MERCK KGAA, DARMSTADT, GERMANY-COMMERZBANK GERMAN INVESTMENT SEMINAR Marcus Kuhnert, CFO - EMD Group
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MERCK KGAA, DARMSTADT, GERMANY – COMMERZBANK GERMAN INVESTMENT SEMINAR Marcus Kuhnert, CFO New York – January 14, 2019
Disclaimer
Publication of Merck KGaA, Darmstadt, Germany. In the United States and Canada
the group of companies affiliated with Merck KGaA, Darmstadt, Germany operates
under individual business names (EMD Serono, Millipore Sigma, EMD Performance
Materials). To reflect such fact and to avoid any misconceptions of the reader of the
publication certain logos, terms and business descriptions of the publication have
been substituted or additional descriptions have been added. This version of the
publication, therefore, slightly deviates from the otherwise identical version of the
publication provided outside the United States and Canada.
2
Disclaimer
Cautionary Note Regarding Forward-Looking Statements and financial indicators
This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,”
“believe,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance are often used to identify forward-looking statements.
All statements in this communication, other than those relating to historical information or current conditions, are forward-looking statements. We intend these forward-looking
statements to be covered by the safe harbor provisions for forward-looking statements in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to a number of risks and uncertainties, many of which are beyond control of Merck KGaA, Darmstadt, Germany, which could cause actual results to differ materially from such
statements.
Risks and uncertainties include, but are not limited to: the risks of more restrictive regulatory requirements regarding drug pricing, reimbursement and approval; the risk of stricter
regulations for the manufacture, testing and marketing of products; the risk of destabilization of political systems and the establishment of trade barriers; the risk of a changing
marketing environment for multiple sclerosis products in the European Union; the risk of greater competitive pressure due to biosimilars; the risks of research and development; the
risks of discontinuing development projects and regulatory approval of developed medicines; the risk of a temporary ban on products/production facilities or of non-registration of
products due to non-compliance with quality standards; the risk of an import ban on products to the United States due to an FDA warning letter; the risks of dependency on suppliers;
risks due to product-related crime and espionage; risks in relation to the use of financial instruments; liquidity risks; counterparty risks; market risks; risks of impairment on balance
sheet items; risks from pension obligations; risks from product-related and patent law disputes; risks from antitrust law proceedings; risks from drug pricing by the divested Generics
Group; risks in human resources; risks from e-crime and cyber attacks; risks due to failure of business-critical information technology applications or to failure of data center capacity;
environmental and safety risks; unanticipated contract or regulatory issues; a potential downgrade in the rating of the indebtedness of Merck KGaA, Darmstadt, Germany; downward
pressure on the common stock price of Merck KGaA, Darmstadt, Germany and its impact on goodwill impairment evaluations, as well as the impact of future regulatory or legislative
actions.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere,
including the Report on Risks and Opportunities Section of the most recent annual report and quarterly report of Merck KGaA, Darmstadt, Germany. Any forward-looking statements
made in this communication are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will
be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. Except to the extent required by
applicable law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
This presentation contains certain financial indicators such as EBITDA pre exceptionals, net financial debt and earnings per share pre exceptionals, which are not defined by International
Financial Reporting Standards (IFRS). These financial indicators should not be taken into account in order to assess the performance of Merck KGaA, Darmstadt, Germany in isolation or
used as an alternative to the financial indicators presented in the consolidated financial statements and determined in accordance with IFRS. The figures presented in this statement
have been rounded. This may lead to individual values not adding up to the totals presented.
3
Agenda
Business overview
Transforming the company
Healthcare – Funding for success
Life Science – Focusing on profitable growth
Performance Materials – Maintaining leadership and innovation
Executive summary and guidance
4
BUSINESS OVERVIEW
Group
A platform of three high-tech & science businesses to compete in attractive
markets
Healthcare Performance
Life Science
Materials
Leading in specialty Leading life science Leading Company in
pharma markets company high-tech solutions
• Biologics and small molecules • Tools and services for biotech • High-tech solutions and materials
• Research focus: Oncology, research & production for electronics
Immunology & Immuno-Oncology • Tools and laboratory supply for the • Broad portfolio of decorative
academic research and industrial and functional solutions
testing
6
Group
Strong businesses with attractive margins
% of sales Margin1 % of EBITDA pre
46% 27.9% 41%
FY 2017 FY 2017
Sales: EBITDA pre2:
€15,327 m €4,414 m
30.4% 38%
38%
21%
16% 40.1%
Healthcare Life Science Performance Materials
1EBITDA pre margin in % of net sales; 2Including Corporate/Others (-€301 m)
7
TRANSFORMING THE COMPANY
Group
Strategic roadmap 2016-2022
2012-2015 2016-2018 2019-2022
Turnaround Fully leverage
Efficiency First pipeline
in Healthcare pipeline potential
program launches
Portfolio Above-
3 strong market growth
optimization
in LS and PM pillars Portfolio in Life Science
Sigma management
integration
Leadership Digital
in Performance business models
Materials New applications
beyond displays
9
Group
We have added scale and strengthened the attractiveness of our portfolio
2007: ~€7 bn sales Transformation volume 2017: ~€15 bn sales
Consumer Health1
merged + Healthcare
4
Ethicals
Serono
Generics - ~€10 bn
3
~€30 bn
+
Life Science
Millipore &
2
Life Science Solutions Sigma-Aldrich
merged
Laboratory Business
Divestments Acquisitions
Pigments
merged
+ Performance
Liquid Crystals - divested + acquired Materials
AZ
1Closing
of sale of Consumer Health at a cash purchase price of € 3.4 billion completed as of December 1 2018; 2Excluding “Crop Bioscience”, which was divested;
10 3
Profroma divestment volume includes cash proceeds for Consumer Health 4Excluding “Theramex”, which was divested;Group
Profitability improved fundamentally
Acquisition of
Sigma-Aldrich
Acquisition of AZ
1
€m Electronic Materials
Margins
Acquisition of Millipore 15,024 15,327
14 000 35%
12,845
Acquisition of Serono
12 000 Divestment of Generics 11,363
10,756 10,735
9,922 30%
10 000 8,951
30% 30%
7,202 29%
8 000 7,402 28% 28%
28% 27% 28%
6,775
26% 25%
6 000
4 000 22%
20%
20%
2 000
0 15%
2 2
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Net sales [€m] EBITDA pre margin [%]
1Included since 2 May 2014; 22007 and 2014 EBITDA pre margin adjusted for comparability
11Group
Clear set of priority goals to be realized by 2018
Performance
Healthcare Life Science Materials
~41% ~38% ~21%
EBITDA EBITDA EBITDA
pre* pre* pre*
Maximize growth of existing Focus on seamless integration Drive innovation and
franchises and deliver cost synergies technology leadership across
Deliver pipeline: Leverage strategic capabilities all businesses
one product launch or for value creation Innovate in applications also
indication p.a. from 2017 beyond displays
MeRck KGaA, ▪ Deleverage to €500 m) until end of 2018 (unless financed by divestments)
▪ Dividend policy that ensures a sustainable and resilient development
*based on FY 2017 reported EBITDA pre, excluding Corporate & Other
12Group
Regular portfolio review and optimization remains key
Supporting mid-term strategy
Acquisitions and divestments are and strengthening core business
part of our history Growing in attractive markets
Licensing transactions remain on
Clear
Proven track record:
our agenda strong ability to win
criteria
All prior transactions earned their Compelling financials:
required cost of capital
IRR > WACC
DNA and
EPS pre accretive
Regular portfolio review Maintain investment-grade
and active capital
allocation will continue track credit rating
record Disciplined approach to
portfolio management will
persist
13HEALTHCARE Funding for success
Healthcare
Healthcare is set to deliver on promising pipeline candidates
Potential pipeline
> €2 bn
Focus on sales
the
pipeline
> €120 m1
Pipeline
products
2018… …2022
Core
business
Deliver
organic
growth 2013 2022E
1
Guidance 2018
15Healthcare
Ambition to keep core business sales organically stable until 2022
Healthcare core business net sales until 2022
• Maintaining solid track record of
Rebif® patient retention
5 years of organic
Decline in line • Integration into joint franchise
growth, w/o CH with interferon market strategy with Mavenclad®
• Driving emerging markets growth
Erbitux® • Mitigate price and competitive
Low single-digit decline pressure in EU by clear Erbitux®
franchise positioning
Drug demand driven by emerging
Fertility
•
markets growth and demographics
Mid single-digit growth • Differentiation due to coverage of
Base
business the entire ART portfolio1
General medicine
2
Mid to high single-digit • Emerging markets growth
growth • Repatriation measures
2013 2017 2022E
1 2
ART: Assisted Reproductive Technology; includes General Medicine, CardioMetabolic Care (CMC), Endocrinology & Allergopharma
16Healthcare
® ®
Mavenclad and Bavencio are growing well and support €2 bn pipeline target
Recently launched products continue to … and support €2 bn pipeline sales
gain market traction in 2018 ... ambition for 2022
90%
1
Bavencio: MCC
72% 3
> €2 bn
60%
Bavencio: additional
30%
indications
0% Bavencio RCC 1L FDA
submission on track
Jun
Dec
Feb
Apr
Nov
Jan
Oct
Mar
May
Bavencio Competitor 1 Competitor 2
Mavenclad US
100% Submitted to FDA
2
Mavenclad: MS
Mavenclad EU
4
> €120 m
Bavencio approved
indications (MCC, mUC)
0,1% 7,5% 10,4% 13,6% 15,3%
0% 2018 2022
Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018*
MAVENCLAD Orals (excluding MAVENCLAD) mAbs
1 2
US: naïve/1L Patient share of IO class in 2018 - Data source: IMS claims data; Germany: share of
3
HE dynamic patients (RMS only) - Data source: actual patients per IMS
and shares estimated from IPSOS MS Monitor; Dynamic 4
markets per internal company estimates; Indication, risk adjusted; composition is an illustration and may change
subject to data read-outs and registration outcomes; Guidance 2018
17Recent & upcoming catalysts
An eventful Q4 and a year of continued pipeline development ahead1
Oncology
Q4 2018 H1 2019 Q3 2019
Immuno-Oncology
Evobrutinib Evobrutinib Evobrutinib Neurology
Ph IIb primary data presentation & Ph IIb 48 week data presentation & Ph II Rheumatoid Arthritis
Immunology
secondary endpoint read-out (MS) decision on PhIII (MS) trial design data read-out
Completed
Tepotinib Cladribine tablets Tepotinib
Ph II data presentation Expected presentation of advanced
Expected FDA decision
(NSCLC 2L / HCC 1L/2L) interim results (NSCLC, MET Exon 14)
Avelumab M7824 (TGF-ß trap)
Ph III PFS IA data read-out Initiation of 2L BTC trial &
(RCC 1L, FDA submission on track) decision on further NSCLC trial settings
Avelumab
Ph III data read-out & interim analysis
(Ovarian 2L plat. res/ref & 1L resp.)
1Note: All timelines are event-driven and may be subject to change; Acronyms: NSCLC – Non small cell lung cancer | MS – Multiple Sclerosis | RCC – Renal Cell
Carcinoma | HCC – Hepatocellular Carcinoma l plat. res/ref – platinum resistant/refractory | FDA – U.S. Food and Drug Administration | IA – Interim Analysis
18LIFE SCIENCE Focus on profitable growth
Life Science
Serving customers across the highly attractive life science industry
RESEARCH PROCESS APPLIED
~€45-50 bn ~€50 bn ~€55 bn
Low single-digit growth High single-digit growth Mid single-digit growth
Academic and government institutions Pharmaceutical companies Diagnostic manufacturers
Biopharma R&D Small biotech Clinical testing labs
Industry R&D Contract manufacturing organizations Food & Beverage manufacturers
~€150 bn* market growing at ~4% CAGR
Growth in volume of experiments Drug volume growth Volume growth from
Mild growth in academic funding from biologics Population growth
Investment in industry R&D from emerging modalities Rise in quality standards
Continued shift to single-use Increased testing needs
*Source: Merck KGaA, Darmstadt, Germany estimate 2018
20Life Science
Business is on track to deliver above-market organic growth
Life Science Market
1 Long-term growth drivers
2
Research activity: >3,000 projects in research pipelines , rising
Research Solutions number of experiments and newly emerging therapies/technologies
3
Low single digit growth backs healthy growth in biotech and CROs
Public and private funding: availability, access and predictability
Academia & Government drive demand from academia and emerging biotech customers
Pharma & Biopharma
Regulation: rising requirements foster long-term customer partnerships
Emerging Biotech
35% Merck KGaA,
4
Darmstadt, Germany
5
Biologics: mAbs production growing by ~11-15% p.a. for 2018-2024
FY 2017 driven by new molecules and biosimilars
38% Process Solutions
€5.9 bn High single digit growth Diversification: contribution by top 10 molecules will decline to
6
~20% until 2024 from 60% today
BioProcessing Noval modalities: innovation in complex-to-deliver therapies,
27% Pharma e.g. gene and cell therapy, will drive demand for single-use,
Services
end-to-end and new technology solutions
1
Market
Regulation: testing volumes overall are rising globally rise in quality
standards and increased demand for testing across customer segments
Applied Solutions Population and economic growth: demand for access to more
Mid single digit growth
sophisticated products and services rises, e.g. in emerging markets
Food&beverage
Speed: need for fast testing results raises requirements for Applied
Environmental
Diagnostics customers, esp. in clinical testing and food & beverage testing
1 2 3 4 5 6
Source: Merck KGaA, Darmstadt, Germany Factbook; Source: PhRMA; CRO = Contract Research Organization; Indicative only; mAbs = monoclonal antibodies; Source:
EvaluatePharma September 2018
21Life Science
Market leading growth and profitability maintained during integration
Consistent above-market growth Key industry player Superior profitability
Organic sales growth vs market* [% YoY] Life Science net sales [€m] EBITDA pre margin [%]
29
2016 25
2016 6,3
. 5,658 22
30
2017 25
24
2017 5,3
. 5,882
30
H1 2018 25
23
H1 2018 .
8,3 3,030 Merck KGaA, Darmstadt, Germany LS
Peer 1
Life Science organic growth Peer 2
Market growth*
Ambition to grow above Secure leading market Maintaining industry-
market through to 2022 position leading margin
*Based on integrated life science peers’ performance, analyst reports and Laboratory Products Association report
22Life Science
Portfolio and focus are key drivers of above-market growth
Life Science net sales organic CAGR 2015-2017*
• Merck KGaA, Darmstdt, ~ 6%
Germany grows within the
Out- relevant market segments
Performance • Broad range of differentiated + 50-100 bps
products and services
• E-commerce platform
• Merck KGaA, Darmstadt,
Portfolio Germany focuses on higher- + 50-100 bps
growth segments of the market
advantage
• E.g. bioprocessing, lab water,
diagnostics offerings
• The life science industry grows
Life science rapidly and develops ~ 4%
market dynamically
*Indication
23Life Science
Innovation underpins Life Science‘s position as growth engine for us
Products launched after 2013 Categories of innovation Industry trends
% of total net sales
Sustain
x2* 1 Increasing relevance Customer
and competitiveness requirements,
scientific standards
and therapies are
evolving continuously
Incremental
2 Expanding high-value
Merck’s KGaA,
products offering
Darmstadt, Germany
strong and innovative
portfolio ensures
Breakthrough well-balanced
2013 2014 2015 2016 2017 2022E
3 Creating transfor- strategic growth
mational solutions
Innovation pipeline is key to differentiate in the market in order to sustain
Life Science’s above-market growth trajectory
*Indication
24Life Science
Integration of Sigma and synergy generation progressing well
On track to deliver planned synergies of ~ €280 m until 2018
Cost synergies On track Topline synergies
✓ ✓ ~260 On track
✓ ~105
~170
✓~15 ~20
~5
2015 2016 2017 2018 2015 2016 2017 2018
Net cost synergies Accelerated cost synergies Top-line synergies
Network consolidation and operational Continued integration of sigmaaldrich.com
transformation ongoing ~80% of relevant products in U.S. and EU are available online
Consolidated 10 manufacturing and distribution sites >1/3 of Merck KGaA, Darmstadt, Germany eCommerce orders
now contain products from both legacy companies
Announced consolidation of 5 further sites
Complete offering in Process Solutions
Combination of customer service centers and offshoring
of transactional tasks
25PERFORMANCE MATERIALS Maintaining leadership and innovation
Performance Materials
A leader in the electronic materials market
1
~€1,250 bn ~€380 bn Electronic materials competitor landscape
Electronics market Semiconductor
market
CAGR 18-25: ~4% CAGR 18-25: ~5%
~€38 bn
Materials market
C4
CAGR 18-25: ~3%
C7
C10 C12
C14
C13
C6 C2
C1 C11
~€125 bn
Display market
C8 C3
CAGR 18-25: ~-1% ~€48 bn C9
Materials market
CAGR 18-25: ~-1%
C5
1
Bubble size in competitive landscape illustrates share of semiconductor
Illustration of the electronics market and thereof its selected sub markets
and display material sales of indicated competitors (C1 – C14)
1Source: Linx 2018, Research & Markets 2017, Semi 2015, McClean/IC Insights 2018, IC insights, Gartner 2017, Prismark 2018, FujiChimera, IHS, Market size as of 2017
27Performance Materials: New structure combines LC with OLED, serving
same customer group
Business allocation within Performance Materials % sales Products
Dielectrics, colloidal silica, lithography
materials, yield enhancers, edge-bead
Integrated Circuit Semiconductor ~20-25%
removers
Materials Solutions
Polyimide raw materials and printing
materials
Liquid crystals (LC) and photoresists for TVs,
smartphones and tablet computers
Display
Display Materials
Solutions ~50-55% Other display and non-display applications
(e.g. LC Windows)
Organic and inorganic light emitting diodes
Advanced OLED
Technologies Optoelectronics
Effect pigments and functional materials for
coatings, plastics, printing and cosmetics
Pigments and Surface ~20-25% Functional materials for cosmetics & special
Functional Materials Solutions applications
Functional materials for electronics and
energy solutions
28“Bright Future”
5-year transformation program drives long-term performance
2018 2019 2020 2021 2022+
Back to organic Growth ▪ Refocus innovation and life cycle
▪ Exploit market growth of Semi & Surface management 2-3% CAGR
▪ Manage Liquid Crystal sales decline ▪ Explore growth in adjacent technologies
Resource allocation & process
excellence ▪ Centralized early research approach ~30% Margin
▪ Efficient reallocation/adjustment of resources ▪ Rigid R&D portfolio management
Portfolio management
▪ Continuous review of entire portfolio ▪ Consider inorganic growth options
▪ Evaluation of partnering approaches ▪ Drive solution based business models
▪ Foster customer-centric mindset
Cultural change ▪ Market-driven innovation
▪ Enhance a common Performance Materials spirit
29Performance Materials
Business portfolio management drives capital allocation and
enables future value creation
Profitability
Invest for growth
Invest for Strong and sustainable market growth
Manage for growth Leading positions and attractive growth
cash opportunities
Semiconductor
Display Solutions: LC Solutions Manage for cash
Mature and lucrative market segments
Surface Solutions
Invest in extension, while managing for profit
Build or Partner
Build/Partner
Divest Early industry cycles with strong potential
e.g. Strictly prioritize and diversify risk
Display Solutions: OLED,
LC-Windows Divest
Regular review for better strategic owner
Growth
potential
30Performance Materials will return to sales growth after 2019
Performance Materials sales development, 2019-2022 sales growth trajectory
in €m
Semiconductor
CAGR:
Solutions
Low single ~2-3%
digit decline
Mid- to high-single digit
Trough growth
year
Surface
Solutions
Low-single digit growth
Display
Solutions
2019E
Absolut org. decline of Absolute org. growth
2022E Low-single digit decline
2018E LC for displays of other businesses
After 2019 sales growth of Semiconductor & Surface Solutions, OLED and Photoresists
will overcompensate the decline of Liquid Crystals for displays
31Margins of PM will remain around 30% in the long-run
EBITDA pre margin indication by business
Profitability indication Display
Solutions
• Display Solutions will adjust above Semiconductor
Solutions
towards PM average margin
• Bottom-line management to
support margin
~30% EBITDA pre margin
• Strong FX exposure will cause
fluctuations
Surface
below Solutions
32EXECUTIVE SUMMARY AND GUIDANCE
Key EBITDA pre* drivers
EBITDA-supporting factors EBITDA-reducing factors
• Organic net sales growth by Healthcare and Life Science • Underlying R&D costs in Healthcare are budgeted above 2017, but
actual development will be subject to clinical data outcome of priority
• Sigma-Aldrich incremental cost and revenue synergies projects and prioritization decisions
~+€95 m YoY
• Healthcare margins negatively impacted by product mix
• Biosimilars divestment frees up R&D budget
(2017: mid to high double-digit million R&D costs) • 2017 special gains of ~€200 m will not recur
• First full-year sales contribution from newly launched pipeline • Performance Materials sales and earnings continuously affected by
products Mavenclad® and Bavencio® decline in Liquid Crystals
• BioMarin milestone payment of €50 m • First launch preparations for Mavenclad® U.S., driving M&S costs
• FX remains a strong headwind, esp. in H1 2018, and is slightly
stronger than anticipated so far; expected EUR/USD 1.19-1.22
for FY 2018
*Constant portfolio
34Group
Full-year 2018 guidance*
Net sales:
Organic +4% to +6% YoY
FX ~ -3% to -5% YoY
~ € 14.4 – 14.8 bn
EBITDA pre:
Organic -1% to -3% YoY
FX -8 to -10% YoY
~ € 3,700 – 3,900 m
EPS pre:
~ € 5.00 – 5.30
*Excluding Consumer Health
35Group on a growing and profitable trajectory
2019 Group EBITDA pre
increase confirmed
2019 2018
Sales
> Sales
EBITDA pre > EBITDA pre
Margin
> Margin
Healthcare and Life Science will compensate
for Performance Materials’ trough year
36Group
2018 business sector guidance*
Healthcare Performance
Life Science
Materials
Net sales Net sales Net sales
▪ Sound organic growth of +4% to ▪ Organic growth ~+7% to 8%: slightly ▪ About stable with -1% to +1% YoY
®
+5%: ongoing organic Rebif above market; all businesses ▪ Volume increases in major businesses
decline offset by growth in other contributing; main driver Process ▪ Liquid Crystals temporarily benefiting
franchises Solutions from China capacity ramp-up
▪ Full-year contributions from 2017 ▪ Full realization of expected topline
launches synergies
EBITDA pre EBITDA pre EBITDA pre
▪ Organic -1% to -2% YoY ▪ Organic ~+8% YoY ▪ Organic -14% to -16% YoY
▪ FX -9% to -11% YoY ▪ FX -3% to -5% YoY ▪ FX -6% to -8% YoY
▪ ~ €1,540 – 1,600 m (excl. CH) ▪ ~ €1,830 - 1,880 m ▪ ~ €745 – 785 m
*Excluding Consumer Health
38Additional financial guidance 2018
Further financial details
Corporate & Other EBITDA pre ~ -€360 – -400 m
Interest result ~ -€230 – -250 m
Effective tax rate ~ 24% to 26%
Capex on PPE ~ €900 – 950 m
Q4/2018 – FY 2019 hedge ratio ~60%
Hedging/USD assumption at EUR/USD ~1.20
2018 Ø EUR/USD assumption ~ 1.18 – 1.21
39Group
Merck KGaA, Darmstadt, Germany has clear financial priorities
Strong cash flow will be used to drive down gearing
to €500 m) ruled out for 2018
Focus on cash flow (or financed by divestments)
and deleveraging
Dividend policy that ensures a sustainable and resilient
development
Synergy generation is utmost priority
Ongoing cost discipline Cost discipline continues in all business sectors
Further efficiency gains from ongoing improvement
and harmonization of processes and systems
All our businesses have growth potential
Efficient capital
allocation Decisions on growth investments are based on
sound business cases and robust clinical data
Near-term financial priorities will secure Merck KGaA, Darmstadt, Germany‘s profitable
growth path
40Group
Strong focus on cash generation to ensure swift deleveraging
1
Net financial debt and leverage development Focus on deleveraging
[Net financial debt/
EBITDA pre]
• Commitment to swift deleveraging to
ensure a strong investment grade
credit rating and financial flexibility
4x
• Cash flow will be used to drive down
3.5x
leverage to expected
3x 3.5x €500 m)
2.5x *
remain ruled out 2018
2.6x 2.5x
2x
2.3xGroup
Dividend growth sustained
Dividend1 development 2011-2017 2017 dividend
• Dividend of €1.25 (+4% YoY)
per share approved for 2017
1.25 • 20.3% of EPS pre
1.20
1.05 • Sustainable dividend growth
1.00
0.95 2
• Dividend yield of 1.4%
0.85
0.75
1 1 1
2011 2012 2013 2014 2015 2016 2017
1 2
Adjusted for share split, which has been effective since June 30, 2014; Calculated with 2017 year-end share price of 89.75€ per share
42Healthcare Strategy
The Healthcare Pipeline continues to deliver November 20, 2018
Phase I Phase II Phase III
M2698 avelumab tepotinib sprifermin avelumab - anti-PD-L1 mAb
p70S6K & Akt inhibitor anti-PD-L1 mAb MET kinase inhibitor fibroblast growth factor 18 Non-small cell lung cancer 1L1
Solid tumors Solid tumors Non-small cell lung cancer Osteoarthritis avelumab - anti-PD-L1 mAb
M3814 avelumab tepotinib atacicept Gastric cancer 1L-M1M
DNA-PK inhibitor anti-PD-L1 mAb MET kinase inhibitor anti-BlyS/APRIL fusion protein avelumab - anti-PD-L1 mAb
Solid tumors Hematological malignancies Hepatocellular cancer Systemic lupus erythematosus Ovarian cancer 1L1 and 1L-M1M
M6620 (VX-970) M9241 (NHS-IL12) atacicept avelumab - anti-PD-L1 mAb
ATR inhibitor Cancer immunotherapy avelumab anti-BlyS/APRIL fusion protein Ovarian cancer 1L1,5
Solid tumors Solid tumors anti-PD-L1 mAb IgA nephropathy
avelumab - anti-PD-L1 mAb
M4344 (VX-803) M7824 Merkel cell cancer 1L1 evobrutinib Urothelial cancer 1L-M1M
ATR inhibitor anti-PD-L1/TGFbeta trap avelumab BTK inhibitor avelumab - anti-PD-L1 mAb
Solid tumors Solid tumors anti-PD-L1 mAb Rheumatoid arthritis Renal cell cancer 1L1
M3541 Solid tumors2 evobrutinib avelumab - anti-PD-L1 mAb
ATM inhibitor M6495 avelumab BTK inhibitor Locally advanced head and neck cancer
Solid tumors anti-ADAMTS-5 nanobody anti-PD-L1 mAb Systemic lupus erythematosus
M8891 Osteoarthritis Non-small cell lung cancer2 M1095 (ALX-0761)4
MetAP2 inhibitor M5049 avelumab anti-IL-17 A/F nanobody Registration
Solid tumors Immune receptor inhibitor anti-PD-L1 mAb Psoriasis
M7583 Immunology Urothelial cancer2 cladribine tablets
BTK inhibitor abituzumab3 evobrutinib lymphocyte-targeting agent
Hematological malignancies M5717 pan-αν integrin inhibiting mAb BTK inhibitor Relapsing multiple sclerosis6
PeEF2 inhibitor Colorectal cancer 1L1 Multiple sclerosis
Oncology
Malaria M7824
anti-PD-L1/TGFbeta trap Immuno-Oncology
Non-small cell lung cancer 1L1
Immunology
Neurology
Global Health
1 First-line treatment;
1M First-line maintenancetreatment.2 Avelumab combination studies with talazoparib, axitinib, ALK inhibitors, chemotherapy, or novel
immunotherapies. 3 As announced on May 2 2018, in an agreement with SFJ Pharmaceuticals Group, abituzumab will be developed by SFJ for colorectal cancer
through Phase II/III clinical trials. 4 As announced on March 30 2017, in an agreement with Avillion, anti-IL-17 A/F nanobody will be developed by Avillion for
plaque psoriasis and commercialized by Merck KGaA, Darmstadt, Germany. 5 Avelumab in combination with talazoparib. 6 As announced on July 30 2018, the US Food and Drug Administration
(FDA) has accepted the resubmission of the New Drug Application (NDA) for cladribine tablets.
43 Pipeline products are under clinical investigation and have not been proven to be safe and effective. There is no guarantee any product will be approved in the sought-after indication.Healthcare Strategy
Continuous newsflow of data throughout 2018 triggered next phases
for our key assets
ASCO GI ASCO WCLC ECTRIMS ESMO
(18-20 Jan) (1-5 June) (23-26 Sep) (10-12 Oct) (19-23 Oct)
]
TGF-ß trap/
Tepotinib NSCLC/ Anti-PD-L1 (ph Ib)
TGF-ß trap/
Anti-PD-L1 (ph Ib) MET-Exon 14 (ph II) ▪ Billiary tract: ORR 20% (indep.) Initiation of 2L
Potentially
▪ Gastric: ORR 22.6% (invest.), 16.1% BTC trial &
▪ Gastric (ORR 16 %) ▪ ORR 57.5% (invest.) fileable
(indep.)3 decision on
▪ ORR 35.0% (indep.) ▪ NSCLC 2L: ORR 37.0%, mPFS 9.5 months2 further NSCLC
▪ ESCC: ORR 20.0% (all-comers) trial settings in
H1 2019
▪ EAC: ORR 13.3% (all-comers)
▪ SCCHN (Oral presentation): clinical
Avelumab MCC (launched) Various ph II Evobrutinib MS (ph II) response rate of 54.5% in HPV+ tumors
combination
▪ 2 years safety/efficacy ▪ Positive read-out in MS
trials started
▪ Significant T1 Gd+ lesions Decision on Ph III design (MS)
reduction versus placebo to follow in Q2 2019
TGF-ß trap/ ▪ Clinically relevant decrease
Anti-PD-L1 (ph Ib) in ARR
Ph II head-to- Avelumab RCC 1L (ph III)
▪ NSCLC 2L: ORR 71.4% head vs SoC
1
(mPFS / mOS not reached) ▪ Primary endpoint met (PFS) in
(NSCLC 1L) planned interim analysis FDA filing on track
▪ HPV-associated cancers:
ORR 41.7% (HPV+) ▪ mPFS: 13.8 months (indep.)2
▪ ORR: 55% (indep.)2
1 2 3
PD-L1 high; PD-L1 ≥ 1%; Update from ASCO GI; Abbreviations: 2L = second line therapy; PR = partial response; ORR = objective response rate; NSCLC = Non-
small-cell lung carcinoma; (m)PFS = (median) progression-free survival; (m)OS = (median) Overall survival; HPV = human papillomavirus; SoC = standard of care;
MCC = Merkel cell carcinoma; RCC = Renal cell carcinoma; RR = lesion rate ratio; ARR = annualised relapse rate; SCCHN = squamous cell carcinoma of the head
and neck; ESCC = Esophageal squamous cell carcinoma; EAC = Esophageal adenocarcinoma; CRC = Colorectal Cancer
44Oncology Strategy
Strategy anchored on five foundational pillars
1
1. Numerous Erbitux ISTs
Targeted 1. Erbitux: continued leadership in CRC and SCCHN
llllllll incl. combination with Avelumab
Oncology 2. Tepotinib: c-met driven cancers 2. Tepotinib in NSCLC, HCC
1. Monotherapy as a basis for combinations 1. NSCLC 1L (high intensity)
2
2. Establish immunogenic priming in combination or sequence with CT/RT1 2. Maintenance in UC 1L, gastric 1L
Avelumab 3. Avelumab + Inlyta (RCC 1L)
3. Novel combinations
4. Establish value of unique molecular characteristics (ADCC) 4. Unique combinations leveraging ADCC
3
• TGF-beta trap/anti-PD-L1
IO bi- Engineer or access platforms where biology is best addressed
llllllll • Anti-LAG-3/anti-PD-L1
functionals by a bi-functional approach
• NHS-IL 12
DNA Damage • DNA-PK-i
4
Establish leadership in DDR and leverage synergies across portfolio
Response (immuno-oncology plus emerging platforms)
• ATR-i
inhibitors • ATM-i
5
Emerging • Antibody-Drug-Conjugates (ADC,
Invest in complementary technologies within focus discovery areas
Platforms e.g. partnership with Mersana/Sutro)
Acronyms: CT: Chemotherapy | RT: Radiotherapy | ATM: ataxia-telangiectasia mutated |ATR: ataxia telangiectasia and Rad3 | DNA-PK: DNA-dependent protein kinase |
45 RCC: Renal Cell Carcinoma | MCC: Merkel Cell Carcinoma | NSCLC: non-small cell lung cancer | DLBCL: Diffuse Large B-cell Lymphoma | UC: Urothelial Cancer1 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Tepotinib: Highly selective c-met inhibitor
Currently no approved therapy targeting METex14 and/or c-met amplification
Oncogenic drivers in lung adenocarcinoma1 Selectivity Profile2
• MET-mutations are clinically unique molecular subtypes of • ATP competitive, reversible small molecule c-Met
NSCLC inhibitor3
• MET exon 14 alteration confer oncogene addiction in ~3-4 % • Highly selective according to preclinical benchmarking2
of NSCLC In panel of >240 kinases, only c-Met inhibited at 1 µM
• No approved therapy specifically targeting METex14 and/or >90% inhibition of phospho-c-Met levels (tumor biopsy)
c-Met amplification
1 Cancer Genome Atlas Nature 2014;511:543-50; 2 Merck KGaA, Darmstadt, Germany data on file; 3 Bladt et al, 2013
461 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Tepotinib: Program overview
Development focus on biomarker enriched patient populations
2017 2018 2019 2020 Est. primary completion1
• Clinical activity demonstrated (interim)
NSCLC MET Exon 14 Skipping Alterations June + follow-up2
• Planned enrollment: 120 (est.) – liquid and
N tissue
S LBx MET Amp. • Pr. endpoint: Confirmed ORR (Independent)
C
• Enrollment: 70 (act.)
L
NSCLC 2L EGFRm Dec 2017 (results • Comparator: Pemetrexed + Cisplatin/
C (with Gefitinib) presented at ESMO 2018) Carboplatin
• Pr. endpoint: PFS (Investigator)
… …
• Primary endpoint met
HCC 1L Oct • Enrollment: 90 (act.)
H • Pr. endpoint: TTP (Independent)
C
• Primary endpoint met
C
• Enrollment: 49 (act.; failed sorafenib)
HCC 2L Feb
• Pr. endpoint: PFS status 12 weeks
(Investigator)
1Timelines are event-driven and may be sbject to change; 2 Confirmed ORR expected approx. in June 2019, subsequent durability of response/follow-up period pending
47 outcome of discussions with health authorities1 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Tepotinib: Interim Phase II results
Encouraging signs of activity in patients with advanced NSCLC harboring
METexon14-skipping mutations
VISION Interim results presented at the
Study Design1 World Conference on Lung Cancer (WCLC) 20181,2
• Encouraging signs of activity
• Patient population:
• ORR to date based on independent review (35.0%) and investigator
Patients with advanced/metastatic NSCLC
assessment (57.5% incl. two CR)
(all histologies) that are METexon 14-
skipping mutation-positive • Median duration of response based on investigator assessment is
14.3 months (95% CI: 3.7, nd)
46 patients treated
• Safety: well tolerated, most common side effects were peripheral edema and
Based in EU, US and Japan
diarrhea
1L, 2L and 3L treatment
Tepotinib 500 mg2 Investigator Independent
• Treatment: Tepotinib 500mg QD Complete response 2 (5.0) 0 (0)
• Primary endpoint: ORR (IRC) Partial response 21 (52.5) 14 (35.0)
• Secondary endpoints: ORR (investigator Stable disease 6 (15.0) 11 (27.5)
assessed), safety, duration of response, Progressive disease 5 (12.5) 8 (20.0)
progression-free survival and overall survival Non-evaluable 6 (15.0) 7 (17.5)
ORR n (%) 23 (57.5) 14 (35.0)
DCR: n (%) 29 (72.5) 25 (62.5)
1Felip E et al., ”Phase II Data for the MET Inhibitor Tepotinib in Patients with Advanced NSCLC and METexon14-Skipping Mutations”, presented at WCLC 2018; 2 Combined
analysis (n=40); efficacy analysis includes patients having at least 2 post-baseline assessments or who discontinued treatment for any reason (n=40)
481 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Avelumab: Program overview
Ongoing studies – Six Phase III trials, more than 15 tumor types
2018 2019 2020 2021 2022 Est. primary completion1
Leverage potential of unique
1 NSCLC 1L (mono/high-intensity) Oct
molecular characteristics
(ADCC)
Gastric 1L (SW-MN) Nov
Establish potential of
2 Urothelial 1L (SW-MN)2
immunogenic priming
(incl. combination and
sequencing with CT/CRT)
Locally Advanced Head & Neck Cancer (CRT) Apr
Renal Cell Cancer 1L (+Inlyta/TKi) Q1
Proprietary
3 combinations
Ovarian Cancer 1L (+PARP/Talazoparib) Q1
1Estimated primary completion date according to Clinicaltrials.gov as of October 26, 2018; timelines are event-driven and may be subject to change; 2 Estimated primary
49 completion date being reprojected; Acronyms: NSCLC: Non Small Cell Lung Cancer, CT: Chemotherapy, CRT: Chemoradiotherapy, MN: Maintenance; SW: Switch1 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Avelumab: NSCLC 1L
Assessing potential efficacy upside in mono-therapy1
NSCLC 2L+: exposure NSCLC 1L: testing hypothesis of higher efficacy/intensity
response correlation
• Hypothesis: higher drug intensity may result in greater efficacy
(potentially driven by ADCC)
• Potential association between higher ORR and higher avelumab
exposure
• ORR highest in patients with both higher avelumab exposure and
tumors with higher levels of PD-L1 expression
PD-L1+ • NSCLC 1L phase III trial amended to leverage high-intensity
hypothesis (est. primary completion Jul 2019)
1Abstract No. 9086. Presented at the 53rd ASCO Annual Meeting; June 2-6, 2017; Chicago, IL, USA: Exposure–response and PD-L1 expression analysis of second-line
50 avelumab in patients with advanced NSCLC: data from the JAVELIN Solid Tumor trial | Acronyms: ORR: Overall Response Rate1 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Avelumab: Renal Cell Carcinoma 1L
Alliance will pursue US regulatory submission following positive
Interim Analysis (PFS)
Interim Analysis1 results
Study Design1
presented at ESMO 2018
• Study: PhIII JAVELIN Renal 101 Primary endpoints (PFS and OS in patients with PD-L1+ tumors):
• mPFS Avelumab + Axitinib: 13.8 months
• Patient population: 886 patients with • mPFS Sunitinib: 7.2 months
advanced RCC across all risk groups, 63%
PD-L1+ Key secondary endpoints (PFS and OS in overall population):
• Comparator: BAVENCIO (avelumab) + • mPFS Avelumab + Axitinib: 13.8 months
INLYTA (axitinib) vs SUTENT (sunitinib) as • mPFS Sunitinib: 8.4 months
1L therapy
Confirmed Objective Response Rate:
• Breakthrough Therapy Designation • ORR Avelumab + Axitinib: 55.2%
granted by the FDA in December 2017 • ORR Sunitinib: 25.5%
Safety profile: favourable safety profile
• Alliance plans to pursue a regulatory submission in the US
Next steps and discussions with other health authorities
• Renal 101 will continue as planned to the final analysis (OS)
1Motzer et al., „JAVELIN Renal 101: Randomized Phase 3 Trial of Avelumab + Axitinib vs Sunitinib as First-Line Treatment of Advanced Renal Cell Carcinoma“, presented
51 at ESMO 2018; Avelumab plus axitinib significantly improve progression-free survival in untreated renal cell carcinoma [ESMO 2018 Press Release], published on 21
October 2018 at https://www.esmo.org/Press-Office/Press-Releases/Javelin101-renal-cancer-immunotherapy-Motzer1 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Anti-PD-L1/TGF-ß trap (M7824)
The first Phase II trial, evaluating M7824 monotherapy vs. pembrolizumab,
was started in October 2018
Mode of Action Study Results & Next Steps
• Manageable safety profile1
• Saturated peripheral PD-L1 and sequestered all released plasma TGF-β1, -β2,
and -β31
• Great potential when combined with Standard of Care, immunotherapy and
internal pipeline drug candidates
• Status Quo & Next Steps:
Dose level finding of Phase I completed
Tested in 14 Phase Ib expansion cohorts across >700 patients
PhII study M7824 monotherapy versus pembrolizumab 1L, advanced
NSCLC high PD-L1-tumor expressers started in October 2018
Additional studies to be started in the course of 2019
• Innovative first-in-class bifunctional fusion
protein designed to simultaneously target • Criteria allowing timely decisions:
two immune suppressive pathways (blocking 1. Expand cohort and/or explore single-arm path-to-registration
PD-L1 and reducing TGF-β signaling)
2. Expand cohorts to confirm signal and/or follow with randomized
• Bifunctional mode should result in broader comparative trial
application vs. respective mono-functional
3. Explore biomarker driven pan-tumor opportunities
agents
4. De-prioritize cohort
1 As presented by J. L. Gulley at ASCO Annual Meeting 2017, June 5, 2017.
521 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Anti-PD-L1/TGF-ß trap (M7824): Focus areas NSCLC & BTC
Updated data presented at ESMO 2018 defined next steps
NSCLC 2L Biliary Tract Cancer (BTC)
• Need: NSCLC accounts for 80-85% of all cases of lung cancer1 • Need: Few available treatment options (no 2L standard of care)4
• Results: Encouraging efficacy comparing favorably to • Results: Encouraging activity5 in 30 Asian patients with
established PDx-inhibitor monotherapy (IRC)2,3: pretreated biliary tract cancer
ORR (all-comers): 27.0% • ORR5: 20% (IRC assessment). Median DoR was NR (range, 8.3–
13.9 months) with confirmed responses ongoing in all patients
ORR (PD-L1-positive): 37.0%
• Overall Survival by IRC:
ORR (PD-L1-high): 85.7%
mOS: 12.7 months (6.7 – NR), comparing favorably with
• Progression free survival by IRC (PD-L1 ≥ 1%): historical data in pretreated patients receiving second- or later
line treatment (1 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
Anti-PD-L1/TGF-ß trap (M7824): Phase Ib results (HPV cohort at NCI)
HPV-assoc. cancers as potential pan-tumor therapy –
prospective study ongoing at NCI
Patients with HPV-assoc. cancers BOR as confirmed by independent radiologist1
• Analyses of HPV+ cervical/SCCHN tumor samples
from TCGA/Oncomine show frequent dysregulation
of TGF-βR1 signaling – suggesting this pathway
plays a role in HPV-mediated carcinogenesis
• HPV associated with almost all anal and cervical
cancer, and some SCCHN2-4
• Retrospective subgroup analysis incl. 17 patients
with HPV-associated cancers1:
Activity in all three tumor types
N=17 N-12
BOR, n (%)
(all HPV associated tumors) (all HPV-positive)
Confirmed ORR = 41.7% (HPV+)1
ORR 6 (35.3)10 5 (41.7)10
Clinical activity of anti-PD-1 monotherapies in CR 2 (11.8)9 1 (8.3)
range of 17–26%5-8 PR 4 (23.5)10 4 (33.3)10
SD 4 (23.5) 1 (8.3)
• Phase II study by NCI specifically accruing PD 7 (41.2) 6 (50.0)
patients with HPV-associated malignancies DCR 10 (58.8)10 7 (50.0)10
1J.L. Gulley et al, ASCO, Jun 2018 (presentation); 2 De Vuyst et al. Int J Cancer. 2009;124:1626–36; 3 Ihloff et al. Oral Oncol. 2010;46:705–11; 4 Mehanna et al. Head
Neck. 2013;35:747–55; 5 Bauml et al. J Clin Oncol. 2015;33 (suppl; abstr TPS3094); 6 Ferris et al. N Engl J Med. 2016;375(19):1856; 7 Frenel et al. J Clin Oncol.
2017;35(36):4035; 8 Ott et al. Ann Oncol. 2017;28(5):1036; 9 1 patient had a confirmed BOR or PR and an unconfirmed BOR of CR; 10 1 PR did not meet the RECIST criteria
541 2 3 4
Targeted IO bi-
Avelumab functionals DDR
Oncology
DNA damage response (DDR)
Complete portfolio supporting leadership in a potentially disruptive class
Genomic instability: a hallmark of late stage cancers1
• DNA damage response (DDR) keeps genetic information intact
• In many cancers DDR pathways are defected, leading to greater dependency on
remaining functional DDR pathways
• Preferentially inhibiting remaining DDR pathways can result in cancer cell death
(“synthetic lethality”)
Amplifying cytotoxic effects of conventional and novel
cancer treatments potentially bears combination potential
cancer treatments potentially bears combination potential
1. Inhibitor portfolio targets all three leading pathways of double stranded breaks –
enabling unique synergies
2. ASCO 2017: leading DNA-PK-I (M3814) found safe and tolerable in a phase I
study, with limited single-agent activity
(20% of patients with stable disease for at least 18 weeks)2
1 Sources: O’Connor, Molecular Cell, 2015 | Benjamin et al., Current Drug Targets, 2010, 11, 1336-1340; 2 “A multicenter phase I trial of the DNA-dependent protein
kinase (DNA-PK) inhibitor M3814 in patients with solid tumors”, Mark van Bussel, ASCO 2017; Acronyms: ATM: ataxia-telangiectasia mutated |ATR: ataxia telangiectasia
and Rad3 | DNA-PK: DNA-dependent protein kinase |
5556 1
Targeted
2 3
IO bi-
4
Avelumab functionals DDR
Oncology
DNA damage response (DDR)
4
Broad combination potential across multiple mechanisms
At least 50% of all cancer patients
receive some type of RADIATION
therapy (NCI 2016) Combination
with CT
At least 70% of all cancer patients receive some Combination Combination
type of CHEMOTHERAPY (NCI 2016) with RT with ADC
DNA-
PK
ATM ATR
Significant share of patients to be
treated with CHECKPOINT
INHIBITORS Monotherapy Combination
with DDR
Combination
with IO
5657 1
Targeted
2 3
IO bi-
4
Avelumab functionals DDR
Oncology
DNA damage response (DDR)
Clinical program targets three major DDR pathways,
in mono- and combination (incl. Avelumab) Estimated primary completion1
2017 2018 2020
2017 2018 2019 2020
Sep Phase I expansion cohorts ongoing in
M6620
combination with CT (TNBC, NSCLC, SCLC)
Sep Phase I dose escalation ongoing for mono-
ATR-i M4344
and combination therapy (with CT)
Phase II study initiated (+Avelumab +
M6620 + Avelumab Nov Carboplatin), PARPi-resistant ovarian cancer
Phase I dose escalation completed in Q4 17
M9831 Oct
in combination with CT, MTD not reached
DNA- One study completed (mono), one study
PK-i M3814 Jul
ongoing (Phase I, combination with RT/ CRT)
Phase I dose escalation initiated (+Avelumab
M3814 + Avelumab Oct with/without palliative RT), advanced solid
tumors
ATM-i Phase I dose escalation ongoing in
ATM-i M3541 Jul
combination with RT
1 Estimated primary completion date acccording to Clinicaltrials.gov as of October 26, 2018; Acronyms: ATM: ataxia-telangiectasia mutated | ATR: ataxia telangiectasia and
57 Rad3 | DNA-PK: DNA-dependent protein kinase | CT: Chemotherapy | RT: Radiotherapy | CRT: chemoradiotherapy | NSCLC: non-small cell lung cancer | SCLC: small cell
lung cancer | TNBC: triple negative breast cancer | MTD: Maximum Tolerated Dose; Note: timelines are event-driven and may changeImmunology
Immunology
Strategy is anchored on leadership in selected disease areas
Sustain Build additional
New frontiers
leadership AI pillars
Lupus • OA disease modification
MS Leadership AI
Indications • SSc-ILD Fibrosis
Core Focus Indications
Rebif: A pioneer
Marketed /
Filed assets Mavenclad: A new
treatment paradigm
Atacicept Sprifermin
Clinical BTK-i Abituzumab
pipeline
IL-17
Pre-clinical Strong Discovery Engine
pipeline
58Immunology
Immunology
Mavenclad could change the MS treatment paradigm
…followed by
Selective reconstitution
Unique
immune posology:
reconstitution max. 20 days
therapy of oral
(SIRT)1 Selective reduction treatment3
in B & T lymphocytes…
100 Proportion of Patients
Qualifying Relapse Free (%)2
80
4 years 77.8 75.6
60
disease Low
control with 40 monitoring
treatment over requirements4
20
2 years2 n=98 n=98
0
CLARITY CLARITY EXT
Cladribine Tablets Cladribine Tablets
3.5mg/kg | Years 1 & 2 3.5mg/kg | Years 1 & 2
Placebo | Years 3 & 4
1Giovannoni G. Neurotherapeutics 2017; Nov 22 [Epub ahead of print] | Wiendl H et al. Neurology 2017;89:1098‒100 | Weindl H. Nat Rev Neurol 2017; Sept 8 [Epub ahead of print]
2Giovannoni G et al. N Engl J Med 2010;362:416–26 | Giovannoni G et al. Mult Scler Aug 1 [Epub ahead of print] 3 Maximum of 20 days of oral dosing over 2 years with no further treatment required in the
next 2 years. For important safety information, refer to the abbreviated Prescribing Information | Oral, weight-based dosing. For an average patient weighing 67 kg. Recommended treatment over 2 years.
One treatment course per year, followed by observation for another 2 years. Each treatment course consists of two treatment weeks, one at the beginning of the first month and one at the beginning of the
second month of the respective year | MAVENCLAD ® EU SmPC, September 2017 | Giovannoni G et al. N Engl J Med 2010;362:416–26 4 MAVENCLAD® EU SmPC September 2017 | Screening must be
performed prior to initiation of therapy in Year 1 and Year 2. Vaccination of antibody-negative patients is recommended prior to initiation of Cladribine Tablets. AE, adverse event; HBV, hepatitis B virus; HCV,
hepatitis C virus; MRI, magnetic resonance imaging; NEDA, no evidence of disease activity; TB, tuberculosis
59Immunology
Immunology
1
Mavenclad®ꞌs attractive label in Europe supports integrated franchise
strategy
Mavenclad® label covers
2 Our overall NDD franchise
60-70% of patients with RRMS Integrated franchise
1 will cover a broad
within the MS patient population strategy
MS patient pool
in Europe
3 4
MS patient population RRMS patients, EU-5
Disease Disease
activity Mavenclad® label activity
• At patient level: Rebif ®
and Mavenclad® are
high high
highly complementary
• At physician level:
High overlap
• Franchise infrastructure
investment benefits both
low low brands
Therapy Therapy
Initiation Escalation Reserve Initiation Escalation Reserve
Prioritized for Prioritized for
Not covered by label
Mavenclad® Rebif®
1 2
Mavenclad® label covers: RRMS+rSPMS+rPPMS; Abbreviations: RRMS = relapsing-remitting multiple sclerosis, MS = multiple sclerosis, rSPMS = replapsing secondary
3 4
progressive MS, rPPMS = relapsing primary progressive multiple sclerosis; Source: Merck KGaA, Darmstadt, Germany; Source: Merck KGaA, Darmstadt, Germany,
Ipsos; As of September 2018, Mavenclad was reimbursed in 22 countries globally
60Immunology
Evobrutinib
Highly selective BTK-i to be explored as chronic therapy
Safety: Promising kinase selectivity Efficacy: Oral, highly efficacious in
minimizing off-target effects1 pre-clinical models1
• Evobrutinib (irreversible antagonist) inhibiting signal
transduction until protein is naturally degraded (no B-cell
depletion)
• Occupancy/efficacy correlation: average BTK occupancy
of >80% correlated with near complete inhibition of
disease activity1
• Clinical benefit of
addressing B cell biology
• Greater selectivity vs. in-class competitors in kinase demonstrated by anti-CD20
Illustrative
screen (>270 kinases) targeting agents
• Besides BTK, two more kinases inhibited (vs. 25 off- • Insights from phase IIa
target kinases by others) trial (RA) leveraged in
broad clinical development
• Kinase selectivity may result in lower AE rate vs. program (three phase IIb
existing treatments trials in MS, SLE, and RA)
1 “Pharmacodynamic Modelling of BTK Occupancy versus Efficacy in RA and SLE Models Using the Novel Specific BTK Inhibitor M2951” Abstract #4342; EULAR 2016
61Immunology
Evobrutinib
First BTKi demonstrating clinical proof-of-concept in relapsing multiple
sclerosis (RMS)1
Study Outcome presented at ECTRIMS 2018:
Study Design
Significant reduction of T1 Gd+ lesions vs placebo
• Design: Randomized, double-blind, Primary endpoint (T1 Gd+ lesions, wks 12-24, endpoint met):
placebo-controlled study in patients with • T1 Gd+ lesion rate ratio vs placebo:
RMS Evobrutinib 25 mg QD: 1.45
Evobrutinib 75 mg QD: 0.30
• Patient population: 267 patients Evobrutinib 75 mg BID: 0.44
• 5 arms: placebo vs. 3 drugs-arms (low,
mid, high dose2) incl. open-label reference Key secondary endpoint (ARR, wk 24, clinically relevant decrease):
arm (dimethyl fumarate, 240 mg BID) • Annualized Relapse Rate (ARR):
Placebo: 0.37
• Gadolinium enhancing T1 (T1 Gd+) lesions Dimethyl fumarate: 0.203
measured at weeks 12, 16, 20 and 24 in Evobrutinib 25 mg QD: 0.57
comparison to patients receiving placebo Evobrutinib 75mg QD: 0.13
Evobrutinib 75mg BID: 0.08
Safety:
• Well tolerated, no treatment associated
infections, infestations or
48 wks data, informing
lymphopenia observed Next Ph III trial design, to be
• Elevated ALT, AST and lipase levels steps presented at an upcoming
observed were reversible and
medical congress in 2019
patients were asymptomatic
1Motalban et al., “Primary Analysis of a Randomised, Placebo-Controlled, Phase II Study of the Bruton’s Tyrosine Kinase Inhibitor Evobrutinib (M2951) in Patients
62 2
with Relapsing Multiple Sclerosis”, presented at ECTRIMS 2018; evobrutinib 25 mg QD, 75mg QD and 75mg BID; 3 One patient considered an outlier, when
accounted for the performance of dimethyl fumarate was in line with previous studiesImmunology
Evobrutinib
Comprehensive development plan across immune-mediated diseases
Comprehensive phase I/IIa Robust phase II program to Est. primary
safety data-set enable differentiated phase III completion
• Randomized, double-blind, placebo-controlled
study in patients with RMS 48 wks data
RMS
• 267 patients presentation and
Safety decision on PhIII
SLE (Ib)
• 5 arms study: placebo vs. 3 drugs-arms (low,
• 24 patients mid, high dose) incl. active control trial design
• Double-blind, Randomized, Placebo- (Dimethyl fumarate) expected in
controlled Study Q2 2019
• Randomized, double-blind, placebo-controlled
dose-ranging study in subjects with SLE
SLE
• 451 patients
SLE Q4 2019
• 4 arms study: placebo vs. 3 drugs-arms (low,
Signal Finding mid, high dose)
RA (IIa)
• 65 patients
• Randomized, double-blind, placebo-
controlled trial in subjects with RA on • Randomized, double-blind, placebo-controlled
stable Methotrexate therapy RA dose-ranging study in subjects with RA
• 360 patients
Q2 20191
• 4 arms study: placebo vs. 3 drugs-arms (low,
mid, high dose)
1Data presentation not expected until Q3 2019.
63 All timelines are event-driven and may be subject to change.You can also read
