KENILWORTH, N.J.--(BUSINESS WIRE)--Merck (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the fourth quarter and full year of 2020.

“Despite extraordinary challenges brought on by the COVID-19 pandemic, Merck achieved solid growth and made meaningful progress in our pipeline in 2020. We remain focused on our science-led strategy and are confident that this approach will continue to deliver value to patients and shareholders,” said Kenneth C. Frazier, chairman and chief executive officer, Merck. “Our scientists continue to advance our internal pipeline of promising medicines and vaccines, including in oncology, HIV, and pneumococcal disease, and, more recently, therapeutics for COVID-19. These pipeline developments provide us with increasing line-of-sight to significant potential growth drivers later this decade and into the next.”

Financial Summary

GAAP (generally accepted accounting principles) (loss) earnings per share assuming dilution (EPS) was $(0.83) for the fourth quarter and $2.78 for the full year of 2020. Non-GAAP EPS was $1.32 for the fourth quarter and $5.94 for the full year of 2020. GAAP EPS for the fourth quarter and full year of 2020 reflect a $2.7 billion charge for the acquisition of VelosBio Inc. (VelosBio). The fourth quarter and full year of 2020 also include a $1.6 billion pretax intangible asset impairment charge related to ZERBAXA (ceftolozane and tazobactam), resulting from a recall in December 2020 and a temporary suspension of sales which reduced expected future cash flows of this product. In addition, the full year of 2020 reflects pretax charges of $1.1 billion related to certain license and collaboration agreements. Non-GAAP EPS excludes the charges noted above, other acquisition- and divestiture-related costs, restructuring costs and certain other items. Refer to the GAAP to non-GAAP reconciliation table on page 12 for further details.

COVID-19 Research Highlights

Building on the company’s experience with antivirals, Merck advanced its scientific programs in an effort to help combat SARS-CoV-2, specifically:

• Molnupiravir (also known as MK-4482) – Merck continued the clinical development of molnupiravir, an orally available antiviral candidate for the treatment of COVID-19, in collaboration with Ridgeback Biotherapeutics LP. It is currently being evaluated in Phase 2/3 clinical trials in both the hospital and outpatient settings. The primary completion date for the Phase 2/3 studies is May 2021. The company anticipates interim efficacy data in the first quarter of 2021.
• MK-7110 (also known as CD24Fc) – In December 2020, Merck acquired OncoImmune, a privately held, clinical-stage biopharmaceutical company, to accelerate the development of MK-7110, a therapeutic candidate for the treatment of patients with severe and critical COVID-19.
  • In December 2020, Merck entered into a supply agreement with the U.S. government to support the development, manufacture and initial distribution of MK-7110 upon approval or Emergency Use Authorization from the U.S. Food and Drug Administration (FDA).
  • Topline results from a pre-planned interim efficacy analysis from a Phase 3 study of MK-7110 were released in Sept. 2020. Full study results are expected in the first quarter of 2021.

Oncology Pipeline Highlights

Merck continued to advance the development programs for KEYTRUDA (pembrolizumab), the company’s anti-PD-1 therapy; Lynparza (olaparib), a PARP inhibitor being co-developed and co-commercialized with AstraZeneca; and Lenvima (lenvatinib mesylate), an orally available tyrosine kinase inhibitor being co-developed and co-commercialized with Eisai Co., Ltd. (Eisai).

• Merck announced the following regulatory milestones for KEYTRUDA:
  • Approval in the United States by the FDA in combination with chemotherapy for the treatment of patients with locally recurrent unresectable or metastatic triple-negative breast cancer whose tumors express PD-L1 (Combined Positive Score [CPS]?10), based on results from the KEYNOTE-355 study;
  • Approval in the United States by the FDA of an expanded indication as monotherapy for the treatment of adult patients with relapsed or refractory classical Hodgkin lymphoma (cHL) based on the Phase 3 KEYNOTE-204 trial; and an updated pediatric indication for the treatment of pediatric patients with refractory cHL or cHL that has relapsed after two or more lines of therapy, both of which were previously approved under the FDA’s accelerated approval process;
  • Filing acceptance with priority review by the FDA for a supplemental Biologics License Application (sBLA) for KEYTRUDA plus chemotherapy as first-line treatment for locally advanced unresectable or metastatic esophageal and gastroesophageal junction cancer based on results from the KEYNOTE-590 study. A Prescription Drug User Fee Act (PDUFA) date is set for April 18, 2021;
  • Filing acceptance in January 2021 by the FDA for an sBLA seeking use of KEYTRUDA for the treatment of patients with locally advanced cutaneous squamous cell carcinoma (cSCC) that is not curable by surgery or radiation based on the results of the KEYNOTE-629 trial. The FDA has set a PDUFA date of Sept. 9, 2021; and
  • Approval in January 2021 in the European Union for KEYTRUDA as first-line treatment in adult patients with metastatic microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR) colorectal cancer based on results from the KEYNOTE-177 study.
• Merck announced that the FDA’s Oncologic Drugs Advisory Committee will discuss Merck’s application for KEYTRUDA for the treatment of patients with high-risk, early-stage triple-negative breast cancer based on the results from the Phase 3 KEYNOTE-522 study. The meeting will be held on Feb. 9, 2021.
• Merck’s Phase 3 KEYNOTE-122 trial evaluating KEYTRUDA versus standard of care (capecitabine, gemcitabine, or docetaxel) for the treatment of recurrent or metastatic nasopharyngeal cancer (NPC) did not meet its primary endpoint of overall survival (OS). Full results will be presented at a future medical meeting.
• Merck and Eisai announced the Phase 3 KEYNOTE-581/CLEAR trial (Study 307) met its primary endpoint of progression free survival (PFS) and its key secondary endpoints of OS and objective response rate (ORR) for KEYTRUDA plus Lenvima as a first-line treatment for patients with advanced renal cell carcinoma (RCC). In a second arm of the trial, Lenvima plus everolimus also met the trial’s primary endpoint of OS and the key secondary endpoint of ORR as a first-line treatment for patients with advanced RCC. Full results from the trial will be presented at the 2021 Genitourinary Cancers Symposium (ASCO GU) on Feb. 13, 2021.
• Merck and Eisai announced the Phase 3 KEYNOTE-775/Study 309 trial evaluating the investigational use of KEYTRUDA and Lenvima met its dual primary endpoints of OS and PFS and its secondary endpoint of ORR in patients with advanced endometrial cancer following at least one prior platinum-based regimen.
• Merck and AstraZeneca announced two European Union approvals of Lynparza:
  • As monotherapy for the treatment of adult patients with metastatic castration-resistant prostate cancer and BRCA1/2 mutations (germline and/or somatic) who have progressed following a prior therapy that included a new hormonal agent; and
  • As first-line maintenance treatment in combination with bevacizumab for adult patients with advanced (FIGO stages III and IV) high-grade epithelial ovarian, fallopian tube or primary peritoneal cancer who are in response (complete or partial) following completion of first-line platinum-based chemotherapy in combination with bevacizumab and whose cancer is associated with homologous recombination deficiency (HRD)-positive status defined by either a breast susceptibility gene 1/2 (BRCA1/2) mutation and/or genomic instability.
• Merck and AstraZeneca announced three approvals of Lynparza in Japan for:
  • Maintenance treatment after first-line chemotherapy containing bevacizumab (genetical recombination) in patients with HRD ovarian cancer;
  • Treatment of patients with BRCA gene-mutated (BRCAm) castration-resistant prostate cancer with distant metastasis; and
  • Maintenance treatment after platinum-based chemotherapy for patients with BRCAm curatively unresectable pancreas cancer.

Other Pipeline Highlights

• In January 2021, Merck announced approval in the United States by the FDA of Verquvo (vericiguat), a soluble guanylate cyclase (sGC) stimulator, to reduce the risk of cardiovascular death and heart failure hospitalization following a hospitalization for heart failure or need for outpatient intravenous (IV) diuretics in adults with symptomatic chronic heart failure and ejection fraction less than 45%, based on the results of the Phase 3 VICTORIA trial. Verquvo is being jointly developed with Bayer AG.
• In January 2021, Merck announced filing acceptance with priority review by the FDA of a Biologics License Application (BLA) for V114, Merck’s investigational 15-valent pneumococcal conjugate vaccine for use in adults 18 years of age and older. A PDUFA date is set for July 18, 2021. Previously, Merck also announced the submission of an application for V114 to the European Medicines Agency.
• Merck announced that two Phase 3 adult studies (the PNEU-PATH [V114-016] and PNEU-DAY [V114-017] trials), evaluating the safety, tolerability and immunogenicity of V114, each met their primary immunogenicity objectives.
• Merck presented Week 96 data from the Phase 2b trial (NCT03272347) that showed islatravir, the company’s investigational oral nucleoside reverse transcriptase translocation inhibitor (NRTTI), in combination with doravirine (PIFELTRO), maintained viral suppression in treatment-naïve adults with HIV-1 infection.
• Merck announced a collaboration with the Bill & Melinda Gates Foundation where the foundation will provide funding to support the Phase 3 IMPOWER 22 trial evaluating the safety and efficacy of investigational islatravir for both treatment and prevention in women and adolescent girls at high-risk for acquiring HIV-1 infection in sub-Saharan Africa.
• Merck also announced plans to conduct additional studies in HIV prevention with investigational islatravir including IMPOWER 24, a global Phase 3 clinical trial to evaluate islatravir as a once-monthly oral agent for pre-exposure prophylaxis (PrEP) at sites across the world and among other key populations impacted by the epidemic, including men who have sex with men and transgender women.
• In January 2021, Merck announced interim data from the Phase 2a trial (NCT04003103) in adults evaluating the safety, tolerability and pharmacokinetics (PK) of the investigational once-monthly oral islatravir tablet for PrEP. Interim findings demonstrated that once-monthly oral islatravir achieved the pre-specified efficacy PK threshold for PrEP at both of the two doses studied (60 mg and 120 mg).
• Merck continued to advance MK-8507, the company’s investigational once-weekly oral non-nucleoside reverse transcriptase inhibitor (NNRTI). The company presented results from Phase 1/1b studies that supported further investigation for once-weekly oral administration as part of combination antiretroviral therapy. Enrollment in a Phase 2 trial evaluating a switch to islatravir and MK-8507 once weekly in adult participants with HIV-1 who have been virologically suppressed for ?6 months on bictegravir/emtricitabine/tenofovir alafenamide (BIC/FTC/TAF) once-daily, is currently ongoing.

Business Development

• In December 2020, Merck acquired VelosBio, a privately held, clinical-stage biopharmaceutical company, to strengthen Merck’s oncology pipeline with MK-2140 (formerly known as VLS-101), an investigational antibody-drug conjugate to treat hematological malignancies and solid tumors.

Fourth-Quarter and Full-Year Financial Impact of COVID-19

In the fourth quarter, the estimated negative impact of the COVID-19 pandemic to Merck’s pharmaceutical revenue was approximately $400 million. As expected, within the company’s human health business, revenue was negatively impacted by reduced access to health care providers given social distancing measures, which negatively affected vaccine sales in particular.

Operating expenses were positively impacted in the fourth quarter by approximately $50 million, primarily driven by lower promotional and selling costs, partially offset by higher research and development (R&D) expenses, net of investments in COVID-19-related antiviral and vaccine research programs.

The estimated overall negative impact of the COVID-19 pandemic to Merck’s revenue for the full year 2020 was approximately $2.5 billion, largely attributable to the human health business but including approximately $50 million attributable to Animal Health.

Operating expenses for the full year were positively impacted by approximately $600 million, primarily driven by lower promotional and selling costs, as well as lower R&D expenses, net of investments in COVID-19-related antiviral and vaccine research programs.

Fourth-Quarter and Full-Year Revenue Performance

The following table reflects sales of the company’s top pharmaceutical products, as well as sales of animal health products.

	$ in millions			Fourth Quarter																Year Ended
				2020				2019				Change				Change Ex- Exchange				Dec. 31, 2020				Dec. 31, 2019				Change				Change Ex- Exchange
	Total Sales			$12,514				$11,868				5%				5%				$47,994				$46,840				2%				4%
	Pharmaceutical			11,367				10,533				8%				6%				43,021				41,751				3%				4%
	KEYTRUDA			3,993				3,111				28%				27%				14,380				11,084				30%				30%
	JANUVIA / JANUMET			1,328				1,418				-6%				-7%				5,276				5,524				-4%				-4%
	GARDASIL / GARDASIL 9			998				693				44%				41%				3,938				3,737				5%				6%
	PROQUAD, M-M-R II and VARIVAX			488				481				2%				1%				1,878				2,275				-17%				-17%
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