Merck & Company, Inc. · NYSE:MRK
Merck & — Investor Day (December 2005)
112 slides from Merck &'s investor day presentation, Dec 15, 2005
Slide 1: Merck Strategy December 15, 2005
Merck Strategy December 15, 2005
Slide 2: Welcome & Logistics
Graeme Bell Investor Relations Welcome & Logistics
Slide 3: Forward-Looking Statement
Forward-Looking Statement This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve risks and uncertainties, which may cause results to differ ma
Slide 4: No Duty to Update
No Duty to Update The information contained in the presentation set forth below was current as of December 15, 2005. While this presentation remains on the company's website the company assumes no duty to update the information to reflect subsequent developments. Consequently, the company will not u
Slide 5: Merck Strategy
Merck Strategy Richard T. Clark Chief Executive Officer and President
Slide 6: The Global Health Care Market is Challenging but Creates Great Opportunity for Merck
Declining success rates in new drug development Rising cost of drug development and commercialization Increasing pressure on returns Increasing price sensitivity and growing reimbursement pressures Greater regulatory scrutiny Rising disease incidence globally High unmet medical needs, e.g. Alzheimer
Slide 7: Reclaim Leadership in the Discovery, Development and Commercialization of Innovative Medicines and Vaccines
Winning will require a fundamentally different approach in every aspect of Merck's business supported by an accountable and results-focused culture Merck will prioritize investment in pharma as its core business Merck will pursue focused acquisitions and partnerships Merck's strategic choices are ex
Slide 8: Key Innovative Products Will Drive Growth While Merck Changes its Business Model to Win
VYTORIN Fastest growing product in the cholesterol market due to superior LDL lowering efficacy vs. all competitors Key Innovative Products Will Drive Growth While Merck Changes its Business Model to Win ZETIA Continued growth due to excellent add-on LDL lowering efficacy with a statin and as monoth
Slide 9: Key Innovative Products Will Drive Growth While Merck Changes its Business Model to Win
Key Innovative Products Will Drive Growth While Merck Changes its Business Model to Win JANUVIA New mechanism with potential to deliver substantial glycemic efficacy, excellent tolerability, and to alter the progression of the underlying disease GABOXADOL Unique mechanism with potential to provide b
Slide 10: Acquisitions and Partnerships will Reinforce Merck's Core Rx Business
Acquisitions and Partnerships will Reinforce Merck's Core Rx Business Merck will pursue focused acquisitions and partnerships that reinforce its core Rx business and drive additional top-line growth Merck will pursue niche acquisitions and partnerships in diagnostics and devices to enable its core R
Slide 11: Merck's Plan to Win is Driven by Five Strategic Actions
Focus on priority disease areas Redefine product discovery and development Create a new commercial model Achieve leadership in emerging pharma markets Create lean and flexible cost structure Merck's plan to win Uncompromising ethics and integrity Strong execution capability High performance culture
Slide 12: Merck's Plan to Win is Driven by Five Strategic Actions
Merck's Plan to Win is Driven by Five Strategic Actions Focus on priority disease areas Redefine product discovery and development Create a new commercial model Achieve leadership in emerging pharma markets Create lean and flexible cost structure Merck's plan to win Uncompromising ethics and integri
Slide 13: Focus on Priority Disease Areas to Meet Unmet Medical Needs
Commit resources to achieve research breadth and depth in priority disease areas Prioritize disease areas based on unmet medical need, scientific opportunity, and commercial opportunity Develop products that are highly valued by patients, payers, and physicians Sustain investment in innovation throu
Slide 14: Significant Investment for Leadership in Nine Priority Disease Areas
Significant Investment for Leadership in Nine Priority Disease Areas Alzheimer's Disease Atherosclerosis Cardiovascular Diabetes Novel Vaccines Obesity Oncology (Targeted Therapies) Pain Sleep Disorders
Slide 15: Focused Investment in Other Selected Disease Areas
Focused Investment in Other Selected Disease Areas Stroke Osteoporosis Schizophrenia Neurodegeneration Ophthalmology Antibiotics Antifungal Antiviral (HCV, HIV) Asthma COPD
Slide 16: Opportunities Outside Priority Disease Areas
Merck Will Also Capitalize on Selected Opportunities Outside Its Priority Disease Areas Where Merck currently has clinical development candidates, it will continue to develop and commercialize, where attractive, regardless of disease areas In other selected disease areas, if there is clinical proof
Slide 17: Merck's Plan to Win is Driven by Five Strategic Actions
Merck's Plan to Win is Driven by Five Strategic Actions Focus on priority disease areas Redefine product discovery and development Create a new commercial model Achieve leadership in emerging pharma markets Create lean and flexible cost structure Merck's plan to win Uncompromising ethics and integri
Slide 18: Redefine Discovery and Development to Yield New High-value Products Faster
Seek patient, payer, and physician input early and throughout product lifecycle Engage in partnership with scientific leaders and key opinion leaders Increase external sourcing of capabilities Integrate key product enablers (e.g., biomarkers, diagnostics, devices, and information) in the development
Slide 19: Merck is Redefining Its R&D Model End-to-end
Merck is Redefining Its R&D Model End-to-end Increase productivity Expand pipeline through both internal discovery and licensing Outsource non-core activities in research and development Improve probability of success Develop/access biomarkers and diagnostics from early stage Test candidates pre-tri
Slide 20: Active External Partnering has Continued in 2005
Active External Partnering has Continued in 2005 Completed over 190 transactions in past five years Achieved high success rate in priority transactions 2005 transaction highlights Agensys - Oncology CSL - Vaccine adjuvant FoxHollow - Atherosclerosis Geron - Oncology vaccine Sumitomo - Schizophrenia
Slide 21: Merck has Experienced a Four-fold Increase in Research Productivity
Merck has Experienced a Four-fold Increase in Research Productivity 0 1 2 3 4 5 6 Index (2001=1) Basic and pre-clinical spending Number of programs entering Phase I & II 2001 2002 2003 2004 2005
Slide 22: Merck's Plan to Win is Driven by Five Strategic Actions
Merck's Plan to Win is Driven by Five Strategic Actions Focus on priority disease areas Redefine product discovery and development Create a new commercial model Achieve leadership in emerging pharma markets Create lean and flexible cost structure Merck's plan to win Uncompromising ethics and integri
Slide 23: Evolve Commercial Model to Drive Revenue with Greater Efficiency and Effectiveness
Enhance communications with key opinion leaders for rapid dissemination of scientific information Increase productivity of promotion to primary care physicians Use technology to communicate in a more targeted, cost- effective way Invest to drive successful product launches Devote more resources to p
Slide 24: Deepen Engagement with Scientific Leaders and Payers
Deepen Merck's engagement with scientific leaders and payers Develop scientific leadership in priority disease areas and enhance engagement of global opinion leaders in the diffusion of science Become a leader in conducting and communicating health technology assessments and outcomes research Develo
Slide 25: Merck Expects to Spend 15-20% Less Per Brand
In The Future, Merck Expects to Spend 15-20% Less Per Brand 15-20% less in the U.S. Better demonstration of value More targeted channels Different selling roles and configuration; more alternative channels ILLUSTRATIVE Historical spending mix per brand Payer Patient Physician promotion and direct se
Slide 26: Merck's Plan to Win is Driven by Five Strategic Actions
Merck's Plan to Win is Driven by Five Strategic Actions Focus on priority disease areas Redefine product discovery and development Create a new commercial model Achieve leadership in emerging pharma markets Create lean and flexible cost structure Merck's plan to win Uncompromising ethics and integri
Slide 27: Emerging Pharma Markets Offer an Important Source of Growth
Build long-term leadership position in key emerging pharma markets Invest now to fully realize this significant opportunity Lower costs by sourcing capabilities from emerging pharma markets Principles Emerging Pharma Markets Offer an Important Source of Growth
Slide 28: Revenue in Key Emerging Pharma Markets Expected to Double to Over $2 Billion by 2010
Merck's Revenue in Key Emerging Pharma Markets is Expected to Double to Over $2 Billion by 2010 Merck's commercial growth 23% revenue and 46% profit CAGR since 1999 #1 market share in top 4 products Strong presence in over 40 cities Russia, Turkey, and Hungary 11% revenue CAGR over five years and in
Slide 29: Merck is Already Sourcing Global Capabilities from Emerging Pharma Markets
Merck is Already Sourcing Global Capabilities from Emerging Pharma Markets Example emerging pharma markets China Merck's global capability sourcing R&D Regional clinical research University and hospital partnerships Manufacturing Procurement of specialty chemicals India R&D Regional clinical researc
Slide 30: Merck's Plan to Win is Driven by Five Strategic Actions
Merck's Plan to Win is Driven by Five Strategic Actions Focus on priority disease areas Redefine product discovery and development Create a new commercial model Achieve leadership in emerging pharma markets Create lean and flexible cost structure Merck's plan to win Uncompromising ethics and integri
Slide 31: Create a Lean and Flexible Cost Structure to Improve Margins
Implement company-wide process redesign to increase effectiveness and lower cost base Build world class Six Sigma capability throughout the company Outsource and partner non-core activities Achieve best-in-class marketing and administrative efficiency Lead the industry in supply strategy Principles
Slide 32: Supply Strategy is the First Phase of Company-wide Redesign
Commercialization Reconfigured Network Lean SUPPLY STRATEGY External Sourcing Posture New Commercialization Model SUPPLY STRATEGY Supply Strategy is the First Phase of Merck's Company-wide Redesign Anticipated Impact of Manufacturing Process Redesign 25% manufacturing headcount reduction 30% product
Slide 33: Redesigning End-to-end Processes to Shift Cost Position
All general and administrative processes Global commercial process End-to-end product development and lifecycle management process Achieving 20-30% savings target will maintain marketing and administrative expense at 2006 levels Merck is Redesigning End-to-end Processes to Fundamentally Shift its Co
Slide 34: Merck has a Clear Plan to Deliver Results
Actively engaged leadership with clear accountabilities for delivery Milestones and metrics to track progress Integrated set of actions to deliver results Merck has a Clear Plan to Deliver Results Focus on priority disease areas Redefine product discovery and development Create a new commercial mode
Slide 35: Examples of How Merck Will Measure Progress Using Key Benchmarks
Quality/value of pipeline Cycle times from PCC to launch Launch performance (market share of drugs in first year of launch) Share relative to competitors Marketing and admin as percent of revenues Examples of How Merck Will Measure Progress Using Key Benchmarks Focus on priority disease areas Redefi
Slide 36: Here is What Winning Means
Merck Has a Plan to Win - Here is What Winning Means: Recognized by patients: For products that address important unmet needs Recognized by physicians: For better outcomes for their patients Recognized by payers: For products that are truly differentiated and deliver high value Recognized by employe
Slide 37: Slide 37
Slide 38: Financial Overview
Financial Overview Judy C. Lewent Executive Vice President and Chief Financial Officer
Slide 39: Enhancing Shareholder Returns
Enhancing Shareholder Returns New business model structured to drive top line and double digit bottom line growth R&D model drives greater research productivity Commercial model ensures full support to launch and promote our products Cost management generates significant savings to reinvest in the b
Slide 40: 2005 and 2006 Performance Update
2005 and 2006 Performance Update 2005 results expected to be in line with guidance: Merck anticipates 2005 earnings per share (EPS) of $2.47 to $2.51* Merck anticipates reported 2005 EPS of $2.04 to $2.10 2006 Guidance Merck anticipates 2006 EPS of $2.28 to $2.36*, including the approximately $0.07
Slide 41: New and In-Line Products Drive Revenue Growth 2005-2010
New and In-Line Pharmaceutical Products and Vaccines Drive Revenue Growth 2005-2010 4-6% CAGR* 2005 2010 Patent Expiry Products thru 2010 New Vaccines Other New Products * Includes 50% of all JV revenue (Merck/Schering-Plough, Merial, Sanofi-Pasteur MSD, Johnson & Johnson°Merck) In-Line Products and
Slide 42: Projected Cumulative Savings in Research Supports Fully Funding Pipeline
$600-$800 Million of Projected Cumulative Savings in Research Supports Fully Funding Pipeline Projected Research Expense: Year-to-Year Comparison 2005 vs. 2010 Expect Low to Mid-Single Digit Compound Annual Growth from 2005-2010 2005 2005 Restructuring Costs R&D Savings Investing in LT Growth 2010
Slide 43: Marketing and Administration Expense Anticipated to be Flat from 2006 Through 2010
Marketing and Administration Expense Anticipated to be Flat from 2006 Through 2010 Significant restructuring actions recently disclosed expected to generate cumulative Marketing and Administration savings of $0.9 billion to $1.2 billion New business strategy is expected to generate an additional $1.
Slide 44: Projected Marketing and Administration Year-to-Year Comparison 2005 vs. 2010
Projected Marketing and Administration Year-to-Year Comparison 2005 vs. 2010 Aggressive Cost Management Enables Full Funding of New Launches, Contributing to EPS Growth Marketing and Admin expense anticipated to be flat from 2006-2010 New Selling Model Sales Admin. Savings General Admin. Savings 200
Slide 45: Anticipate Double Digit Compound Annual EPS Growth Through 2010
Anticipate Double Digit Compound Annual Earnings Per Share Growth Through 2010 Relative to 2005 Base* Revenue (including 50% of all JV revenue) expected to grow by 4-6% CAGR from 2005 to 2010 Anticipate double digit compound annual earnings per share growth through 2010, relative to 2005 base of $2.
Slide 46: Merck Is Focused on Cash Flow to Enhance Total Shareholder Returns
2005 free operating cash flow, after capital expenditures, is expected to be in excess of $5 billion 2006 free operating cash flow, after capital expenditures, is expected to be approximately $5 billion Excluding the impact of 2006 AJCA-related tax payment, cash flow expected to exceed $5 billion. M
Slide 47: Question & Answer
Question & Answer
Slide 48: Research Overview
Research Overview Peter S. Kim President, Merck Research Laboratories
Slide 49: Merck's Research and Development Update
Merck's Research and Development Update Merck's Late Stage Pipeline Review Merck's New Research & Development Model Focusing on Priority Disease Areas Leveraging Key Product Enablers Moving Towards Differentiated, Targeted Therapies Accelerating Development and Increasing Efficiencies Increasing Pro
Slide 50: Key Late Stage Development Highlights
Key Late Stage Development Highlights Three NDA submissions in 2005 Three anticipated filings in 2006 Five programs in Phase III by 1Q06 Eight programs in Phase IIb by 1Q06
Slide 51: Merck's Development Pipeline December 15, 2005
Merck's Development Pipeline December 15, 2005 GARDASIL Cervical Cancer ROTATEQ Infant Gastroenteritis ZOSTAVAX Shingles JANUVIA (MK-0431) Diabetes VORINOSTAT (SAHA) Cancer, CTCL MK-0517 CINV MK-0431A Diabetes MK-0518 (T-1Q06) HIV GABOXADOL Insomnia MK-0524A Atherosclerosis MK-0524B (T-1Q06) Atheros
Slide 52: Merck's Development Pipeline December 15, 2005
Merck's Development Pipeline December 15, 2005 GARDASIL Cervical Cancer ROTATEQ Infant Gastroenteritis ZOSTAVAX Shingles JANUVIA (MK-0431) Diabetes VORINOSTAT (SAHA) Cancer, CTCL MK-0517 CINV MK-0431A Diabetes MK-0518 (T-1Q06) HIV GABOXADOL Insomnia MK-0524A Atherosclerosis MK-0524B (T-1Q06) Atheros
Slide 53: Merck's Development Pipeline December 15, 2005
Merck's Development Pipeline December 15, 2005 GARDASIL Cervical Cancer ROTATEQ Infant Gastroenteritis ZOSTAVAX Shingles JANUVIA (MK-0431) Diabetes VORINOSTAT (SAHA) Cancer, CTCL MK-0517 CINV MK-0431A Diabetes MK-0518 (T-1Q06) HIV GABOXADOL Insomnia MK-0524A Atherosclerosis MK-0524B (T-1Q06) Atheros
Slide 54: JANUVIA: A New Mechanism for the Treatment of Type 2 Diabetes
JANUVIA: A New Mechanism for the Treatment of Type 2 Diabetes JANUVIA (MK-0431) is efficacious in Type 2 diabetes Potent and highly selective inhibitor of dipeptidyl peptidase IV (DPP-4) Once-daily dosing Substantial reduction in A1C levels observed Incidence of hypoglycemia similar to placebo Effec
Slide 55: JANUVIA is Efficacious in Patients with Type 2 Diabetes
JANUVIA is Efficacious in Patients with Type 2 Diabetes Results at 12 weeks: 100 mg Once Daily Therapy Entire Cohort <7% 7 to <8.5% ^8.5% - -1.20 - -1.00 - -0.80 - -0.60 - -0.40 - -0.20 0.00 % HbA1c decrease Placebo-subtracted HbA1c reduction by baseline HbA1c Reference: Herman G et. al., American D
Slide 56: JANUVIA: Potential for Disease Modification
Diabetic Mice JANUVIA: Potential for Disease Modification Diabetic Mice + DPP-4 Analog Lean Control Mice Insulin-producing islet ? cell Restoration of Pancreatic Islet ? Cells in Mice Following 10 week Treatment with JANUVIA analog Reference: Zhang, B et. al., American Diabetes Association, June, 20
Slide 57: JANUVIA: 2006 NDA Filing Anticipated
JANUVIA: 2006 NDA Filing Anticipated JANUVIA is a novel efficacious treatment for Type 2 Diabetes JANUVIA has a favorable safety and tolerability profile Phase III program is progressing on target Additional data to be submitted to the American Diabetes Association Meeting (June, 2006)
Slide 58: Merck's Development Pipeline December 15, 2005
Merck's Development Pipeline December 15, 2005 GARDASIL Cervical Cancer ROTATEQ Infant Gastroenteritis ZOSTAVAX Shingles JANUVIA (MK-0431) Diabetes VORINOSTAT (SAHA) Cancer, CTCL MK-0517 CINV MK-0431A Diabetes MK-0518 (T-1Q06) HIV GABOXADOL Insomnia MK-0524A Atherosclerosis MK-0524B (T-1Q06) Atheros
Slide 59: MK-0431A: MK-0431 Combination with Metformin
MK-0431A: MK-0431 Combination with Metformin Metformin is the most commonly used therapy for Type 2 diabetes Monotherapy Well-established safety, tolerability and efficacy profile Lowers hepatic glucose output Not associated with hypoglycemia Extensive combination therapy usage MK-0431A Product Prof
Slide 60: MK-0431A: Provides Efficacy in Patients with Inadequate Glycemic Control on Metformin
Mean glucose (mg/dL) 100 120 140 160 180 200 220 240 Placebo + Metformin (BID) MK-0431A: Provides Efficacy in Patients with Inadequate Glycemic Control on Metformin Monotherapy MK-0431 + Metformin (BID) Reference: Brazg et. al., American Diabetes Association, June, 2005 Breakfast Lunch Dinner Dose 2
Slide 61: MK-0518: A Novel Mechanism Compound for HIV-1 Infection
MK-0518: A Novel Mechanism Compound for HIV-1 Infection Resistance is a major problem with current HIV therapy1,2,3 More than 76% are resistant to one class of therapy ~ 50% are resistant to multiple classes of therapy Resistance in treatment-naive patients has increased to >20% from 8% in 1999 MK-0
Slide 62: MK-0518: A New Mechanism for the Treatment of HIV-1 Infection
MK-0518: A New Mechanism for the Treatment of HIV-1 Infection MK-0518 is a potent inhibitor of HIV-1 integrase Product profile Potent antiretroviral activity demonstrated in treatment- naive patients and salvage patient population Data in salvage patient population to be presented in 2006 Conference
Slide 63: MK-0518 Effect on HIV RNA Levels in Treatment Naive Patients
Change from Baseline in HIV RNA (log10 copies/mL) 1 2 3 4 5 8 10 Days on Therapy - -3 - -2 - -1 0 1 MK-0518 HIV Integrase Inhibitor: Effect on HIV RNA Levels in Treatment Naive Patients 100mg bid 600mg bid Placebo Reference: Morales-Ramirez, J.O.; 2005:10th Annual European AIDS Conference
Slide 64: Gaboxadol: A New Mechanism for the Treatment of Insomnia
Gaboxadol: A New Mechanism for the Treatment of Insomnia Gaboxadol is selective for extrasynaptic GABA-A receptors containing ? subunits Highly expressed in brain areas regulating sleep (e.g., thalamus) Does not interact with the benzodiazepine binding site Results of Early Clinical Studies: Improve
Slide 65: Gaboxadol Improves Sleep Initiation and Maintenance in Primary Insomnia
Gaboxadol Improves Sleep Initiation and Maintenance in Patients with Primary Insomnia H. Lundbeck A/S Alliance Deacon S et al. Sleep (28), 2005: Presented at APSS; Denver, 2005. Parameter Placebo 15 mg Gaboxadol p-value Latency to Persistent Sleep (min) 30.0 23.6 <0.05 Total Sleep Time (min) 409 420
Slide 66: Gaboxadol Improves Sleep Initiation and Maintenance in Primary Insomnia
Gaboxadol Improves Sleep Initiation and Maintenance in Patients with Primary Insomnia H. Lundbeck A/S Alliance Deacon S et al. Sleep (28), 2005: Presented at APSS; Denver, 2005. Parameter Placebo 15 mg Gaboxadol p-value Latency to Persistent Sleep (min) 30.0 23.6 <0.05 Total Sleep Time (min) 409 420
Slide 67: MK-0524A: Lipid Management Beyond LDL-C
HDL-C (mg/dL) Relative CHD Risk after 4 Years Source: Framingham Heart Study MK-0524A: Lipid management beyond LDL-C Low HDL-C and Increased CHD Risk 100 160 220 85 0.3 0.4 0.55 65 0.4 0.65 0.9 45 0.65 1 1.6 25 1.3 1.6 2.7 LDL-C (mg/dL) There is a significant unmet medical need for reducing the risk
Slide 68: Proven Cardiovascular Benefits Associated with Niacin Treatment
Proven Cardiovascular Benefits Associated with Niacin Treatment in Clinical Studies Crystalline niacin was first used in 1955 Early outcome study indicated a beneficial effect of niacin in heart disease Coronary Drug Project1 Atherosclerosis studies indicated vascular improvement with niacin HATS (H
Slide 69: Limitations of Niacin HDL-C Raising Therapy
Limitations of Niacin HDL-C Raising Therapy 90% of patients experience flushing with niacin therapy Worst at first dose Chronic, intermittent and unpredictable Extended-release niacin, pretreatment with aspirin, and other measures only partially reduce the flushing associated with niacin Poor tolera
Slide 70: MK-0524: A Novel Niacin Flushing Pathway Inhibitor
Flushing (% increase) Time (minutes) Niacin - -5 0 5 10 0 25 50 75 100 MK-0524: A Novel Niacin Flushing Pathway Inhibitor Prostaglandin D2 Receptor Antagonism Suppresses Niacin-Induced Vasodilation in the Mouse Placebo MK-0524 (low dose) MK-0524 (high dose)
Slide 71: MK-0524: A Novel Niacin Flushing Pathway Inhibitor
NIASPAN NIASPAN + MK-0524 Placebo MK-0524: A Novel Niacin Flushing Pathway Inhibitor Niacin Dose: 1 gram Niacin Dose: 2 grams % of Days with Moderate/ Severe Flushing Weeks on Treatment 0 10 20 30 40 1 2 3 4 5 6 7 8
Slide 72: MK-0524A & MK-0524B: A Novel Approach to Lipid Management
MK-0524A & MK-0524B: A Novel Approach to Lipid Management with Proven Outcomes MK-0524A Merck's extended-release niacin combined with a novel flushing pathway inhibitor Target 2 gram dose of niacin routinely attainable HDL-C increase of 20-25% and triglyceride decrease of 25-30% Can be used with any
Slide 73: Merck's New Research & Development Model
Merck's New Research & Development Model Focusing on Priority Disease Areas Leveraging Key Product Enablers Moving Towards Differentiated, Targeted Therapies Accelerating Development and Increasing Efficiencies Increasing Productivity: Building on our Momentum
Slide 74: Merck's Nine Priority Areas of Focus
Merck's Nine Priority Areas of Focus Alzheimer's Disease Atherosclerosis Cardiovascular Diabetes Novel Vaccines Obesity Oncology (Targeted Therapies) Pain Sleep Disorders
Slide 75: Areas of Targeted Research
Areas of Targeted Research Stroke Osteoporosis Schizophrenia Neurodegeneration Ophthalmology Antibiotics Antifungal Antiviral (HCV, HIV) Asthma COPD
Slide 76: Example of Prioritization: Pipeline in Atherosclerosis, Cardiovascular, Diabetes & Obesity
Example of Prioritization: Merck's Pipeline in Atherosclerosis, Cardiovascular, Diabetes & Obesity Obesity, MK-0493 Obesity, MK-0364 Phase II Atherosclerosis, MK-0859 (T-1Q06) Phase I Atherosclerosis, MK-0633 Obesity, Nastech PYY3-36 Atherosclerosis, MK-0354 Diabetes, MK-0941 Diabetes, MK-0893 Diabe
Slide 77: Leveraging Biomarkers as Key Product Enablers: Atherosclerosis
Leveraging Biomarkers as Key Product Enablers: Example in Atherosclerosis Novel Pharmacogenomic Collaboration with FoxHollow Technologies Focused on identification of new biomarkers of atherosclerotic disease progression Integrated into Merck's Research and Development programs FoxHollow will provid
Slide 78: Oncology: Leading the Way Towards Differentiated, Targeted Therapies
Oncology: Leading the Way Towards Differentiated, Targeted Therapies Rosetta Ph III Ph I Ph II Preclinical Launch Rigel Internal Programs Tools and Academic Relationships Alnylam, NKI, Celera, RNAi (numerous unannounced) Partnerships Pierre Fabre F50035 Geron KSP Inhibitor AVEO Vertex VX680 Vorinost
Slide 79: Vorinostat: Histone Deacetylase Inhibitor for Cancer
Vorinostat: Histone Deacetylase Inhibitor for Cancer SAHA (suberoylanilide hydroxamic acid) NDA Filing for Cutaneous T-cell Lymphoma (CTCL) anticipated in 2006 Positive Phase IIa data Vorinostat was generally well-tolerated Additional data to be submitted to the American Society of Clinical Oncology
Slide 80: Accelerating Early Development Timelines
1CMR International, 2000- 2004 (Major Company Median Comparison) June 2005 Typical Timeline for Early Development1 Accelerating Early Development Timelines: First in Man to Initiation of Phase III Ph I Ph II Ph I Ph II 3.5 years Ph I Ph II Ph I Ph II Total time from FIM to Phase III Merck Timelines
Slide 81: Increasing Efficiencies in Late Development: Decreasing Cycle Time
3 Month reduction 2005-2006: Anticipated Cycle Time Reductions 2006-2007: Anticipated 2 months reduction in Development Processes Increasing Efficiencies in Late Development: Decreasing Cycle Time 4 Month reduction Protocol Approval Last Patient In Last Patient Out WMA 2005-2007 Total Anticipated Cy
Slide 82: New Candidates Entering Merck Pipeline
New Candidates Entering Merck Pipeline: Internal & Licensed Candidates % to Phase I * Lower limit since some candidates remain in preclinical development 2001 2002 2003 2004 2005 # Candidates Internal Preclinical Candidates (GLP studies), including back-ups Licensed Preclinical (GLP studies) and Cli
Slide 83: Programs Entering Phase II Development
0 2 4 6 8 10 12 14 2001 2002 2003 2004 2005 Programs Entering Phase II Development # Programs Year
Slide 84: R&D Pipeline Overview
R&D Pipeline Overview Phase III Specific compounds Phase I and II Specific compounds by MK number The most advanced compound with a specific mechanism in a given therapeutic area MK number consistent with other external databases (e.g., ClinicalTrials.gov) Not included Pre-clinical compounds Back-up
Slide 85: Merck's Late Development Pipeline with Supplemental Indications
Merck's Late Development Pipeline with Supplemental Indications - December 15, 2005 2005 Submissions EMEND PONV SINGULAIR EIB SINGULAIR Linear Growth GARDASIL Cervical Cancer ROTATEQ Infant Gastroenteritis ZOSTAVAX Shingles 2006 Anticipated Filings JANUVIA (MK-0431) Type 2 Diabetes VORINOSTAT (SAHA)
Slide 86: Merck's Research and Development Summary
Merck's Research and Development Summary Increasing Late Stage Development Portfolio Three NDA submissions in 2005 Three anticipated filings in 2006 Five programs in Phase III by 1Q06 Eight programs in Phase IIb by 1Q06 Merck's New Research & Development Model Focusing on Priority Disease Areas Leve
Slide 87: Question & Answer
Question & Answer
Slide 88: New Vaccine Commercialization
New Vaccine Commercialization Margaret G. McGlynn President, Merck Vaccines
Slide 89: Unprecedented Opportunity for Growth of the Vaccine Business
Unprecedented Opportunity for Growth of the Vaccine Business Unprecedented opportunity to launch four new vaccines globally Merck's breakthrough investigational vaccines target large vaccination cohorts, address unmet medical needs, and have been developed to provide a significant public health bene
Slide 90: Adolescent/Adult Vaccine Opportunity
Adolescent/Adult Vaccine Opportunity Success will require market preparation and launch execution to ensure rapid adoption in the adult and adolescent vaccination markets Leverage the existing pediatric and adult immunization schedules to establish prevention paradigm Educate physicians and consumer
Slide 91: GARDASIL
@ GARDASIL. [Quadrivalent Human Papillomavirus (Types 6,11,16,18) Recombinant Vaccine]
Slide 92: Cervical Cancer: A Serious Global Burden
Cervical Cancer: A Serious Global Burden 630 million people globally, including 20 million Americans, are currently infected with human papillomavirus (HPV) Infection with certain types of HPV causes cervical cancer Cervical cancer is the second leading cause of cancer death in women worldwide Annua
Slide 93: Significant Physician and Consumer Interest in HPV Vaccine
Significant Physician and Consumer Interest in HPV Vaccine 10 - 12 y.o. 13 - 15 y.o. 16 -18 y.o. Likely 0.46 0.77 0.89 Unlikely 0.4 0.15 0.05 Undecided 0.14 0.08 0.06 Strong Physician Intent to Vaccinate... 74% of female college students would accept a vaccine > 80% of females (18-30) believed HPV v
Slide 94: Gardasil is Expected to be the First HPV Vaccine to Market with Broadest Coverage
Represents a significant medical breakthrough in cancer prevention The only investigational cancer vaccine for the prevention of cervical cancer, cervical dysplasia and genital warts Broadest coverage will be provided through a quadrivalent vaccine Expected to be the first cervical cancer vaccine wo
Slide 95: Large Potential Vaccination Cohort
Large Potential Vaccination Cohort Leverage first mover advantage to capture appropriate catch-up cohorts Future growth will be fueled by indications for additional populations *Per capita GNI > $9,385; developing markets to be addressed via partnerships 0 100 200 300 400 Other High Income Mkts* EU
Slide 96: Phase III Studies for Gardasil with 25,000 Participants Demonstrated 100% Efficacy
Phase III Studies for Gardasil(r) with 25,000 Participants Demonstrated 100% Efficacy Gardasil(r) prevented 100% of HPV 16/18/6/11-related CIN, AIS or EGL in women not yet infected with either HPV 16, 18, 6, or 11 at baseline Primary Endpoint1 Vaccine Cases Placebo Cases Efficacy (%) CIN 1, 2/3, AIS
Slide 97: Comprehensive Plans for Launch of Gardasil
Comprehensive Plans for Launch of Gardasil(r) Utilize capacity of global pharmaceutical sales resources to target larger physician base versus a typical vaccine Focus on early vaccine adoption by physicians Multi-segment promotion (Ped, OBGYN & PCP) to educate on urgency to vaccinate adolescents and
Slide 98: Key Steps in Recommendation and Funding Process for HPV Vaccines in the U.S.
Key Steps in Recommendation and Funding Process for HPV Vaccines in the U.S. Professional societies (AAP, AAFP, ACOG, SAM) and other organizations participate and provide input ACIP Working Group (WG) established to formulate recommendation State management of VFC funds ACIP votes on recommendation
Slide 99: Prepared to Maximize Launch of Gardasil
Prepared to Maximize Launch of Gardasil(r) Gardasil(r) represents a major breakthrough in cancer prevention Benefits a large vaccination cohort and addresses an important unmet medical need High global burden raises significant physician and consumer interest in a vaccine Merck is poised to rapidly
Slide 100: RotaTeq
Se leq © (Rotavirus Vaccine, Live, Oral, Pentavalent)
Slide 101: High Burden of Rotavirus Disease
High Burden of Rotavirus Disease Rotavirus infects nearly all children by age 3 Severity is unpredictable and ranges from asymptomatic infection to dehydrating gastroenteritis, which can result in death Worldwide, an estimated 500K deaths every year In the U.S., an estimated 100 deaths per year, 70K
Slide 102: RotaTeq is Expected to be the Only Pentavalent Rotavirus Vaccine
RotaTeq(r) is Expected to be the Only Pentavalent Rotavirus Vaccine Anticipated to launch first to market in the U.S. and the only pentavalent rotavirus vaccine available worldwide Covers types responsible for approximately 88% of disease1 Rotavirus Efficacy & Safety Trial (REST) is one of the large
Slide 103: ZOSTAVAX
Slide 104: Shingles is Common, Serious and Can Have Severe Complications
Shingles is Common, Serious and Can Have Severe Complications It is estimated that 1 million cases of herpes zoster occur annually in the U.S. Up to 50% of people surviving until age 85 will suffer from zoster 25% to 50% of shingles patients older than 50 will develop postherpetic neuralgia (PHN)1 O
Slide 105: Zostavax Expected to be the Only Zoster Vaccine Available
ZostavaxTM Expected to be the Only Zoster Vaccine Available Large potential vaccination cohort of adults age 50+ 1Per capita GNI > $9,385 excluding Japan Expected to launch as the only zoster vaccine available worldwide Filed with FDA for U.S. approval in April 2005; future enhancement will include
Slide 106: Zostavax Reduced Incidence of Shingles and PHN in Shingles Prevention Study
ZostavaxTM Reduced Incidence of Shingles and PHN in Shingles Prevention Study 1315 cases in vaccine group versus 642 cases in placebo group; p<0.001 227 cases in vaccine group versus 80 cases in placebo group; p<0.001 Years of Follow-up 0 1 2 3 4 5 Cumulative Incidence of HZ (%) 0 Zoster Vaccine 1 2
Slide 107: Comprehensive Plans for Launch of Zostavax
Comprehensive Plans for Launch of ZostavaxTM Utilize primary care sales force to develop older adult vaccination market Support stocking among non-routine vaccinators Thought leader education Office support for new vaccinators Capitalize on frequent physician office access among older adults Obtain
Slide 108: Significant Opportunity for Growth with New Vaccines
Significant Opportunity for Growth with New Vaccines Unprecedented opportunity to launch four new vaccines globally that address significant unmet medical needs Merck is poised to rapidly convert widespread interest and excitement into appropriate routine vaccination globally Success would result in
Slide 109: Question & Answer
Question & Answer
Slide 110: Closing Remarks
Closing Remarks Richard T. Clark Chief Executive Officer and President
Slide 111: Slide 111
Slide 112: Merck Strategy December 15, 2005
Merck Strategy December 15, 2005