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Merck Announces Full-Year And Fourth-Quarter 2012 Financial Results

Marketing and administrative expenses, on a non-GAAP basis, were $3.3 billion in the fourth quarter of 2012, a decrease from $3.6 billion in the fourth quarter of 2011. The decrease was primarily due to productivity measures and the beneficial impact of foreign exchange.

Research and development (R&D) expenses, on a non-GAAP basis, were $2.2 billion in the fourth quarter of 2012, an increase from $2.1 billion in the fourth quarter of 2011. The increase reflects an upfront payment related to a worldwide licensing agreement for AiCuris' novel portfolio of investigational medicines targeting human cytomegalovirus.

Equity income from affiliates was $231 million for the fourth quarter and $642 million for the full year, which primarily includes partnerships with AZLP and Sanofi Pasteur MSD.

The GAAP effective tax rate of 21.1 percent for the fourth quarter of 2012 reflects the impact of acquisition-related costs and restructuring costs. The non-GAAP effective tax rate, which excludes these items, was 23.6 percent for the quarter. Both the GAAP and non-GAAP effective tax rates reflect a favorable ruling on a state tax matter in the fourth quarter.

Additionally, the company has achieved the previously announced $3.5 billion in synergy targets related to the merger with Schering-Plough Corporation.

Recent Key Developments
  • Merck recently received and is reviewing safety and efficacy data from the pivotal Phase III trial of odanacatib, the company’s investigational medicine for osteoporosis. As previously indicated, the company has been conducting a blinded extension of the trial in approximately 8,200 women, which will provide additional safety and efficacy data. Merck now anticipates that it will file applications for approval of odanacatib in 2014 with additional data from the extension trial, rather than filing in the first half of 2013. The company continues to believe that odanacatib will have the potential to address unmet medical needs in patients with osteoporosis;
  • The New Drug Application (NDA) for suvorexant, the company's investigational insomnia medicine, was accepted for review by the FDA, during which the medicine also will be evaluated by the FDA’s Controlled Substance Staff. If approved by the FDA, suvorexant will become available after a schedule assessment and determination has been completed by the U.S. Drug Enforcement Administration. Also, the company submitted an NDA for suvorexant to the health authorities in Japan;
  • The marketing authorization application for vintafolide, an investigational treatment for folate-receptor positive platinum-resistant ovarian cancer in combination with pegylated liposomal doxorubicin, was accepted for review by the European Medicines Agency;
  • The NDA resubmissions for sugammadex, a neuromuscular blockade reversal agent, and ezetimibe/atorvastatin tablets, an investigational combination medicine for hyperlipidemia, separately were accepted for review by the FDA. Merck expects the FDA’s review of both candidates to be completed in the first half of 2013; and
  • In January, the company submitted a Biologics License Application to the FDA for MK-7243, an investigational allergy immunotherapy tablet for grass pollen.

Merck is on track to file five products for regulatory approval in 2013. The company also recently started several key clinical trials including: Phase III trials of MK-3102, an investigational once-weekly DPP-4 inhibitor in development for treatment of type 2 diabetes; a Phase III study of MK-3222, an investigational biologic therapy for treatment of psoriasis; a Phase II/III trial of MK-8931, an investigational β-amyloid precursor protein site-cleaving enzyme (BACE) inhibitor, to evaluate safety and efficacy in patients with mild-to-moderate Alzheimer's disease; and a Phase II study of MK-3475, an investigational therapy for the treatment of patients with advanced melanoma.

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