leadership and an established global presence were also discussed:

• In hepatitis C, the company has initiated Phase 3 trials for MK-5172/MK-8742, its all-oral combination regimen, and also plans to initiate studies in combination with sofosbuvir for evaluating shorter durations of therapy.
• In HIV, the company plans to commence a Phase 3 trial in the fourth quarter of 2014 for its non-nucleoside reverse transcriptase inhibitor, doravirine (MK-1439), and for raltegravir once-daily, a new formulation of its integrase inhibitor ISENTRESS.
• In diabetes, the company plans to file omarigliptin, a once-weekly DPP-4 inhibitor, in Japan by the end of 2014. In addition, in collaboration with Pfizer, Merck continues to evaluate ertugliflozin, an investigational oral sodium glucose cotransporter (SGLT2) inhibitor, in Phase 3 trials.

Delivering in Immuno-oncology

Merck is investing to be a leader in oncology and is focused on advancing MK-3475. The company announced that the FDA has accepted its Biologics License Application (BLA) for MK-3475 for the treatment of advanced melanoma in patients previously treated with ipilimumab and granted priority review status. The PDUFA date for the BLA is October 28, 2014.

Conference and Webcast Information

There will be a live webcast of the event available on Merck's website at www.merck.com starting at 9:00 a.m. EDT. Software needed to listen to the webcast may be obtained on the corporate website and should be downloaded prior to the beginning of the webcast. A replay of the webcast will be available by the end of the day on May 6, 2014. Institutional investors, analysts and members of the media also can participate in the event by dialing (706) 634-2289 or (877) 214-9289 and using ID code number 42688075.

About Merck

Today's Merck is a global healthcare leader working to help the world be well. Merck is known as MSD outside the United States and Canada. Through our prescription medicines, vaccines, biologic therapies, and consumer care and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to healthcare through far-reaching policies, programs and partnerships. For more information, visit www.merck.com and connect with us on Twitter, Facebook and YouTube.

Forward-Looking Statement

This news release 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 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; 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 Merck’s 2013 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov).