4Merck’s historyMerck is the world’s oldest pharmaceutical and chemical companymorphine codéine1668Friedrich Jacob Merck: Engel-Apotheke (“Angel Pharmacy”) in Darmstadt1827Plant extracts and other chemicals by Heinrich E. MerckAlkaloïdes:Quelques 150 ans plus tard, Heinrich E. Merck reprend la petite affaire familiale pour la transformer en fabrique de médicaments et de produits de chimie fine. La révolution pharmaceutique est en marche : dès lors, Merck produit à grande échelle des alcaloïdes (morphine, codéine, cocaïne…).A la fin du 19e siècle, George Merck, membre de la famille(Georg Merck, petit-fils de Heinrich Emanuel Merck). , s’installe aux Etats-Unis pour créer, en 1903, Merck & Co. et se lancer à son tour dans la fabrication de ces produitsMais l’entrée en guerre des Etats-Unis le contraint en 1917 à se séparer de la branche allemande et à assurer sa propre croissanceL’année 1925 marquera un véritable tournant. George Merck cède la direction à son fils qui transforme la société de chimie fine en entreprise pharmaceutique. La recherche et le développement s’imposent comme les nouveaux fers de lance d’une industrie en pleine expansion. 1933, le Merck Institute of Therapeutic Research est fondé. Les scientifiques de l’institut associent alors leurs noms aux plus grandes avancées scientifiques et médicale : la mise au point et l’industrialisation de la pénicilline, de la cortisone, de la vitamine B12, de la streptomycine… permettent de soigner des millions de malades.
5Merck’s history1887A subsidiary in New York was created (Georg Merck, a grandson of Heinrich Emanuel Merck)1900Merck was represented on all continentsConfiscation : World War I, Merck & Co. became an independent American company1914George Merck is giving direction to his son that turns the company of fine chemicals in pharmaceutical company19251933The Merck Institute of Therapeutic Research is based
6Merck’s historyAfter the Second World War merged with Sharp & Dohme = MSD1953Establishment of Merck KGaAFor USA: Merck = EMD1953
7From Merck to Merck Serono Chemistry + Primary Care
9Sales in 2005 Products EUR million Concor® 348.4 Glucophage® 297.2 Duoneb®251.5Erbitux®218.2others573
10Small molecules + Erbitux® Development of biological molecules Erbitux® – a first-in-class IgG1 monoclonal antibody targeting the EGFR. Treatment of metastatic colorectal cancer and squamous cell carcinoma of the head and neck.1998 – Eli Lilly Merck licensed the right to market Erbitux® outside the US and Canada
11Looking for a biotech company Focus on specialist and innovative drugs Erbitux® is a recent success of Merck GroupDevelopment of not only new chemical but especially biological moleculesStrategy to grow from a local, mid-sized pharmaceuticals and chemicals company into a leading global biopharmaceuticals player
124th largest companies specializing in biotech Serono for sale4 therapeutic areas:Fertility treatments : world leader (60%market share) Gonal-f®Growth and metabolic disordersPsoriasisMultiple sclerosis : blockbuster Rebif® is the globalmarket leader4th largest companies specializing in biotechLed since 1996 by billionaire Ernesto Bertarelli
13Decision to acquire the pioneering biopharmaceutical company Serono Advantages of SeronoHigh-quality manufacturingInnovativeand successful productsA well-stockedand promising development pipelineAccess to the important U.S. marketDecision to acquire the pioneering biopharmaceutical company Serono
14Acquisition of Serono – 2007 16,6 milliards CHF= 10,6 milliards d‘ € On February 5th, 2007, Merck held 97% of Serono’s capital and 98% of the voting rights.
19Merck had integrated the name Serono and became Merck Serono +
20Merck Serono Vs EMD Serono Divisions for innovative prescription drugs of MerckIn North America (U.S. and Canada), the activities of Merck Serono are conducted under the name EMD Serono.EMD: Emanuel Merck, DarmstadtIn medical biotechnology, Merck Serono is a leader in Europe.
21Merck relocated on the premises of Serono Headquarters in Geneva (Switzerland)
22Merck Serono becomes Serono Develop and scale biologics Strategy focused on delivering innovations to patientsTherapeutic areas: neurodegenerative diseasesoncologyfertilityendocrinologyrheumatologyBring cardiometabolic care products in emerging markets
23Merck generics for sale 13/05/ billion €Mylan acquired Merck's genericsThe divested Generics business represents EUR 1,802 million of sales in 2006 and sells products in more than 90 countries
24Theramex for sale 10/28/2010 265 million€ Merck KGaA's European Based Women's Health Businessrevenues = 100 million € in 2009Teva Pharmaceutical has acquired Merck's TheramexTeva Pharma take over the distribution rights of Theramex's products sold in several countries.
26What’s Merck group and Merck Serono now? On a tjrs la division de merck entre la branche chimi et pharmaceutique-niveau pharma on a consmer health car avec des produits OTC comme bion, fémibion pour la santé de la femme, flexagil pr l’agilité, nasivin pour les rhumes et merck serono avec des produits de biotech majoritairement, qu’on va détailler par la suite.-niveau chimie on a millipore qu’ils viennent de racheter avec des technologie pour les scientifiques et performance maatérials avec des cristaux liquides, despigments…Merck is organized as a Corporation with general partners (Kommanditgesellschaft auf Aktien - KGaA). At least one partner has unlimited liability for the company’s creditors (general partner). The others (shareholders) hold an interest in the share capital without any personal liability for the company’s debts. It is therefore a hybrid of an Aktiengesellschaft (German stock corporation) and a Kommanditgesellschaft with a focus on German stock corporation law
27Sales of Merck KGaA - 2011 Merck Serono 92% Consumer Health Care 8% Pharmaceuticals : 63%Merck Serono92%Consumer Health Care8%
28Regular increase of the activity Increase of sales Merck SeronoRegular increase of the activity Increase of sales+27%+29%
29Merck Serono – R&D expenses 2010 : 1167 millions €: increase of 32%
30Consumer Health CareDrug without prescription Women’s and children’s health Cough and cold treatments Products to support everyday health and agility. Leading brands = Bion®, Femibion®, Nasivin®, Flexagil®, Seven Seas®, Kidabion®, Cebion® and Diabion®.
31Performance Materials = Liquid Crystals, Advanced Technologies, Pigments & cosmetics. Materials and solutions are being used by the consumer electronics, lighting, printing, plastics, and cosmetics industries. Merck is active in the growth markets around “clean energy” and develops innovative materials.
32Acquisition de millipore - 2010 pour 5 137 millions d’ € Merck MilliporeAcquisition de millipore pour millions d’ €BIO SCIENCELAB SOLUTIONPROCESS SOLUTION
33Revenues lost due to patent expiries - a % of 2010 revenue Patent cliffRevenues lost due to patent expiries - a % of 2010 revenueKey products protected for next three years -patent expiries:Rebif ® : EU 2015, US 2022Erbitux ® : EU 2014, Japan 2016Gonal-f ® : EU 2009, USA 2015
35Strategy of Merck Serono Strategic focusEnhance the productivity of our drug discovery activities with innovative and emerging technologies Expand upon our Multiple Sclerosis franchise to enter other neurodegenerative disease areas Expand our pipeline in Rheumatology with complementary product opportunities offering a broad indication potential
36Assessment of Therapeutique Areas Strategy merck seronoAssessment of Therapeutique Areas
37~60% of portfolio based on biologically manufactured products SalesProducts% SalesEur MillionRebif®31%1 668Erbitux®15%820Gonal-f®9%504Concor® franchise7%373Glucophage® franchise6%316Other products32%1 727BiologicsSmall molecules~60% of portfolio based on biologically manufactured products
38Phase I Phase II Phase III In Registration Oncology ARX 424Long-acting interferonMultiple sclerosisONOOral S1P receptor modulatorMultiple sclerosisErbitux® (cetuximab)Anti-EGFR mAb (PETACC-8*)Adj colon cancerRebif® HSA-free formulation(interferon beta-1a) for patientswith early signs of MS (REFLEX)EMA: ApprovedATX-MS-1467Immune tolerizing agentMultiple sclerosisExtended-release formulation ofinterferon beta-1aCilengitideIntegrin inhibitorSCCHNErbitux® (cetuximab)Anti-EGFR mAb (EXPAND)Gastric cancerErbitux® (cetuximab)Anti-EGFR mAbNSCLC (1st line therapy)EMA: Application submitteCilengitideIntegrin inhibitorNSCLCCilengitideIntegrin inhibitor (CENTRIC)GlioblastomaPI –2301Second-generation peptide copolymerMultiple sclerosisAnti-integrin mAb (DI17E6)Metastatic colorectal cancerStimuvax®Cancer immunotherapy(START, INSPIRE)NSCLCHypoxia-targeted drug (TH-302)Soft tissue sarcomaMEK inhibitor(AS703026/MSC B)Solid tumors and hematologicalmalignanciesAnti-integrin mAb (DI17E6)Metastatic prostate cancer (mCRPC),setting prior to chemotherapyNovel combinations of MEK inhibitor(AS703026/MSC B) with one of two sanofi-aventis PI3K inhibitors**Solid tumorHypoxia-targeted drug (TH-302)Pancreatic cancerKuvanSapropterin dihydrochloride(SPARK****)PKU in pediatric patients < 4yearFibroblast Growth Factor 18Cartilage injury repairMEK inhibitor(AS703988/MSC B)Solid tumorsAtaciceptanti-Blys/anti-APRIL fusion proteinSystemic lupus erythematosusc-Met kinase inhibitor(EMD )Solid tumorsOncologyNHS-IL12***Cancer immunotherapySolid tumorsNeurodegenerative DiseasesFibroblast Growth Factor 18OsteoarthritisRheumatologyAtaciceptanti-Blys/anti-APRIL fusion proteinLupus nephritisEndocrinology
39degenerative Diseases CardioMetabolic care and others Therapeutic areasOncologyNeurodegenerative DiseasesFertilityEndocrinologyCardioMetabolic care and others
40Oncology Colorectal cancer CRC Head and Neck cancer The third most deadly cancer among women and the fourth in men. Worldwide, it is responsible for around 529,000 deaths per year.Metastatic bowel or mCRC : start in colon or rectum but has spread to another part of the body - metastasizes. About a quarter of people diagnosed with CRC already have metastatic CRC.Head and Neck cancerFlat "squamous" cells that line the surfaces in the head and neck area, such as the mouth, nose and throat, and are thus termed "squamous cell carcinomas of the head and neck" (SCCHN).Significant increase in the worldwide incidence of SCCHN over the past decade, particularly among women.Globally, there are almost 650,000 new cases of head and neck cancer each year, and over 350,000 deaths.
41Oncology Erbitux® Cetuximab IgG1 monoclonal antibody targeting EGFR. Approved in many countries all over the world for KRAS wild-type mCRC with chemotherapyApproved in squamous cell carcinoma cancer of the head and neck – SCCHN in combination with radiation therapy or chemotherapy.Erbitux® - Product of Eli Lilly, rights to commercialize Erbitux outside US and CanadaIn 2010, sales of Erbitux® rose by 18% to 820 million €.Strenghts :Strong position in niche markets in EuropeHigh market share in metastatic colorectal cancerStandard of care in head & neck cancer
42Erbitux competitors - CRC OncologyErbitux competitors - CRCAvastin® – Bevacizumab Roche / Genentech, USA + EUApproved for mCRC, Advanced nonsquamous NSCLC,Metastatic kidney cancer when used with interferon alfa, Glioblastoma.Vectibix® – Panitumumab Amgen, USA + UEApproved for mCRC with disease progression on or following fluoropyrimidine-, oxaliplatin-, and irinotecan-containing chemotherapy regimensXeloda® – Capecitabine Roche / Genentech, USA + UEApproved for mCRC, cancer of colon after surgery , breast cancer
43Erbitux ® - in registration Strong product in an expanding market OncologyErbitux ® - in registrationApplication submitted to EMAFirst line therapy in NSCLC in combination with chemotherapyNSCLC accounts for 80%–85% of all lung cancer cases.Erbitux ® - Phase IIIGastric cancer in combinaition with chemotherapy – EXPANDErbitux + FUFOX : high response rate in metastatic gastric cancer.Adjuvant treatment in stage III colon cancer - PETACC-8 The final report with the official results of this trial is Dec.2014Strong product in an expanding market
44Oncology Cilengitide Stimuvax ® Cilengitide : the integrin inhibitors Control tumor growth. Action : attacking the tumor cells directly in a targeted manner and stopping angiogenesis that feed the tumor.Phase III : Cilengitide in glioblastoma CENTRICEstimated Primary Completion Date : Sept.2012 Phase II : SCCHN & NSCLCStimuvax ®Cancer immunotherapy that is designed to stimulate the body’s immune system to identify and target cells expressing MUC1.Phase III : unresectable stage III NSCLC - START & INSPIREEstimated Primary Completion Date : Sept. 2015
45OncologyPhase IIn 2010, Merck KGaA signed a worldwide research and development agreement with Sanofi-Aventis U.S. Inc.Two novel experimental combinations of the MEK inhibitor AS703026/MSC B with one of two compounds of sanofi-aventis.PI3K/mTOR inhibitor SAR (also known as XL765), is under the responsibility of Merck SeronoClass I PI3K inhibitor SAR (also known as XL147), is under the responsibility of Sanofi-Aventis.
46degenerative Diseases CardioMetabolic care and others Therapeutic areasOncologyNeurodegenerative DiseasesFertilityEndocrinologyCardioMetabolic care and others
47Neuro degenerative Diseases Multiple sclerosisMS is a complex, multifaceted disease of the central nervous system (CNS) with multiple pathways. Approximately 400,000 people in the U.S. have MS. (2.5 million worldwide)MS interferes with the brain’s ability to control such functions as seeing, walking & talking. It is unpredictable and every person with MS will have his or her unique set of symptoms.
48Neuro degenerative Diseases Rebif ® Interferon beta-1a Rebif is indicated for the treatment of patients with relapsing forms of multiple sclerosis.Rebif is a purified glycoprotein, which is produced by recombinant DNA technology using genetically engineered Chinese Hamster Ovary cells into which the human interferon beta-1a gene has been introduced.Rebif decreases the frequency of clinical exacerbations and delays the accumulation of physical disability.Rebif was approved by the U.S. FDA on March 7, 2002 is available in over 80 countries worldwide. Blockbuster with €1.7bn sales in 2010
49Neuro degenerative Diseases Rebif ® Perfect Life Cycle Management StrategyLife cycle management improves patient convenience and protects key franchises
51Neuro degenerative Diseases Rebiject II ® auto-injector
52Neuro degenerative Diseases RebiSmart® New Formulation
53Neuro degenerative Diseases Rebif ® Major Competitors Avonex (interferon beta-1a) is approved by the FDA to treat relapsing forms of MS. (Biogen Idec) It is the leading MS therapy in the US, with around 40% of the overall market, and in Europe, with around 30% of the overall market.Betaferon/Betaseron is approved as monotherapy treatment for relapsing-forms of multiple sclerosis. (Bayer)Tysabri is approved as monotherapy treatment for relapsing forms of multiple sclerosis. Administered by infusion (intravenous) (Biogen Idec and Elan )Copaxone (glatiramer acetate injection) is indicated for the reduction of the frequency of relapses in relapsing-remitting multiple sclerosis. (Teva Pharmaceuticals)
54degenerative Diseases CardioMetabolic care and others Therapeutic areasOncologyNeurodegenerative DiseasesFertilityEndocrinologyCardioMetabolic care and others
55Market position/ Strengths Gonal-F® Follitropin alpha for Injection FertilityMarket position/ StrengthsPioneer and market leaderComprehensive portfolio of complementary productsGonal-F® Follitropin alpha for InjectionThe Gonal-f® RFF Pen is a gonadotropin hormone produced by recombinant DNA technology (rDNA).It is used in ovulation induction (OI) and in vitro fertilization (IVF)
56Fertility Luveris® lutropin alfa for injection The first and only recombinant human luteinizing hormone (r-hLH) approved in the worldCetrotide® cetrorelix acetateGonadotropin releasing hormone antagonistCrinone® progesterone gelIndicated for progesterone supplementation as part of an Assisted Reproductive Technology (ART)Ovidrel® hCGThe first and only recombinant human chorionic gonadotropin (r-hCG)
57degenerative Diseases CardioMetabolic care and others Therapeutic areasOncologyNeurodegenerative DiseasesFertilityEndocrinologyCardioMetabolic care and others
58Market position/ Strengths Saizen® somatropin for injection EndocrinologyMarket position/ StrengthsAmong Top 5 in growth hormones“only in class”products for selected niche indicationsSaizen® somatropin for injectionRecombinant human growth hormone made by DNA technology.
59Endocrinology Serostim® somatropin for injection Indicated for the treatment of HIV wasting in patients receiving antiretroviral therapyEgrifta® tesamorelin for injectionFirst treatment indicated to reduce excess abdominal fast in HIV-infected patients with lipodystrophyKuvan® sapropterin dihydrochlorideFirst treatment indicated in Europe for the treatment of hyperphenylalaninemia
60degenerative Diseases CardioMetabolic care and others Therapeutic areasOncologyNeurodegenerative DiseasesFertilityEndocrinologyCardioMetabolic care and others
61CardioMetabolic care and others Market position/ StrengthsDiabetesLeading market positions with gold standard products that have high brand equityExcellent track record in life cycle management (i. e. formulations)Strong position in Emerging Markets246 million people with type 2 diabetes around the worldGlucophage : 1st first-line treatment for type 2 diabetesGlucovanceMetformine : was the Molecule of MerckCardiovascular diseasesCV diseases are responsible for one in every three deaths which translates into 17 million people worldwide each year Bisoprolol : 1st-line treatment of hypertensionThyroid disease200 million people worldwide suffer from hypothyroidism20% of this population is currently receiving treatmentLevothyroxine sodium
62CardioMetabolic care and others RheumatologyAtacicept - anti-BLyS/anti-APRIL fusion proteinPhase II : Systemic lupus erythematosus (SLE)Phase I : Lupus nephritisFibroblast growth factor 18Phase II : Cartilage injuryPhase I : OsteoarthritisPartnership with BMSExclusive worldwide license to Merck Serono to develop and commercialize Fibroblast Growth Factor 18, and the genetic fusion molecule Atacicept.
64Merck Serono’s future Strategy focus Expand their fast growing presence in China and other Emerging MarketsGrow their U.S. business with specialist-focused therapiesExpand their ongoing presence in the Japanese market
65Development programs discontinued Neuro- degenerative Diseases Cladribine tablets for use in Multiple Sclerosis (Phase III)Safinamide for treatment of Parkinson indications (Phase III)New Formulation of Rebif in the U.S.OncologyErbitux for use in metastatic triple-negative breast cancer (Phase II)Clinical development for IMO-2055, currently in development for squamous cell carcinoma of the head and neck (Phase II)EndocrinologyARX-201 for use in growth hormone deficiencies (Phase II)
66Redefining the R&D organization New R&D OrganizationOne executive for separated R and D functionsLeaner organization with clear responsibilities on individuals rather than on committees.
67Merck Serono’s future February 2012 Mendor signed a distribution agreement with Merck Serono for the meter Mendor Discreet ™Merck Serono + Threshold = global agreement to co-develop and commercialize phase III Hypoxia-Targeted Drug TH-302
68Merck Serono’s future April 2012 2012 To return all rights to Safinamide at Newron Pharmaceuticals SpABut continue co develepment for Pruvanserine & Sarizotan2012Merck Serono will increase tenfold its annual donation of praziquantel tablets which will increase from 25 to 250 million units - schistosomia
69Strategy for the future Future growth trendsFuture growth trendNeurodegenerative Disease7.9%Oncology24.2%Fertility5.9%Endocrinology8.9%CardiometabolicCare/Others5.5%They want to become the leader in oncology by 201569
70Merck Serono’s SWOT STRENG THS WEAKNESSES THREAT S OPPORT UNITIES Erbitux ® standard of careRebif® performa nce benefiting from volume growth and price/Life cycle managem entNew R&D hub in BeijingEfficient patent cliffLeader in fertilityGreat reputationWEAKNESSES50% of sales held by Rebif® et Erbitux®Failure in gaining regulatory approvals forcladribine tabletsLack of new products in the portfolioLicence for Erbitux®OPPORT UNITIESExpand Merck Serono’s oncology pipeline and product portfolioSeveral patenerships (BMS-Sanofi)Possible expansion in AsiaTHREAT SIncreasing competition from biosimilarIncreasing competition in multiple sclerosis-oncology marketCompetitors=Avastin® for Erbitux® and Avonex®-Tysabri® for Rebif® Generics²