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October 27, 2015 6:45 am ET

• Increased Non-GAAP EPS by 7 Percent to $0.96; GAAP EPS of $0.64
• Raised 2015 Full-Year Non-GAAP EPS Target to a Range of $3.55 – $3.60 and GAAP EPS Target to a Range of $1.64 – $1.74
• Worldwide Sales Were $10.1 Billion, a Decrease of 5 Percent; Excluding the Impact of Foreign Exchange, Acquisitions and Divestitures, Worldwide Sales Grew 4 Percent
• Advanced KEYTRUDA Program
  • FDA Approved sBLA for the Treatment of Previously Treated Patients with Metastatic Non-Small Cell Lung Cancer (NSCLC) Whose Tumors Express PD-L1
  • In KEYNOTE-010 Study KEYTRUDA Showed Superior Overall Survival Compared to Chemotherapy in Patients with Previously Treated Advanced NSCLC Whose Tumors Express PD-L1
  • Third-Quarter Sales Were Approximately $160 million

Merck (NYSE:MRK), known as MSD outside the United States and Canada,
today announced financial results for the third quarter of 2015.

“Our solid results this quarter demonstrate that our focused strategy,
which aims to drive future growth, as well as value for patients,
society and shareholders, is working. The evolving market, economic and
political dynamics of global health care increasingly underscore that
the ability to provide high-value innovation is what will distinguish
successful companies going forward,” said Kenneth C. Frazier, chairman
and chief executive officer, Merck.

Non-GAAP (generally accepted accounting principles) earnings per share
(EPS) of $0.96 for the third quarter exclude acquisition- and
divestiture-related costs, restructuring costs and certain other items.

A reconciliation of GAAP to non-GAAP net income and EPS is provided in
the tables that follow. Year-to-date results can be found in the
attached tables.

Additional Executive Commentary

“Our late-stage pipeline and ongoing launches create both near- and
longer-term opportunities to generate value through innovation aimed at
addressing some of the world’s biggest medical needs – cancer,
antibiotic resistance, cardiometabolic disease, hepatitis C and
Alzheimer’s disease,” said Frazier.

“Our broad, global and balanced portfolio of medicines and vaccines
allows us to weather periodic volatility within a particular therapeutic
area or region while consistently focusing on the best scientific and
medical opportunities,” continued Frazier.

“The Global Human Health business performed well in the third quarter
with continued growth in our diabetes, hospital acute care and oncology
franchises. We continue to be pleased with the progress of KEYTRUDA,
which is a priority launch for the company,” said Adam Schechter,
president, Global Human Health, Merck.

“In the third quarter, Merck Research Laboratories achieved multiple
milestones in our oncology and infectious disease clinical development
programs, priority areas where we believe we can have the most
beneficial impact on the lives of patients around the world,” said Dr.
Roger M. Perlmutter, president, Merck Research Laboratories. “In
particular, the results from KEYNOTE-010, which we announced yesterday,
provide unambiguous evidence of the favorable impact that our R&D
efforts can have in the treatment of grievous illnesses.”

“The third quarter was another demonstration of our strong execution. We
remain committed to delivering a leveraged P&L. We have met and will
exceed our annual target of $2.5 billion in net savings versus 2012 by
the end of this year,” said Robert Davis, chief financial officer, Merck.

Select Business Highlights

Worldwide sales were $10.1 billion for the third quarter of 2015, a
decrease of 5 percent compared with the third quarter of 2014, including
a 7 percent negative impact from foreign exchange and a 2 percent net
unfavorable impact resulting from the divestiture of the Consumer Care
business and select products, partially offset by the acquisition of
Cubist Pharmaceuticals, Inc. (Cubist).

The following table reflects sales of the company’s top pharmaceutical
products, as well as total sales of Animal Health and Consumer Care
products.

Commercial and Pipeline Highlights

During the third quarter of 2015, the company continued to focus on
advancing its pipeline and key therapeutic areas of diabetes, hospital
acute care, oncology and vaccines and executing on key launches,
including KEYTRUDA (pembrolizumab), an anti-PD-1 therapy, for the
treatment of advanced melanoma and metastatic NSCLC in patients whose
disease has progressed after other therapies, and BELSOMRA (suvorexant)
for the treatment of insomnia.

• Merck significantly advanced the clinical development program for
  KEYTRUDA.
  • The U.S. Food and Drug Administration (FDA) approved
    KEYTRUDA for the treatment of patients with metastatic NSCLC whose
    tumors express PD-L1 as determined by an FDA-approved test and who
    have disease progression on or after platinum-containing
    chemotherapy across both squamous and non-squamous metastatic
    NSCLC.
  • The National Institute for Health and Care Excellence (NICE) of
    the U.K. issued
    a draft recommendation for KEYTRUDA as a first-line
    treatment option for adults with advanced melanoma. Additionally,
    NICE issued its final guidance recommending KEYTRUDA for the
    treatment of advanced melanoma in patients whose disease has
    progressed after treatment with ipilimumab.
  • The FDA accepted
    for review a supplemental Biologics License Application (sBLA) for
    KEYTRUDA for the first-line treatment of unresectable
    or metastatic melanoma. The FDA granted Priority Review with a
    PDUFA action date of Dec. 19, 2015.
  • Additionally, the FDA extended
    the PDUFA action date for a separate sBLA for KEYTRUDA for the
    treatment of patients with ipilimumab-refractory advanced melanoma
    to Dec. 24, 2015. The company submitted additional data that
    constitutes a major amendment, which will require additional time
    for review.
  • Topline results from KEYNOTE-010 indicated
    the pivotal study met its primary objective. KEYTRUDA showed
    superior overall survival compared to chemotherapy in patients
    with previously treated advanced NSCLC whose tumors express PD-L1.
    The company plans regulatory submissions based on these data to
    the FDA by the end of 2015 and the European Medicines Agency (EMA)
    in early 2016.
  • Data were presented at the European Cancer Congress from the
    KEYNOTE-028 study, which included first-time presentations of
    findings investigating the use of KEYTRUDA in multiple tumor types.
  • More than 25 registration studies for KEYTRUDA have been announced
    or initiated in more than 10 tumor types. In total, the KEYTRUDA
    clinical development program encompasses more than 30 tumor types
    in more than 160 clinical trials, including more than 80
    combinations of KEYTRUDA with other cancer treatments.

• The company advanced its clinical development program for the
  treatment of diabetes.
  • The Japanese Pharmaceuticals and Medical Devices Agency approved
    omarigliptin, which will be known as MARIZEV in Japan, a
    once-weekly medicine that helps lower blood sugar levels in adults
    with type 2 diabetes. Japan is the first country where
    omarigliptin has been approved; the company plans to submit
    omarigliptin for regulatory approval in the United States by the
    end of 2015, and other worldwide regulatory submissions will
    follow.
  • At the 51^st European Association for the Study of
    Diabetes Annual Meeting, pivotal Phase
    3 data were presented demonstrating omarigliptin achieved its
    primary efficacy endpoint.

• The company highlighted its commitment to addressing infectious
  diseases with 40 presentations of data at the joint meeting of the
  Interscience Conference of Antimicrobial Agents and Chemotherapy, and
  International Congress of Chemotherapy and Infection.
  • Data were presented from the two pivotal Phase
    3 clinical studies for bezlotoxumab, an investigational
    antitoxin for prevention of Clostridium difficile (C.
    difficile) infection recurrence, which met their primary
    efficacy endpoints. The company plans to submit new drug
    applications for regulatory approval of bezlotoxumab in the United
    States, EU and Canada by the end of 2015.
  • Data were presented from a Phase
    2 study of relebactam, an investigational beta-lactamase
    inhibitor with Qualified Infectious Disease Product and Fast Track
    designations from the FDA for use in combination therapy, which
    met its primary efficacy endpoint in patients with complicated
    intra-abdominal infections. The company has initiated pivotal
    Phase 3 studies in serious bacterial infections.
• The company’s clinical development program for elbasvir/grazoprevir,
  an investigational once-daily, single tablet combination therapy for
  the treatment of adult patients with chronic hepatitis C virus (HCV)
  infection, advanced in the third quarter of 2015.
  • The FDA accepted
    the company’s New Drug Application for Priority Review with a
    PDUFA action date of Jan. 28, 2016.
  • The EMA accepted
    the company’s Marketing Authorization Application for review,
    which it will initiate under accelerated assessment timelines.

Pharmaceutical Revenue Performance

Third-quarter pharmaceutical sales declined 2 percent to $8.9 billion,
including an 8 percent negative impact from foreign exchange. Excluding
the impact of exchange, growth was driven by sales in the core
therapeutic areas of hospital acute care, diabetes and oncology. Growth
in hospital acute care was driven by the addition of the Cubist
portfolio and sales growth of certain inline brands. The increase in
diabetes reflects the timing of customer purchases in the United States
and global demand growth. Growth in oncology reflects higher sales of
KEYTRUDA, which were approximately $160 million for the quarter.

Third-quarter pharmaceutical sales reflect lower sales of REMICADE
(infliximab), a treatment for inflammatory diseases, due to loss of
exclusivity in the company’s marketing territories in Europe, and
NASONEX (mometasone furoate monohydrate), an inhaled nasal
corticosteroid for the treatment of nasal allergy symptoms, due to
supply constraints in the United States, as well as declines in the HCV
portfolio of VICTRELIS (boceprevir) and PEGINTRON (peginterferon
alfa-2b). In addition, pharmaceutical sales reflect declines in
vaccines, primarily PNEUMOVAX 23 (pneumococcal vaccine polyvalent)
driven by lower sales in the United States and PROQUAD (Measles, Mumps,
Rubella and Varicella Vaccine Live) driven by the timing of sales
activity related to the Pediatric Vaccine Stockpile of the U.S. Centers
for Disease Control and Prevention. These declines were partially offset
by higher U.S. sales in the franchise of GARDASIL 9 (Human
Papillomavirus 9-valent Vaccine, Recombinant) and GARDASIL [Human
Papillomavirus Quadrivalent (Types 6, 11, 16, and 18) Vaccine,
Recombinant], vaccines to prevent cancers and other diseases caused by
HPV.

Animal Health Revenue Performance

Animal Health sales totaled $825 million for the third quarter of 2015,
a decrease of 7 percent compared with the third quarter of 2014,
including a 14 percent negative impact from foreign exchange. Excluding
the impact of exchange, growth was driven by an increase in sales of
companion animal products, primarily BRAVECTO (fluralaner), a chewable
tablet that kills fleas and ticks in dogs for up to 12 weeks, and new
aqua and swine products, including PORCILIS PCV M Hyo, a new swine
vaccine.

Other Revenue Performance

Other revenues – primarily comprising alliance revenue, miscellaneous
corporate revenues and third-party manufacturing sales – increased to
$323 million in the third quarter of 2015.

Third-Quarter 2015 Expense and Other Information

The costs detailed below totaled $7.8 billion on a GAAP basis during the
third quarter of 2015 and include $1.4 billion of acquisition- and
divestiture-related costs and restructuring costs.

The gross margin was 62.7 percent for the third quarter of 2015 compared
to 60.0 percent for the third quarter of 2014, reflecting 12.4 and 14.3
unfavorable percentage point impacts, respectively, from the
acquisition- and divestiture-related costs and restructuring costs noted
above. The increase in non-GAAP gross margin was driven by lower
inventory write-offs and foreign exchange.

Marketing and administrative expenses, on a non-GAAP basis, were $2.4
billion in the third quarter of 2015, a decrease from $2.6 billion in
the same period of 2014, which was primarily driven by the favorable
impact of foreign exchange and the sale of the Consumer Care business.

Research and development (R&D) expenses, on a non-GAAP basis, were $1.6
billion in the third quarter of 2015, a 1 percent increase compared to
the third quarter of 2014.

Other (income) expense, net, was $170 million of income in the third
quarter of 2015 compared to $166 million of income in the third quarter
of 2014. The third quarter of 2015 includes a gain of $250 million on
the divestiture of certain migraine clinical development programs. In
the third quarter of 2014, the company recorded a gain of $396 million
on the divestiture of certain ophthalmic products in several
international markets that was partially offset by a $93 million
goodwill impairment charge related to the company’s joint venture with
Supera Farma Laboratorios S.A. in Brazil.

Financial Guidance

Merck has raised its full-year 2015 non-GAAP EPS range to be between
$3.55 and $3.60, including a negative impact from foreign exchange. The
range excludes acquisition- and divestiture-related costs, costs related
to restructuring programs and certain other items. The company also has
raised its full-year 2015 GAAP EPS range to be between $1.64 and $1.74.

At current exchange rates, the company now anticipates full-year 2015
revenues to be between $39.2 billion and $39.8 billion, including a
negative impact from foreign exchange and approximately $1 billion of
net lost sales from acquisitions and divestitures.

In addition, the company continues to expect full-year 2015 non-GAAP
marketing and administrative expenses to be below 2014 levels and R&D
expenses to be modestly above 2014 levels.

The company continues to anticipate its full-year 2015 non-GAAP tax rate
will be in the range of 23 to 24 percent, not including a 2015 R&D tax
credit.

A reconciliation of anticipated 2015 EPS, as reported in accordance with
GAAP to non-GAAP EPS that excludes certain items, is provided in the
table below.

Total Employees

As of Sept. 30, 2015, Merck had approximately 68,000 employees worldwide.

Earnings Conference Call

Investors, journalists and the general public may access a live audio
webcast of the call today at 8:00 a.m. EDT on Merck’s website at http://www.merck.com/investors/events-and-presentations/home.html.
Institutional investors and analysts can participate in the call by
dialing (706) 758-9927 or (877) 381-5782 and using ID code number
42222255. Members of the media are invited to monitor the call by
dialing (706) 758-9928 or (800) 399-7917 and using ID code number
42222255. Journalists who wish to ask questions are requested to contact
a member of Merck’s Media Relations team at the conclusion of the call.

About Merck

Today’s Merck is a global health care 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
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 health care through
far-reaching policies, programs and partnerships. For more information,
visit www.merck.com
and connect with us on Twitter,
Facebook
and YouTube.
You can also follow our Twitter conversation at $MRK.

Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA

This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the
“company”) includes “forward-looking statements” within the meaning of
the safe harbor provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements are based upon the current beliefs
and expectations of the company’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; the company’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 the company’s patents
and other protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory actions.

The company 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 the company’s 2014 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).

¹ Merck is providing certain 2015 and 2014 non-GAAP
information that excludes certain items because of the nature of these
items and the impact they have on the analysis of underlying business
performance and trends. Management believes that providing this
information enhances investors’ understanding of the company’s
performance. This information should be considered in addition to, but
not in lieu of, information prepared in accordance with GAAP. For a
description of the items, see Table 2a, including the related footnotes,
attached to this release.

² Net income attributable to Merck & Co., Inc.

³ Represents the difference between calculated GAAP EPS and
calculated non-GAAP EPS, which may be different than the amount
calculated by dividing the impact of the excluded items by the
weighted-average shares for the period.

⁴ Includes expenses for the amortization of intangible assets
and purchase accounting adjustments to inventories recognized as a
result of acquisitions, intangible asset impairment charges and expense
or income related to changes in the fair value measurement of contingent
consideration. Also includes integration, transaction and certain other
costs related to business acquisitions and divestitures.

⁵ Includes the estimated tax impact on the reconciling items.

Merck
Media:
Lainie Keller, 908-236-5036
Steven Cragle, 908-740-1801
or
Investors:
Teri Loxam, 908-740-1986
Justin Holko, 908-740-1789