Merck & Co Inc. (NYSE:MRK) November 10, 2011 8:30 AM ET
Michael E. Kamarck - Member of Management Committee, Member of Law/Regulatory Review Committee, Member of Operations Committee and President of Technical Operations & Product Supply
Peter S. Kim - Executive Vice President and President of Merck Research Laboratories
Michael Mendelsohn -
Roger Pomerantz -
Kenneth C. Frazier - Chief Executive Officer, President, Director and President of Global Human Health
Unknown Executive -
Darryle Schoepp - Senior Vice President and Director of Neuroscience Drugs
Nancy Thornberry -
Adam H. Schechter - Executive Vice President and President of Global Human Health
Alex Kelly - IR
Steve Scala - Cowen and Company, LLC, Research Division
Charles Anthony Butler - Barclays Capital, Research Division
Gregory B. Gilbert - BofA Merrill Lynch, Research Division
Tim Anderson - Sanford C. Bernstein & Co., LLC., Research Division
Seamus Fernandez - Leerink Swann LLC, Research Division
Jami Rubin - Goldman Sachs Group Inc., Research Division
Christopher Schott - JP Morgan Chase & Co, Research Division
John T. Boris - Citigroup Inc, Research Division
Barbara A. Ryan - Deutsche Bank AG, Research Division
Unknown Analyst -
Good morning, everyone, and welcome to Merck, and welcome to our R&D and business briefing. This morning, we have a full lineup of speakers for you. We have some good content that everybody's been working hard to prepare for you. So thank you for joining. Also, for those on the web, thank you for joining us. We will get started just a moment.
But before we do, I wanted to take a moment to introduce some of the management team at Merck who has joined us today.
So if I can start on the left side of the room. Frank Clyburn, if you can stand. So Frank is Head of our Primary Care and Women's Health Global business line. Joe Romanelli, who you know -- who is now working in Global Human Health business, supporting Adam Schechter. Mark Timney. Mark Timney leads the U.S. organization for Global Human Health. Mike Nelley, [ph] who you know. Mike, at the moment, supports Ken Frazier as a Chief of Staff role and he's soon to be taking a new role where he'll be heading our country operations in Sweden. So congratulations, Mike. Chris Scalet. Chris runs our IT group, our facilities and a lot of the other internal functions inside the company. Rick Bowles, who leads our compliance organization. Mirian Graddick-Weir, who leads our HR organization. Rick DeLuca is a new member of the management team. Rick has just joined recently to head the Animal Health business. Mike Rosenblatt, who is our Chief Medical Officer. Next, Willie Deese. Willie leads our Global Merck Manufacturing division. Bruce Kuhlik, who is the Head of Legal and Global Communications group. Adele Ambrose, who is the Head of Global Communications. Tom Hall, who works in our Strategy group. And Luciano Rossetti, who works in R&D's Scientific Strategy. And then Julie Gerberding, who leads our Vaccines division is here with us. And finally, Carol Ferguson, who you know on the Investor Relations team.
So with that said, let me remind you that some of the comments we make today might be considered forward-looking comments and statements, and as a result, you should know that some of those statements may turn out to not be true with the passage of time. We make our best efforts to make them factual, but there are certain risk factors that we identify in our SEC filings that could cause our actual results to differ materially from any forward-looking statements we'd make today. We also refer you to our website for those SEC filings. It will give you that information. And then also you can see on the web we have our materials from our third quarter earnings call, including financials, that we may refer to during today's presentation.
So with that said, I'd like to get started. And our first speaker is Ken Frazier, who is our CEO and President and soon-to-be Chairman of the Board.
Kenneth C. Frazier
Thank you, Alex, and thanks, everyone, and good morning. We appreciate you joining us here this morning. And I am, along with my colleagues, honored to have the opportunity to spend some time with you this morning talking about our future. I'm also honored to be the new CEO of Merck. Merck is an exceptional company that, over the years, has done a great deal for so many people all around the world. But along with that great honor comes a very sobering responsibility, and that is the responsibility to ensure that we position this company in such a way as to be a sustainable enterprise that can continue to create value for customers, for patients and shareholders over the long term, and that is what I concentrate on when I come to work every day.
So we're delighted today to have an opportunity to host you at the second anniversary of our merger with Schering-Plough. We believe it's been a very successful union despite a few challenges along the way, and we'd like to help you understand today sort of how we intend to move forward as a unified company creating value.
So the first thing I want you to know is that we've spent some time thinking about transforming our company. We'll talk about what we mean by transforming Merck. But let me also tell you at the core, that we are committed, as committed as we've ever been as a company to scientific excellence and to innovation.
When I say we're committed to science, I mean that we're committed to it today and that we'll be committed to it tomorrow and we'll be committed to it for as long as I have anything to say about it.
We also have an exciting pipeline with a number of potential catalysts in 2012 and 2013, and Peter Kim will be talking about that later. As a company, I want you to know as a management team, we remain confident in our future. But while we're confident in our long-term future, we also recognize that we can't ask you, our investors, to wait for us to achieve all of our long-term aspirations without getting a reasonable return on your investment in the short term. So while we're confident in our long-term future, I want you to know that we intend to perform in the short term, and I hope that you will agree that in the year 2011, we have been performing.
The third point, as I mentioned earlier, is I think the merger has gone extremely well. Inside the company, it feels like we have been one company now for a long time. We're operating as one company. There's still some things that we have to do around systems and our network strategy, but even those things we're working on as we continue to fulfill our obligations under the integration.
The fourth thing I want to talk to you about today is how we're executing on a 4-part strategy that aims to deliver superior shareholder value over the long term.
I want you to know the fact is as Merck's new CEO, I am not satisfied with our current underlying valuation. But at the same time, I'm committed to ensuring that we build upon and restore the historic strengths that have made Merck successful over the long term. By design, my management team and the Board of Directors have spent a fair amount of time trying to objectively look at what it is that we do well as a company and what it is that we could do better. And we know that when it comes to some of the fundamentals, we have to find new and better ways of getting the job done.
So the marketplace is demanding more of us and you, our investors, expect more of us, and I want you to know that I appreciate that. But at the same time, again, given the long lead times that are inherent in this business, we have to think about how to build on our strengths for the long term to have competitive advantage and success as a company. At the same time, in the near term, the bottom line is we want to maximize cash flow. So we can invest in our business for that long-term growth, but also, so that we can have a sustainable enterprise that can continue to contribute to global health care over the long term.
At the same time, I want you to know that we're also committed to returning a significant amount of cash to you and value to you in the short term.
So now let's look at our plan for growth. Despite an early setback here in the year 2011, we laid out a challenging and ambitious plan to accelerate our business momentum. We said back in February when we first talked to you that 2011 would be a year that was all about execution. And we believe we're executing this year. Through September, we have delivered 5% top line growth, higher than expectations coming into the year, increasing sales by nearly $2 billion. In order to drive those top line investments, we said we would make strategic investments behind launches and the emerging markets. And thus far, we've invested more than $500 million in those key growth geographies and key growth drivers in our portfolio. And despite those targeted selective investments in 2011, we have still achieved net synergies of $2.8 billion since the merger.
In July, we announced a new wave of cost reductions to further drive efficiency inside our company. We said back in February that we would grow the bottom line faster than the top line. And so far this year, we've grown non-GAAP EPS by 10%.
We also said that we would advance the pipeline. And this year, we've been making what we believe are the right investments while also moving products to our late-stage pipeline. This year, we received approval to sell 5 new medicines including VICTRELIS, the first-in-class protease inhibitor for hepatitis C, and JUVISYNC, the first ever approved combination product for type 2 diabetes and cholesterol control.
Now we know that we need to do a lot more in terms of return on investment and R&D, and Peter Kim will share with you some of the significant steps that we're doing inside the company or taking inside the company to do just that.
Now looking ahead to 2012, I also want you to know that we're excited about our prospects next year. Right now, we're in the middle of developing our annual plans and our long-term operating plans. We will provide you our guidance for next year on our February call where we report our fourth quarter earnings.
But I'd like to tell you a little bit about how you might be thinking about 2012 given where we're aiming to be in 2012. First of all, we all know that 2012 will be a challenging year with certain known headwinds including the SINGULAIR patent expiry in August. Notwithstanding those challenges, we are setting high expectations for ourselves as a company next year. We intend to advance and augment our pipeline. We intend to deliver again strong operational performance next year. That means, for us, maintaining revenues at or near 2011 levels despite the SINGULAIR patent expiry. It also means that we have to continue reducing costs in the right way in order to deliver a leveraged P&L. In other words, we're talking about a company with a similar profile to the one we described in February 2011 when we said what we aspire to be like for investors over the long term.
Let me put that differently. We are not talking about a trough here. Next year, we intend to make the investments that will allow us to succeed in 2012 and beyond, and we're confident in our ability to do that. Now, we also understand that just setting goals for sales and EPS is not enough. So we're taking concrete steps to deliver profitable sales growth to generate an improved return on everything we do and even more cash flow tomorrow.
Now with respect to cash flow, we plan to remain shareholder-friendly with the added cash flow, and I'll talk more about that specifically in a moment.
Now if you allow me, I'd like to run through today's agenda. I will cover our strategy, our investment approach and our priorities for capital allocation. Next, Peter Kim will talk about some of the key drivers in our pipeline, but he will also talk about the efforts that are under way in Merck research laboratories to drive sustainably positive return on investment going forward. Then Peter will introduce 5 scientific colleagues who will help you understand how we plan to differentiate various parts of our pipeline when it comes to innovating. Finally, Adam Schechter will tell you about how we're trying to drive more revenue and more value in our human health business and our strategy for developed markets, as well as our strategy for emerging markets.
Let me reiterate that at Merck, the heart of what we do, you might say, who we are, is a company that translates cutting-edge science into medically important products, medicines and vaccines that have saved and improved and extended lives all over the world.
Now at the same time we know the substantial changes in the external world and that we have to adapt and transform Merck to ensure our future success. But the thing that will not change is our commitment to innovation. We believe innovation remains the single biggest driver of value for customers, for patients and for shareholders. That's what leads us to our 4-part strategy.
The first part of our strategy is to optimize our core human health business. The second part of our strategy is to expand in key growth markets all around the world. The third part of our strategy is to extend opportunities in our complementary and synergistic businesses of Animal Health and Consumer Care. And the fourth part is to excel in managing costs so that we can reinvest in growth while providing a good return to our shareholders. That 4-part strategy, if executed well, we believe will lead to increased shareholder return. So now let me start with what we're doing to optimize our core business.
As I've said before, this is basically all about execution, that means maximizing the growth of our in-line products, capitalizing on our late-stage pipeline by successfully launching new drugs, driving stronger return on investment across our entire R&D portfolio, including external innovations and partnerships that will help us either maintain or build leadership positions in the key therapeutic areas where we choose to compete.
Speaking of optimizing our core business, let's look at the innovation spectrum. For the past decade, at Merck, innovation has typically meant discovering and developing first-in-class medicine. We have a strong track record in discovering and developing first-in-class medicines and I think most people would agree that it's historically been a strength of Merck with compounds like JANUVIA, ISENTRESS and GARDASIL.
Now without losing our interest and desire around doing path-breaking research, we're broadening our thinking on scientific innovation to also include striking a balance between first-in-class molecules and molecules that can be considered best-in-class, that is to say molecules that the marketplace would differentiate favorably.
Looking across this entire spectrum, it is also important for us to get the maximum value out of every discovery that comes out of our research labs, and that implies more effective efforts around life cycle management than has historically been the case at Merck. I would say that JANUVIA and REMICADE are both good examples of effective life cycle management.
We also see a lot of value in the biosimilars space. Biosimilars are innovation-oriented, and we believe that few companies will have all the skill sets that are necessary to compete across the portfolio of biosimilars. Merck wants to be and intends to be one of those companies that can do that.
There's also a role for innovation when it comes to branded generics. That could be new formulations or combinations that meet unmet medical need, and we want to be at the forefront of innovative branded generics, particularly in the emerging markets where those kinds of products matter most.
Next, we will focus on optimizing our launches. We fortunately have multiple ongoing and upcoming launch opportunities. This year, we received approvals for 5 new drugs, and we have filed 8 more new drugs for approval between 2012 and 2013 and Peter Kim will cover that when he stands up here, so we have opportunities.
The next element of our strategy is growing our business in key geographic markets. Now the way we think about this, the best measure for this is looking at what we call evolution index by market. To answer a key question, are we growing faster than the market? Are we growing faster than our competitors? Adam will show you that we are focused on that relative growth in both mature markets and developing markets alike. The good news is that we're growing faster than our competition right now in many markets, including what we call the critical must-win 3 markets of the U.S., Japan and China.
Now let's talk about business development. Another way of optimizing our business is to work with diverse partners to strengthen our presence in these key markets. And this year, we signed more than 30 agreements to do just that. This slide shows you just a few examples of that. For example, Sun Pharma, which will help us provide innovative branded generics in the emerging markets; Simcere, which will expand our reach to doctors and patients in lots of places across China where our own sales force capabilities would not be able to reach without this kind of partnership; BGI enhances our capabilities in genomics, not just in the emerging markets but globally; Parexel and Hanwha will help us expand our portfolio within the biosimilars business; and Roche, which, for us, was an out-of-the-box agreement to help patients and physicians understand the benefits of VICTRELIS, and going forward, to help us collaborate around new therapies in the hepatitis C field.
I'd like to now talk about some of our complementary and synergistic businesses, and I'd like to start first with Consumer Care. We think Consumer Care is a good strategic fit with our Rx business, and it also is a business that has strong underlying market trends. We like the business because it has, among other things, attractive operating margin. And it also has enduring brands that are positioned well in their respective market segments. Having an OTC presence benefits Merck even though we recognize we do not have a business that has the global scale of the market leaders. It enables us, again, to extend the life cycle of our Rx products when it's possible to have an Rx-to-OTC switch.
In many markets, the distinction or delineation between OTC products and Rx products like CLARITIN is actually less than it is in some of the Western markets. And so we use the same channels, we appeal to the same customers. So it's important for us to have that opportunity.
Now with respect to market trends, they are also driving growth in the consumer health business. First of all, people all over the world are feeling more empowered to take care of their health. Secondly, people are also extremely focused on wellness. Next, governments and other payers are shifting costs increasingly for consumers. So all of those trends, we believe, support our Consumer Care business. I'd like to turn to another complementary area, which is Animal Health. Here, Merck Animal Health is a global leader. In the third quarter, as you know, we had 20% growth in this business, and importantly, half of that growth was from new products. We have a portfolio like our human health business that is focused on innovative medicines and vaccines. And we're looking to extend the value of our research discoveries across multiple species. The business has certain features that are common to human health, including, as I just said, the innovation orientation, but it also has attractive profit margins. Again, turning to the broader trends, they also favor this business. The market is expected to grow faster than 5% on an annualized basis between now and 2017.
There's a growing world demand for protein consumption. Well, I have a growing demand for it myself, but there's a growing demand for protein consumption all around the world, especially in the emerging markets, and Merck Animal Health is ideally positioned to capitalize on that development. There's also favorable trends in companion animals. It's a great opportunity and we have a great pipeline when it comes to companion animals. So Merck Animal Health, I think, has a tremendous opportunity given its relatively low market share and its strong pipeline to grow in the companion animal business. And again, underlying this is tremendous global growth. There's been a doubling in the last 10 years of pet ownership as well as veterinary professionals. So all in all, we see Animal Health and Consumer Health as both complementary and synergistic businesses.
Now I'd like to shift to the fourth aspect of our business, which is managing costs while investing for future growth. Following the merger, we've delivered 80% of the promised synergies. We're ahead of schedule with respect to our basic merger target. As I mentioned earlier, in July, we complemented that with an additional $1.3 billion to $1.5 billion in additional cost reductions. Now make no mistake about it. These kinds of cost reductions require major changes in how we operate this company. It also, I think, gives us greater variability in our cost base. Now as I said before, we intend to redeploy some of those savings to drive growth and productivity and profitability in our underlying business where that return, we believe, is justified.
Our goal was to be a stronger company with better long-term growth prospects as well as increased near-term profitability. Our strategy is aimed at generating substantial cash on a sustainable basis. So given that, let me talk a little bit about our priorities for capital allocation.
So obviously, the first priority for any company is to operate the business, to make the necessary capital investments and other investments that we need to keep our business going. To meet our obligations now and in the future, it's important for us to maintain a strong balance sheet that gives us the flexibility and the ability to make the kinds of investments that you need to do in a long lead time business. The second thing is we need to invest in growth opportunities where we have value-creating business development opportunities, be those licenses or targeted acquisitions that will help us, again, augment our pipeline and either build or maintain leadership in key therapeutic areas.
After we do those things, that is to say, operate the business for the long term and invest in business development, we want to continue to return cash to shareholders through our dividend and share repurchase program. I want to give you a sense of the opportunities that we have to enhance our current business. As I said, we're actively pursuing new products to bolster our portfolio and therapeutic areas where Merck either already leads or we're targeting for future leadership. We want to have value-creating partnerships that drive our business and enhance our portfolio in the emerging markets. They help us expand our capabilities, those kinds of partnerships, with the kind of local knowledge that makes a real difference in those markets. As I mentioned before, we will look for value-creating opportunities, and I stress value-creating opportunities, if they are available to us in Animal Health and Consumer Health.
Now let me talk about buying back shares. We said our priority for capital allocation is returning cash to shareholders after funding growth opportunities. In 2010 and 2011, as this chart shows, we returned $12.5 billion to our shareholders via dividends and share repurchases. $4.7 billion of that remains on a repurchase authorization. So I hope you have a sense on this on that $4.7 billion that remains in our authorization, that we have both the room and ambition for additional share repurchases to create shareholder value.
Next, let me talk about the dividends. I said several times that we have confidence in our business, and we want to demonstrate that confidence in our business plans for driving sustainable profitable growth. We also want to maintain a record of returning high percentage of cash to shareholders, and we're pleased to announce today that our board has authorized an 11% increase in our dividend.
We hope you see that as a concrete example of our focus on shareholder value. The applause could have been a little bit more, but -- it's early.
With that good news, I just want to close my remarks by coming back to where I started, some key points today. First of all, I want you to know that we remain mindful of the major issues and challenges that face Merck and this entire industry. We understand that R&D productivity is a challenge and we're working on that. We understand that even when our products get into those markets, that it's tough now from a pricing austerity standpoint. But at the same time, we're very excited because we believe that the science has actually never given us a better opportunity in drug discovery and development. We also see that there's tremendous unmet medical need out there, and we believe that innovation is still the answer. In fact, we would go so far as to say in a world in which products are rapidly being commoditized, we believe this is the only sustainable answer in the health care field.
Secondly, I want you to know that we realize that the burden is on us to deliver consistently. We've tried to do that in 2011. We will continue to do that in 2012 and beyond. In the short term, we say inside it's all about performance and execution. In the longer term, we say it's all about innovation and execution.
Lastly, we're aiming for sustainable earnings growth based on, first of all, consistent revenue growth. We are focused on top line growth. We made investments in 2011. We said we would make them where we thought we could drive top line growth. We've driven top line growth. We intend to do that going forward.
Next, we're interested in robust pipeline growth, both internally and externally. Beyond that, we intend to have a much more efficient cost structure because it allows us to invest in our business for the long term and it allows us to return value to our shareholders.
Finally, what underlies all of this in this business since it's an intellectual-, capital-oriented business is we have to be able to attract, recruit, retain world-class talent. And while people would say that's sort of the soft side of business, I actually would argue that that's the leading indicator in a science-based business like Merck.
So let me pause and just make one final comment. And that is this, we've talked about innovation a lot. But innovation is a word that can apply in many contexts. This industry and this company are unique because what we do matters so much in the world. The business of Merck affects people's lives in a profound and intimate powerful way. In fact, I daresay that there isn't a single person within the sound of my voice whose life hasn't been impacted by a Merck product, whether it's a medicine or vaccine. We try to keep that in mind as we do our work every day. And my commitment as Merck's CEO is to ensure that we run this company in a way so that we can be producing the same kinds of products that have changed medical practice 20 years from now as we were able to do 20 years in the past. That is really what I think about when I come into my office in the morning. I want you to know that I think about treating the patients 20 years from now and I have to take the steps today to ensure that we run this company so that we are here to sustainably innovate on behalf of those patients 20 years from now.
Lastly, I am confident in Merck's future. And I hope as you listen today's -- to today's presentation that you'll keep that in mind. And I hope when you finish listening to them that you share my confidence about Merck's future.
So thank you for your generous listening this morning. It is now my pleasure to introduce my colleague, Peter Kim, President of the Merck Research Laboratories.
Peter S. Kim
Thank you, Ken. Very good morning to everyone here at Whitehouse Station, as well as to those of you joining us by webcast. It's a pleasure to be with you again. Can we get to my slides, please? It's good to have slide leads.
So we have a busy and exciting day ahead of us, so let me start by providing you with a brief outline of the research section. I'm going to begin by reviewing some of Merck's recent pipeline highlights and accomplishments. Then I'll make some remarks about our research and development strategy prior to turning to the main focus today, the Merck pipeline. This year, I've asked our head of Merck BioVentures and 4 of the research franchise heads to speak about the pipeline candidates in their respective areas.
Merck has 8 anticipated filings in 2012 to 2013, including 5 major programs. BRIDION, our agent for reversal of neuromuscular blockade, is already approved in 68 countries. In Japan, BRIDION is having a substantial impact on the practice of anesthesia. Today, we will show you new results of the BRIDION hypersensitivity study and outline our plans to prepare for refiling with the FDA next year.
Odanacatib is our oral once weekly cathepsin K inhibitor for osteoporosis. Today, we will show you for the first time data on the improvement of bone strength in women taking odanacatib versus placebo. Suvorexant is our orexin receptor antagonist for insomnia. We will show you safety and efficacy data that have not been presented before from a 1-year long-term study with Suvorexant. We will also show you, for the first time, data demonstrating that Suvorexant can be clinically differentiated by showing a lack of next-day residual effects, in addition to having beneficial effects on sleep onset and sleep maintenance. TREDAPTIVE, for atherosclerosis, is Merck's extended-release niacin plus laropiprant , an anti-flushing agent. Today, we will provide you with new data demonstrating that laropiprant is necessary to maintain the reduction of flushing caused by extended-release niacin in patients even after extended periods on TREDAPTIVE.
And V503 is our vaccine for the prevention of certain HPV-associated cancers. V503 takes the fourth HPV type in GARDASIL and adds the 5 -- adds 5 new cancer-causing HPV types, such that the extended protection now will be almost 90% of HPV-associated cervical cancer cases. We will provide you with an update of the V503 program in which 4 Phase III studies are finished and the final study is fully enrolled.
We also have 2 candidates in clinical development with the potential to transform medical practice and Merck. The first is anacetrapib, our CETP inhibitor for atherosclerosis that you've heard about before. We're pleased to report that our large outcomes trial, called REVEAL, is now enrolling patients. We will review data that was recently published showing for the first time that anacetrapib enhances reversed cholesterol transport in a preclinical species. In addition, we will review data indicating that the HDL produced in the presence of anacetrapib is fully functional as judged by several different assays.
The second potentially transformative candidate in our pipeline is our BACE inhibitor for the treatment of Alzheimer's disease. BACE has been a very difficult target for the entire pharmaceutical industry, and our chemists have made incredible progress. Today, we are delighted to show you exciting data demonstrating an unprecedented reduction of CSF-A beta levels in humans with MK-8931, our lead BACE inhibitor, which is in Phase I of development.
Finally, a major push within our labs over the last few years has been to incorporate a best-in-class approach in drug discovery and development. This is in addition to our traditional focus on first-in-class products. I will speak more about the mindset change that has occurred toward incorporating a best-in-class strategy later, but I'm pleased that many of our clinical programs are now targeting a best-in-class profile. In today's meeting, when we say best-in-class, we mean a next-in-class drug with meaningful differentiation. We will present 3 of our best in class programs that have progressed to Phase IIb of development: MK-3102, our once-weekly DPP-4 inhibitor for diabetes; MK-3222, our selective anti-IL-23 antibody for psoriasis; and MK-5172, an extremely potent pan-genotypic protease inhibitor for hepatitis C virus.
Next slide, please.
There are many perceptions and concerns about the slowdown in research and development in the pharmaceutical industry. This fear is enhanced during the time of merger integration. I can assure you that since our merger, we have maintained a focus, a sharp focus on our pipeline, and successfully executed on our key programs. Since the merger, we have had 8 new molecular entities or NMEs and combination products approved, and we have several additional NMEs and combination products under review. Moreover, since the merger, we have successfully advanced 8 clinical programs into Phase III. Next slide, please.
Merck has a robust pipeline with many exciting opportunities from discovery through late-stage development. Here is our late-stage pipeline as of November 4, which has 19 candidates in Phase III. I want to highlight MK-3415A, our C. difficile antibody program, and MK-431E, our combination product with sitagliptin and atorvastatin, both of which has entered Phase III since the last pipeline update in July. The arrows denote candidates that have advanced since we last met in May of 2010. My colleagues and I look forward to sharing more details about candidates in this pipeline during the day. Next slide.
And this slide provides a summary of the candidates that we anticipate filing over the next 3 years. Next slide.
Let me now turn to the subject of return on investment in the pharmaceutical industry. This topic has fueled considerable debate, and several of you have covered it in your reports. Suffice it to say, the ROI in the pharmaceutical industry has declined to unacceptable levels. At Merck, we have been taking actions to improve ROI in the near term as well as making changes to improve ROI in the longer term. And while I will not get into numbers today, I am pleased to say that we are seeing a significant improvement in our calculated ROI for Merck's R&D. Now given the long cycle times involved in research and development, there are only a couple of levers that one can really use that have a significant near-term impact on ROI, and we've employed both of these extensively. Next slide.
The first lever is to rigorously prioritize our portfolio and then to set a high bar for allowing programs to proceed. This concept is certainly not new, but it's something that requires discipline. Soon after the merger of Merck and Schering-Plough, we undertook an extensive prioritization process that resulted in the discontinuation of 13 Phase II and Phase III programs. These programs were derived from both legacy companies. Today, rigorous prioritization is a routine undertaking led through a collaboration between the research, human health and finance leadership teams. Through this process, we identify and advance programs that offer significant medical advances and that will provide a robust return on investment on a probability of success-adjusted basis. Now as a consequence of advancing only programs that provide a robust return, many of the deprioritized programs have value. Indeed, programs that we stop are put on an out licensing list. And since 2010, we have outlicensed several of these candidates. Next slide.
This slide illustrates what we refer to as a value-cleaning curve in which individual projects are plotted with regard to their contributions to the cumulative net present value on a probability of success-adjusted basis and the cumulative net present cost. I want to emphasize that the axes represent cumulative value and cumulative cost. So the first step, we rank projects by their predicted ROI. Then we plot first at the lower left projects that have the highest ROI on a probability of success-adjusted basis. Next slide.
As indicated by the arrows, this methodology plots the incremental contribution of each project to the cumulative net present value and the cumulative net present cost. This continues in order until we finally plot those projects with the lowest contribution to ROI, again on a probability of a success-adjusted basis. The result is a creaming curve shown here. The steeper part of the curve represents projects with a higher ROI, and the shallower part of the curve represents projects with a lower ROI. We create separate creaming curves for each stage of late development, Phase IIa -- excuse me, Phase IIb, Phase III and life cycle management projects. I'm showing you here real data taken from the prioritization process for the life cycle management programs in our portfolio at the beginning of 2011. Each of the data points then refers to a separate proposed life cycle management project. Next slide.
Here you see in green those projects that were ultimately funded and in red those that were not funded. You can see that there's an approximate cutoff point below which projects were generally funded. To the right of that cutoff point, although there are exceptions, projects were generally not funded. Over the last few years, we have worked to shift this cutoff point to the left. In other words, we've been raising the bar for projects to proceed. For the single project that was not funded but that reside on the very steep part of the curve, we had initially planned to fund it. However, FDA feedback subsequently indicated that we are unlikely to obtain the label change that we had envisioned at the time that we first valued the program. Therefore, the actual value associated with the program was much less than we originally thought and we did not fund the program. So this example illustrates that our prioritization process impacts real-time decision-making.
On the flatter part of the curve, you see that there's some programs that were funded even though they're apparently not providing a robust return. The predominant reason programs on the flatter part of the curve that are funded is to preserve existing products value that otherwise would be lost if the program were not conducted. And this is almost always due to a competitive situation. For example, one of the green programs on the flatter part of the curve is a life cycle management study for SIMPONI in ankylosing spondylitis. Other anti-TNF drugs have this indication. And for competitive reasons, it's important for us to have it as well even if the return is low for the ankylosing spondylitis as indication per se.
Portfolio prioritization is a rigorous and systematic process at Merck that impacts real-time decision-making. We are setting the bar high, ensuring that we focus our people and our financial resources on those projects that address significant healthcare needs and promise a substantial return. Next slide.
The other way to improve return on investment in the near term, of course, is to decrease the denominator. Indeed, we've been working hard to reduce R&D spend by eliminating redundancies and improving efficiencies. And while closure decisions had been announced for 11 of our research sites, we've retained critical talent. This graph shows that from the time of the merger to the end of this year, we anticipate reducing annual R&D cost in excess of $600 million while at the same time increasing investment in key programs.
I should point out that this is on a backdrop of 5 years of significant growth in both legacy companies, as indicated on the bottom of the slide. So to summarize, the actions that we've taken to improve ROI in the near term have focused on 2 key levers: one, rigorous prioritization coupled with a high bar for proceeding; and two, reduction of overall costs. For the longer term, of course, one needs to make changes that will allow for a sustainable return on investments. I would like to now review some of the changes that we are making to achieve just that. Next slide.
Over the past few years, we have been aggressively implementing a new research strategy and operating model that positions us for long-term growth with a sustainably positive ROI. I am now pleased to share with you key elements of our strategy as well as some examples of early success. There are 5 strategic areas of change that I would like to highlight: one, we are focusing on developing best-in-class in addition to first-in-class products; two, we're using innovative tools and a change in our decision-making mindset to drive towards early go and no-go decisions; three, we have identified priority disease areas for our pre-proof-of-concept research programs, providing focus on where we intend to win; four, we are increasing our commitment to external research and licensing; and finally, we are strengthening our efforts in biologic therapeutics including biosimilars and novel biologics.
Let me begin with a major mindset change within MRL that we have achieved and that I am convinced will have a major impact on our ability to achieve a sustainably positive ROI. The history is as follows: Merck has traditionally been thought of as a company that translates basic science into new treatments for disease. Next slide.
Indeed, as shown here, over the past 10 years, Merck and Schering-Plough have done an outstanding job of developing first-in-class drugs and vaccines that have achieved major impact on human health. It's critical that we continue to conduct the innovative research that leads to the first-in-class products. But there are also major opportunities to improve human health and Merck's bottom line by developing follow-on best-in-class products that provide meaningful differentiation from existing products in the class. Frankly, this is an area where Merck has not excelled. Next slide.
Earlier this morning, Ken showed you our scientific innovation continuum. Best-in-class programs directed at mechanisms with established proof of concept in humans obviously have a higher probability of success than first-in-class programs that do not have proof of concept in humans and are, therefore, expected to provide a higher ROI. I think that you would agree with me that if we have the scientific excellence to create outstanding first-in-class drugs, then we certainly are capable of creating best-in-class drugs. We need, however, to have the mindset to do so. Next slide.
I am pleased to report that this mindset change has, with substantial effort, taken hold in MRL. Today, every discovery program must have an explicit intent, either to be a best-in-class product or to be a first-in-class product for a particular mechanism. Now I want to emphasize that our best-in-class programs are not simply follow-ons. These programs have the clear additional requirement that we offer meaningful differentiation from the first molecule in the class. We still work on first-in-class mechanisms, and it is important for us to do this. But today, 50% of our lead optimization resources in discovery are dedicated to best-in-class programs.
Importantly, whenever we or a competitor demonstrate that a mechanism works in humans, we now ask whether or not there's an opportunity for us to initiate a best-in-class program. And as I said earlier, today, we will present 3 best-in-class programs that will advance the Phase IIb of development, providing clear evidence that this cultural shift has taken hold in MRL. Next slide.
Another major mindset change within MRL is our focus on making early go and no-go decisions. Getting sciences to make early no-go decisions is challenging. But we've made excellent progress in the past 2 years. In addition to making good science decisions, our sciences are now also making good science-based business decisions. Next slide.
In order to drive the mindset changes needed to enable early go and no-go decisions, in 2006, we created separate departments in experimental medicine, imaging and molecular profiling. In this way, we provided focus on developing and using human biomarkers of disease. We have also been aggressively building modeling and simulation capabilities to enhance decision-making in the labs. In 2010, we created a separate modeling and simulation department, and we have been busy hiring external talents in this area. Modeling and simulation uses an integrated mathematical representation of defined inputs to enhance decision-making. And as you can see on this slide, over time, MRL has made an increasing number of early go and no-go decisions enhanced by biomarker or modeling and simulation data.
Let me share a few specific examples with you. First, I'll show an example of an early go decision from the development program of Suvorexant, our first-in-class orexin antagonist for the treatment of insomnia. Then I will relate to you an example of an early no-go decision for a novel diabetes target. Finally, I'll show you a modeling- and simulation-enabled decision in our BASE program for Alzheimer's disease. Next slide.
Orexin receptor antagonism is a new potential first-in-class mechanism for the treatment of insomnia that you'll hear more about later. We have outstanding scientific talent in sleep research in MRL, and we use polysomnography or PSG extensively in our preclinical and clinical studies. As illustrated on this slide, PSG is a comprehensive test that records changes that occur in the body during sleep including brainwave readings by EEG, recordings of eye and muscle movements as well as cardiac and respiratory measurements.
In Phase I studies of Suvorexant carried out in 2008, we used measurements of PSG in only 20 normal volunteers. And based on these studies, we were able to make an early go decision and selected doses for use in the subsequent trials in patients with insomnia.
As shown on the bottom of the slide, this allowed us to skip Phase IIa and go directly from Phase I to Phase IIb. Next slide.
Here's an example of an early no-go decision that we made in late 2010 for a novel mechanism to treat diabetes. In preclinical models, this mechanism showed robust efficacy as a glucose-lowering agent via glucose-dependent insulin secretion, and MK-1421 was developed for this purpose. In experimental medicine studies, a technique called graded glucose infusion or GGI can be used to evaluate mechanisms that work via insulin secretion. Glucose is infused at an increasing rate, and the resulting insulin secretion rate is measured in humans.
As you can see on the top graph, when the study is done with exenatide, a marketed GLP-1 analog, there's a substantial increase in the insulin secretion rate as compared to placebo. But as you can see on the bottom graph, when high concentrations of MK-1421 were evaluated in a Phase I GGI study in humans, it did not lead to increased insulin secretion as compared to placebo. This led to the disciplined decision of stop the MK-1421 program and to make a no-go decision for this novel diabetes mechanism.
Importantly, this early no-go decision was made after a Phase I study in only 20 volunteers. Traditionally, such a no-go decision would have required a larger, more expensive and time-consuming Phase II proof-of-concept trial. Next slide.
Here's one example of where modeling and simulation has enhanced our decision-making. You will hear more about our BASE inhibitor program for Alzheimer's disease from Darryle Schoepp. When we initially took our lead base inhibitor into humans, we found that the molecule was much more efficacious than we had anticipated. As a result, at oral doses studied, we observed very robust lowering of CSF-A beta levels. This is illustrated in the boxed area on the graph. Traditionally, to ensure that we would have a good dose response in our Phase II study, we would have needed to conduct an additional Phase I study at lower doses before selecting doses to manufacture for Phase II. However, our modeling assimilation experts were able to create mechanistic models to predict the CSF-A beta response at lower doses. This allowed us to select doses for Phase II drug supply manufacturing without delay while we conducted a confirmatory Phase I study in parallel, enabling an earlier Phase II start.
These are just a few examples of where our experimental medicine, imaging, molecular profiling and modeling and simulation departments have greatly enhanced decision-making. Next slide.
Finally, I'd like to briefly mention the additional changes that we are making to improve ROI over the longer term. Next slide.
First, disease area prioritization. At the time of the merger, the combined company was working on 39 disease areas in the pre-proof-of-concept space. We undertook a systematic and clinical evaluation of the scientific opportunities, our scientific capabilities and in partnership with our human health colleagues and analysis of the unmet medical needs. Through this process, the original 39 disease areas were narrowed down to 11 priority disease areas, as shown here. As you can see, there are 7 areas on the left where we aim to enhance our market leadership and 4 areas on the right where we are working towards market leadership. These priority disease areas provide important focus. Approximately 70% of MRL's research spending in the pre-proof-of-concept space is targeted towards these areas.
Of course, science rarely follows a strict linear path. Thus, we allow for approximately 30% spend for opportunistic projects that will and do arise. Importantly, post-proof of concept, that is after mechanism or compound have been shown to work in humans, the investments are driven by the business case for each specific program regardless of the disease area from which they are derived.
These same principles guide our increased efforts in identifying external licensing and research collaborations. Pre-proof of concept, we are focused on external opportunities in the priority disease areas listed here. The business cases for post-proof of concept opportunities are evaluated without regard to disease area. Next slide.
As I have mentioned before, we are also strengthening our efforts in Biologics. This modality has proven to be extremely affective in answering unmet medical needs and delivering value. But historically, Merck has not had a strong presence in this area. An important factor for Biologics providing a higher ROI is that overall, they exhibit a higher success rate as compared to small molecules in part because they have a lower tendency to encounter off-target toxicity problems. We now have programs in Novel Biologics, Biobetters and Biosimilars. You will hear more about our Biosimilars program from Mike Kamarck.
In summary, the new research strategy and operating model that we have been implementing over the past few years is now in place. The key strategic changes include 2 areas of major mindset change, a shift in developing best-in-class as well as first-in-class products and a shift in our decision-making toward early go and no-go decisions. In addition, we have identified priority disease areas, increased our commitment to external licensing and research and strengthened our efforts in biologic therapeutics. Taken together, these changes position us for long-term growth with a sustainably positive ROI. Next slide.
Let's now move on to the pipeline. Merck has a robust pipeline with many exciting opportunities, and we are very pleased to share some highlights with you today. I will begin by covering oncology, respiratory and immunology and vaccines. Oncology is a priority disease area for Merck, and we are focused on developing drugs that target specific oncogenic pathways. Our goal is to create and advance a focused portfolio in order to bring forward medicines that can significantly improve patient outcomes and gain reimbursement in key markets. Next slide.
I'll begin by highlighting our mTOR inhibitor ridaforolimus, which we licensed from ARIAD. We filed ridaforolimus in the U.S. and the EU in the second half of 2011 as maintenance therapy for metastatic soft-tissue or bone sarcomas. The filing is based on the results from the Phase III SUCCEED trial that were presented at ASCO in June. Patients with metastatic sarcoma, who had completed first, second or third line therapy and who, in response to that therapy, had a complete or partial response or disease stabilization, were enrolled in the study. A highly statistically significant 28% reduction in disease progression was demonstrated. Radiologic assessment of tumor growth demonstrated a mean decrease of 1.3% with ridaforolimus compared with a 10.3% increase with placebo. The study was not powered for overall survival although there was a numeric trend in favor of ridaforolimus. In terms of tolerability, the profile was very similar to other mTOR inhibitors. The most common adverse event was stomatitis or mouth ulcers, which usually responded to local therapy and to our reduction in dose.
As you'll see in a minute, we are studying ridaforolimus in combination with other mechanisms in several tumor types including ovarian, breast and prostate. Next slide.
Although our oncology franchise is relatively young, we are making good progress. Our strategy is designed to ensure increased success rates in late developments with treatments that are substantially better than standard of care. The strategy that we are implementing is outlined on this slide. We use Phase Ia to ensure target engagement and defined dose. Then we applied biomarker-based responder hypotheses to select the patients that we predict will respond to a particular drug or combination of drugs. Importantly, we set the bar high at Phase Ib. Only when we have achieved the high response rate in a biomarker-based subpopulation will we proceed until later developments. Ideally, later stage development will include a seamless Phase IIb, III pivotal trial with a high futility bar at the end of Phase IIb before proceeding into Phase III. Next slide.
This slide shows some of the early oncology clinical studies in the Merck portfolio. As you can see, we are testing multiple mechanisms that hit specific oncogenic pathways. As shown on the column on the right, we are pursuing specific responder-based hypotheses in defined subpopulations. In many cases, we are using targeted combination therapies to enhance efficacy and prevent the development of resistance. Several of these early clinical studies involve the combination of 2 investigational Merck drug candidates. In one case, we're studying the combination of our AKT inhibitor with AstraZeneca's MEK inhibitor. Next slide.
So to summarize, we now have multiple mechanisms in clinical development in oncology. We are emphasizing combination therapies and using biomarkers to drive patient selection. This allows us to demonstrate the efficacy of our drugs in defined subpopulations faster, more cost effectively and with better patient outcomes. Next slide.
Now I'd like to move to our respiratory and immunology franchise. Next slide. Let me begin with our AIT programs. Seasonal and perennial allergies affect approximately 30 million North American adults. The 3 most frequent allergies are grass, ragweed and dust mite. Immunotherapy with subcutaneous injections modifies the immune system and has been shown to be effective treatment for many allergies. AITs are a novel allergy immunotherapy in the form of oral, rapidly dissolving sublingual tablets, which avoids injections. This will allow for convenient home administration and expanded access. Merck has partnered with ALK-Abello to develop AITs to treat these allergies in North America. Next slide.
The Grass AIT was approved in the EU in 2006 where it is marketed as GRAZAX, a disease modifying treatment of grass pollen-induced rhinitis and conjunctivitis. This slide shows the result of a 5-year study of GRAZAX. Daily administration of GRAZAX for 3 years effectively reduced symptoms compared with placebo and also maintained efficacy for 2 years after treatment was discontinued, which is the basis of the disease modification claimed in the EU. GRAZAX was generally well tolerated with predominantly local allergic reactions, as expected. We are completing an additional efficacy study in North America with the aim of filing in the U.S. in 2013. Next slide.
This slide shows new data presented last week at the ACAAI meeting from our Ragweed AIT program. Merck has completed 2 replicant efficacy studies that show significant reductions in the combined symptom and medication use score compared with placebo. The Ragweed AIT was generally well tolerated with predominantly local allergic reactions, again as expected. We're completing a brief safety study with the aim of filing in the U.S. in 2013. Next slide.
Let me now turn to our best-in-class anti-interleukin-23 antibody program, which is being studied for the treatment of psoriasis. Here's a medical need to treat patients with moderate to severe psoriasis with safe, effective and conveniently administered therapies. Stelara or Ustekinumab is a biologic therapy approved for use in patients with moderate to severe psoriasis. Now as shown in this figure, IL-12 is composed of 2 protein sub-units, p40 and p35, whereas IL-23 is composed of p40 And p19. Because Ustekinumab binds the p40, it blocks both IL-23 and IL-12. In contrast, MK-3222 is a monoclonal antibody defined specifically to p19, and therefore, selectively blocks only the [indiscernible] IL-23. By blocking IL-23, both drugs block inflammation, which accounts for the efficacy in treating psoriasis and potentially other inflammatory conditions. But MK-3222 does not block IL-12, which is an important T-cell stimulating factor. Humans that are genetically deficient in both IL-12 and IL-23 have an increased risk of 2 specific infections, mycobacterium, including Mycobacterium tuberculosis, and Salmonella. In preclinical models whereas antibodies that inhibit both IL-12 and IL-23 increased the risk versus controls for Mycobacterium and Salmonella infection, antibodies that bind specifically to IL-23 by MK-3222 do not. MK-3222 is currently in Phase IIb of development and is anticipated to start Phase III in 2012. Next slide.
Let me now move on to vaccines over Merck continues to build on its long legacy of providing extremely cost-effective products to improve human health. In the late-stage vaccines pipeline, we have 3 Phase III programs. Next slide.
I'll start with V419, our hexavalent pediatric combination vaccine containing components of currently licensed vaccines. V419 protects against Haemophilus influenza b, Hepatitis B, diphtheria, tetanus, pertussis and polio. This combination vaccine is being developed in collaboration with Sanofi-Pasteur and we anticipate filing in 2014. Next slide.
Our new best-in-class HPV vaccine, V503 builds on the innovation and success of GARDASIL by incorporating antigens against 5 additional cancer-causing HPV types. This increases the protection against HPV-related cervical cancers from 70% to over 87%. Next slide.
The Phase III program for V503 is comprised of 5 studies. The first 4 are now complete, and all primary and secondary endpoints were met. In addition, the 14,000 patient event-driven efficacy study is ongoing. This study compares V503 to GARDASIL for protection against high-grade cervical dysplasia due to the 5 new HPV subtypes in V503. The V503 program also supports filing for indication in boys. We anticipate filing V503 in 2012. Next slide.
Finally, I'd like to highlight our inactivated Herpes Zoster vaccine, V212. This vaccine is being developed to address the important unmet medical need for vaccine that prevents shingles and its complications in immunocompromised patients. Compared to healthy individuals with the same age, immunocompromised patients such as bone marrow transplant recipients and patients with cancer are at a much higher risk for shingles and the associated severe pain syndrome called post-herpetic neuralgia or PHN.
In addition, more severe disease such as disseminated Herpes Zoster is more common in these patients than otherwise healthy adults. Unfortunately, because they have a diminished immune system, live virus vaccine including ZOSTAVAX are contraindicated in immunocompromised patients. As an inactivated vaccine, V212 will complement ZOSTAVAX in meeting the unmet medical needs of patients at risk for Herpes Zoster. This slide shows the prevalence and the higher incidence rate of shingles in the patient populations that we are currently studying with V212. Next slide.
An earlier study by Ann Arvin and her colleagues at Stanford and published in the New England Journal of Medicine provides proof of concept that a heat-inactivated Varicella-Zoster virus can provide protection against shingles and PHN in immunocompromised patients. As shown in this Kaplan-Meier plot from that paper, vaccination with a heat-inactivated Varicella-Zoster virus reduced the risk of Herpes Zoster by over 60% in bone marrow transplant recipients. Next slide.
Now heat inactivation of viruses is not a process that's readily amenable for large-scale vaccine manufacturing. Merck has developed the proprietary method for inactivating the same attenuated Varicella-Zoster virus strain that's used in our ZOSTAVAX vaccine. And this process is used to manufacture V212. We are enrolling 2 Phase III trials, one in autologous hematopoietic cell transplantations, more commonly referred to as bone marrow transplantations, and the other in solid tumor malignant -- in patients with solid tumor malignancies undergoing chemotherapy and hematologic malignancies. We anticipate filing first with a bone marrow transplant data in 2014 and filing for the second indication in cancer patients at a later date.
Both of these studies have regimens of 4 monthly doses, and both are endpoint-driven studies with a minimum of 1-year follow-up after the last dose of vaccine or placebo. Next slide.
So that completes the discussion of the first 3 research franchises for today. In a few minutes, we will continue the discussion that will include a more detailed look at many of the other exciting programs in our pipeline. We are improving ROI at Merck by implementing near-term actions and longer-term strategic changes. In this way, we are providing immediate improvement in ROI and will create a sustainably positive ROI in the future. As you know, we track ROI and MBV [ph] as a pipeline as part of our balanced scorecard for the company. And as I stated earlier, while I'll not get into the numbers today, I'm pleased to reiterate that we are seeing a significant improvement in generating a positive calculated ROI for Merck's R&D. Next slide.
So thank you for your attention. We're now going to take a 10-minute break, and then I'll introduce you to Mike Kamarck, who will talk about Merck BioVentures.
Peter S. Kim
So it's now my pleasure to turn the podium over to Michael Kamarck, President of Merck BioVentures who will speak to our efforts in the biosimilars arena. Mike was appointed President of Merck BioVentures in December of 2009 where he has cross-divisional responsibility for Merck's biosimilars pipeline. He's also Senior Vice President of vaccines and biologics manufacturing at Merck. Prior to joining Merck, Mike served as President, Technical Operations and Product Supply for Wyeth Pharmaceuticals. Mike?
Michael E. Kamarck
Thank you, Peter, and good morning. As Peter mentioned, biosimilars are part of Merck's balanced biologics portfolio that includes the novel biologics programs that are being discussed today. I lead a virtual division that we call Merck BioVentures, utilizes internal Merck resources and third parties in biosimilar product development in commercial planning. Next slide.
I've been working in biotechnology since its inception 30 years ago, and I never dreamed I would ever see a slide like this. As you can see in 2010, a half of the top 10 drugs in the pharmaceutical industry are biotechnology drugs. And the contribution of protein drugs are expected to grow through 2014 when it's expected that 7 of the top 10 selling drugs will be biotech medicines with combined revenues of over $50 billion.
Now for our novel biologics programs, this data confirms the blockbuster potential of bioactive proteins. From the perspective of our biosimilar efforts, it's only necessary to highlight that all of the products listed on the slide and dozens of other biotech products have patent expiries in the U.S. and Europe this decade. Our strategy is to provide biosimilar products for certain of these opportunities where we can be among the first movers after the originator patent expiration. Then the next slide.
Now Europe first introduced a biosimilar pathway in 2005 for 3 molecules including human growth hormone, erythropoietin and the colony stimulating factors -- granulocyte-colony stimulating factors. These 3 were among the earliest biotech products and they're the simplest in size and structure. In the EU, the approval packages using this new pathway required analytical, preclinical, clinical and immunogenicity studies. And draft guidelines for the regulatory approval of the important monoclonal antibodies biosimilars in Europe are currently in discussion and we're waiting for those guidelines to be formally approved and issued.
In the United States, the Biologics Price Competition and Innovation Act of 2010 created a legal pathway for approval of biosimilars, but it did not detail the regulatory requirements for the development and licensure steps. So we're also waiting for these guidelines to be issued, hopefully before the end of this year.
Now while waiting for this formal guidance, we continue to discuss our specific programs with the regulators. We've had numerous meetings to date. We've gotten some feedback from them. We extrapolate from those learnings to all of our development programs. So we desperately need the overview, both from the U.S. and Europe to understand what full requirements for this business are going to be.
In the meantime, we can interpret the 5 years of commercial data from the first EU launches of biosimilars as shown on the next slide.
The earliest launch of human growth hormone was not considered an initial success. The market was fragmented, the products were undifferentiated and the biosimilar providers underestimated the importance of focused commercial efforts in launching these products. The second launch -- the second set of launches of the erythropoietin alpha products was more successful. The market was large and central payers saw an opportunity to drive cost savings, particularly in Germany and Sweden as you can see. And the third and most recent launch of the GCSF has generally had the best uptake of all. Many markets achieving 50% or higher market shares. Now at the same time, some of the markets remained slow adapters of biosimilars, but recently even their penetration rates are increasing. So these examples demonstrate there will be a substantial business opportunity for those companies prepared to discover and deliver the optimal commercial approach.
Next slide. There's been a lot of discussion about the very high barriers to entry for all biosimilar competitors. And those barriers to entry exist in portfolio development, in process development and manufacturing, in analytical, preclinical and clinical expertise. The ability to manage new regulatory pathways. And then, as I just discussed, the ability to develop a new commercial marketing approach. Merck has made major internal investments and has expertise in all of these areas. And we also have been active in partnering with others to build critical capabilities.
For example, advance slide, please. We've committed over 200 people in R&D to the development of the Merck BioVentures portfolio. We've established partnerships to obtain critical molecules such as the deal already mentioned with Hanwha, to obtain a biosimilar version of Enbrel. We have invested over $200 million in building our internal manufacturing infrastructure for biosimilar and novel programs. Internally, we have 6 facilities that we're making our biological products in. And then, recently, we concluded a partnership with MedImmune for their manufacturing capacity in their brand-new facility in Frederick, Maryland.
Finally for clinical development, we partnered with PAREXEL in an exclusive biosimilars deal. They are working to provide us with access to approximately 500 worldwide clinical sites to do our biosimilar clinical work.
Next slide. So we've made significant progress in building our capabilities. Today, we are reporting a number of biosimilar molecules we have in active clinical development, including biosimilars for Neupogen, Neulasta, Rituxan and Enbrel.
Let me say a few words about Enbrel. The Enbrel molecule is a very high technical quality and it's far along in its progression through development. In fact, HD203, which is the name given to it by Hanwha, is currently being studied in Korea in Phase III studies. Those studies are randomized double-blind active controlled parallel group Phase III clinical studies. We are evaluating its efficacy and safety with Enbrel in combination with methotrexate in treating patients with RA. Now because Enbrel is one of the earliest freedom to operate dates, for Merck, we believe it's going to be the lynchpin in this new business. This portfolio also allows us to continually prioritize our investments behind the best opportunities. Using the strategies outlined earlier by Peter, we'll select from these molecules that have the highest potential relative to the development cost, highest probability of technical success and those molecules for which we have the highest probability of being a first mover.
Now while we won't wait for the formal global guidance on biosimilars to be issued, before moving to late stage development, we do need formal clarity around a number of critical issues. For example, the apparent requirement for using only locally sourced comparator material for our Phase III studies that are intended for global registration. That's a challenge. In this context of regulatory ambiguity, we don't expect to have 5 molecules in Phase III by the end of 2012. Instead the timing of Phase III starts will be determined by the regulatory guidance and the ongoing prioritization of our portfolio. That said, I'll remind you that it's the freedom to operate dates that are most critical in the timing of the launch of our products. Finally, biosimilar -- the market opportunity for biosimilars is large, with important patent expiry starting in the middle of this decade. Merck BioVentures has made progress in developing the portfolio of biosimilar targets, securing partnerships to enhance the portfolio and capabilities while actively engaging with regulators as they develop the final pathways. All of this is with the goal of pursuing the highest potential molecules and making them ready to enter the market when we have the freedom to operate. Thank you.
Peter S. Kim
Thank you, Mike. Our next speaker, Roger Pomerantz, joined Merck in early 2010 to head up our infectious diseases research franchise. Roger has a distinguished career in academia, including serving as Chief Medical Resident at Massachusetts General Hospital and Chair of the Department of Infectious Diseases at Thomas Jefferson University as well as an industry most recently as President of Tibotec, a virology and infectious diseases company within J&J. Effective December 1 of this year, I'm pleased to announce that Roger will become Merck's new head of Licensing and External Research replacing David Nicholson, who is retiring. Roger?
Thanks, Peter, and good morning, everybody. I'm going to focus today on a number of medicine targeting serious infectious diseases. Specifically I'll talk about Merck's innovative, antimicrobial HIV and HCV therapeutics.
Let me start by highlighting our antimicrobial group of therapeutics, focusing on our first-in-class MK-3415A monoclonal antibodies to Clostridium difficile. Next slide please.
Clostridium difficile is a gram-positive rod anaerobic bacteria. It produces 2 toxins, nicely named toxin A and toxin B, critical for the pathogenecity of the bacteria in the human colon.
C. difficile infection or CDI has now become the most important cause of hospital and nursing home-associated diarrhea in the United States. There are now estimated to be over 500,000 new cases of CDI in the U.S. each year. The rates of disease have doubled in the past 10 years, especially in the elderly.
At the same time, a hyper virulent strain of this bug is now in hospitals in the U.S. and Europe, leading to further increases in mortality and morbidity. The infection is more likely to cause substantial morbidity and mortality in some of our sickest patients, our elderly, immunocompromised patients or patients who received large amounts of a broad spectrum antibiotics. What also makes Clostridium difficile so difficult to treat for physicians and patients is that it frequently recurs despite therapy. Following an initial about of CDI, a full 20% of people will recur. With further rounds of recurrence, the likely-hood of permanent clearance dropped precipitously, so that a recurrence after 3 bouts of CDI is highly likely. No medicines are available to present -- to prevent this recurrence. So we do have a true unmet medical need. Next slide, please.
We think we have an answer to this though. MK-34158A monoclonal antibodies, the product that we license from MassBio and Medarex, MK-3415A is a combination of 2 monoclonal antibodies, 1 against toxin A and 1 against toxin B, used to treat patients with a single infusion. In the Phase IIb trail, published in the New England Journal of Medicine, treatment with MK-3415A, when added to the standard of care with metronidazole and/or vancomycin reduced the likelihood of recurrence of CDI by 72% through 12 weeks following the end of the one infusion. So administration of MK-3415A to patients at high-risk of recurrence may greatly improve their chances of preventing ongoing disease and ongoing diarrhea. Next slide, please.
The Phase III program for this drug has already commenced, representing the first time a biologic has been used in the treatment of this type of illness. Two adaptive design pivotal trials will enroll 2,800 patients who were hospitalized with C. diff and will determine the antibody safety and efficacy in preventing recurrence of C. difficile infection. There will be 4 treatment arms, the monoclonal against toxin A alone, toxin B alone, A plus B versus placebo. All with adjunctive standard of care.
Therapy with metronidazole, vancomycin or fidaxomicin recently approved for this disease will be allowed in the trials, and the primary endpoint is prevention of disease recurrence. Let me remind you that there is no drug approved for prevention of CDI recurrence. We expect filings in the U.S. and Europe in 2014. Next slide, please.
So now, I'll turn to our HIV therapies, and in particular, ISENTRESS or raltegravir. ISENTRESS is first-in-class and the only integrace inhibitor approved for treatment of HIV, and it is the only integrace inhibitor that has shown both long-term efficacy and long-term tolerability. Next slide, please.
So in the era of highly effective therapy, HIV infection in the developed world is now a chronic disease. However, chronic therapy with many highly active anti-retroviral regimens put patients at risk for serious drug-associated adverse experiences including exacerbations of diseases seen in a typical aging population. It would be a pyrrhic victory if we keep HIV infected patients from dying of AIDS but then watch them suffer prematurely from other AIDS-related co-morbidities. ISENTRESS containing regimens produce long-term viral suppression with limited impact on key safety parameters. The availability of ISENTRESS, along with the changing profile of HIV has raised the barrier to success for new products. Such products must now exhibit both high efficacy and long-term safety.
Let's talk a little bit about the long-term efficacy and safety of ISENTRESS. Next slide, please.
First, I'll focus on efficacy. The start Merck trial randomized 563 treatment-naive patients to receive chronic therapy with either raltegravir -- a raltegravir based regimen or an efavirenz based regimen. Long-term efficacy results are presented here. The y axis is the proportion of patients with HIV RNA levels less than 50 copies per milliliter, which is defined as undetectable. The x axis presents weeks of therapy out to 192 weeks of therapy or a full 3.7 calendar years. Therapy with ISENTRESS resulted in consistent control of HIV infection.
Now let me turn to safety. Next slide, please. As I noted earlier, HIV has become a chronic disease in the developed countries and the effective population is aging. Long-term therapy with certain anti-retrovirals increases the risk for atherosclerotic cardiovascular disease. Long-term data from Phase III trials demonstrate that ISENTRESS-based regiments compare favorably with other regimens with regard to certain metabolic parameters associated with increased risk of cardiovascular disease including cholesterol, LDL and triglycerides.
Next slide, please. ISENTRESS also differs from other anti-HIV medicines because of its limited impact on bone health. Here we show the total bone and spinal bone mineral densities were higher among patients receiving ISENTRESS-based regimen compared with those receiving a Truvada-based regimen over 96 weeks of therapy. These unique efficacy and safety data have led us to develop a fixed-dose combination program with ISENTRESS and lamivudine with a Phase III trial anticipated to start next year.
Let me conclude this topic by reiterating, Merck's ongoing commitment to HIV. We will continue to invest in the development of new treatments and new mechanisms to combat this insidious disease.
Next slide, please. Finally, let me describe our chronic HCV therapeutics including VICTRELIS, MK-7009 or Vaniprevir and MK-5172, the first and genotypic protease inhibitor for chronic HCV.
We are in the middle of a revolution in the management of hepatitis C, a disease that affects 180 million people around the globe. We have made great inroads into understanding the vulnerabilities of the Hepatitis C virus, and as a consequence, we have developed and are continuing to develop new medicines that will greatly impact this area.
Next slide, please. The goal of therapy is to achieve sustained viruological response or SVR, defined as undetectable HCV in the blood for a period of 24 weeks after completion of therapy. Large observational studies have shown that in chronic Hepatitis C infection, if we obtain SVR, we obtain a cure. This cure translates not only into a decrease in overall burden of disease, but also a mortality benefit that begins to manifest itself almost immediately after clearance occurs. This suggests that when we help a patient achieve SVR, we have the potential to improve his or her life expectancy. Next slide, please.
Merck has been at the forefront of developing drugs to help patients achieve SVR. Most recently, we have obtained marketing approval for the first protease inhibitor to be approved for chronic HCV genotype 1, VICTRELIS or boceprevir in over 40 countries to date. I'm pleased to announce that the approval in Switzerland has just occurred. We are expanding this medicine for use in emerging markets, and we have initiated studies needed to register VICTRELIS in East Asia and in Russia. We are pleased to initiate the first planned clinical study under our collaboration agreement with Roche to study VICTRELIS with the polymerase inhibitor mericitabine with peginterferon and ribavirin to approve SVR rates and reduce treatment duration among historical no responders. We have continued our evaluation of VICTRELIS in important patient segments, including no responders and HIV-HCV co-infected patients. I'd now like to share with you exciting new interim efficacy results in this patient population.
Next slide, please. First, let's talk about no responders. Historical no responders are those patients who have little response to therapy with peginterferon and ribavirin defined as less than 2 log fold decline in viral load in the blood after 12 weeks of therapy with peg/riba. A proportion of the patients in the control peg/riba arms of the Phase III studies of VICTRELIS failed to achieve SVR.
We gave those patients who were no responders to peg/riba an opportunity to enroll in an open label rollover study called PROVIDE in which they receive VICTRELIS with peg/riba. Thus, the PROVIDE study gave us an opportunity to study VICTRELIS for the first time in historical no responders. A total of 48 patients who exhibited a no response in the controlled arms of the Phase III studies of VICTRELIS were enrolled in PROVIDE. They received 44 weeks of therapy with VICTRELIS plus peg/riba, and we now have the SVR data for 42 of these historical no responders.
Next slide, please. I'm pleased to share with you some new interim data presented this week at the AASLD meeting. That's 2 As. We have now shown that 38% of historical nulls in the PROVIDE trial achieved in SVR. This data show that VICTRELIS with peg/riba provides an important new treatment option to a group of patients who had little opportunity to achieve SVR with the prior standard of care, peg/riba. We will submit this new data to regulatory agencies in 2012. So now let me turn to new interim Phase IIb data for VICTRELIS among patients with HIV, HCV co-infection.
Next slide, please. This mean that 30% of HIV-infected persons are also infected with HCV. Liver disease, mostly due to Hepatitis C is the leading cause of death in these patients. Therapy with peg/riba result in an SVR in only 25 to 35% of co-infected patients. So these population has a particular need for new therapies. We conducted a Phase IIb placebo-controlled study in HIV-HCV co-infected patients, 100 of those patients. They were randomized 2 to 1 to receive either 4 weeks of peg/riba followed by 44 weeks of VICTRELIS plus peg/riba or 48 weeks of peg/riba alone.
We now have the data through 24 weeks of therapy.
As shown here, addition of VICTRELIS to peg/riba in this difficult-to-treat population doubled the proportion of patients who achieved HCV negativity at treatment week 24. These are very positive data and we look forward to bringing you the SVR data later in 2012. Finally, I'd like to tell you about another trial with VICTRELIS.
Next slide, please. The currently approved HCV protease inhibitors increase the proportion of patients who experience anemia during therapy over the rates observed with peg/riba alone. Management of anemia requires ribavirin dose reduction and/or the use of erythropoietin. To provide further insight on the management of anemia, we initiated a Phase III study to evaluate the impact of ribavirin dose reduction or the use of erythropoietin on SVR among treatment-naive HCV genotype 1 infected patients. All patients receive VICTRELIS with peg/riba. Patients who became anemic were randomized to receive 1 of the 2 supportive care strategies as noted on the slide, and we expect results to confirm the impact of different ways of managing anemia with these agents in the first quarter of 2012.
Not let me turn to our second protease inhibitor for HCV MK-7009 or Vaniprevir. Next slide, please. Vaniprevir is a potent, oral twice-daily protease inhibitor for the treatment of chronic HCV. The drug is now in Phase III trials in Japan. I'd like to share with you the impressive data with this drug. A global Phase II study compared the efficacy and tolerability of several dosing regimens of Vaniprevir plus peg/riba versus peg/riba alone among patients who had failed prior therapy with peg/riba. Patients who received Vaniprevir with peg/riba for a total of 24 weeks achieved SVR at over a threefold higher rate than patients who received a full 48 weeks of peg/riba alone. GI side effects particularly nausea, vomiting and diarrhea were observed at a higher frequency in patients who received Vaniprevir. Among Japanese patients, studies in a separate Phase II trial, Vaniprevir at a lower dose 300-milligrams BID with peg/riba increase the proportion of patients who achieved viral negativity at treatment week 4 by greater than fourfold.
Next slide, please. This efficacy data were also accompanied by a good safety profile in the Japanese patients. No patients experienced serious adverse events and the proportions who experienced GI side effects as well as anemia were comparable to those receiving standard of care. We anticipate a JNDA to be filed in 2014.
So now, I would like to turn to our third protease inhibitor for chronic Hepatitis C treatment, MK-5172. Next slide, please.
MK-5172 is the first pan-genotypic protease inhibitor for use in HCV, and we are very excited about this drug. It is pan-genotypic in that it shows significant viral suppression in patients infected with genotype 1 or genotype 3 and preclinical data support that it will be active against genotypes 2, 4, 5 and 6. The drug offers a high barrier to resistance, potency remains high against viruses containing mutations associated with the failure of therapy with first-generation HCV protease inhibitors. The drug was generally well tolerated and at high doses in 7 days dosing studies, only modest GI effects were observed.
Finally, MK-5172 offers convenience, once-daily administration, no food effect.
Let me show you some Phase I data to support these statements. Next slide, please. Here, we illustrate data presented at the recent AASLD meeting showing that MK-5172 monotherapy induces a rapid and profound viral suppression in patients infected with HCV genotype 1. In the graph, the y axis shows the log fold drop in HCV RNA levels and the x axis is the days after the start of therapy with MK-5172. At all doses, down to 50 milligrams, we observed a robust decrease in viral loads after only 7 days of treatment. Note also that the patients remain at lower viral levels of viral load even when the drug stopped for up to another week.
Overall, 76% of patients who receive doses greater than 100 milligrams daily achieved HCV RNA levels below the limits of quantitation. This is very dramatic.
Next slide, please. Now let's focus on the same type of data in patients infected with genotype 3, typically harder to treat and most commonly found in the Indian subcontinent. Plotted out on the y axis, is HCV RNA log fold change and the x axis represents days on or off treatment. Again, therapy was associated with 4 to 5 log full drops in HCV RNA. To our knowledge, no other protease inhibitor have shown this in any other genotype other than genotype 1. And even here, 38% of patients who received doses above 100 milligrams daily achieve HCV RNA levels below the limits of quantitation. And please remember, we are only talking about 7 days of monotherapy.
Next slide, please. Now, I want to show you data that illustrates the pan-genotypic activity of MK-5172 in in vitro assay. On the y axis, is the IC50, the lower the IC50, the more potent the effect of the drug against the virus. The different genotypes are presented on the x axis. The color show that burgundy is telaprevir, orange is TMC435, green is boceprevir and blue is MK-5172. Only MK-5172 is pan-genotypic
Next Slide, please. Now I'll show you graphically MK-5172 high barrier to resistance. We evaluated the in vitro activity of 5172 against variance commonly found among patients who have failed therapy with VICTRELIS or telaprevir with peginterferon and ribavirin.
The IC50 is on the y axis and the x axis displays the viruses with common resistance mutations in patients who failed the first generation protease inhibitors. In these plots, burgundy is telaprevir, green is boceprevir and blue is MK-5172. The blue is very hard to see. Because MK-5172 has significant activity against all of this resistance mutants.
Next slide. Here we show activity of MK-5172 in light blue against commonly found resistance variance isolated after treatment with MK-7009 in dark blue and TMC435 in orange. As you can see, for all mutants with the exception of the rare A156P mutants, MK-5172 is substantially more active than TMC435. The drug has now entered Phase IIb trials. Phase II evaluations in a variety of other settings are also planned.
Next slide, please. So MK-5172 is a promising treatment for chronic Hepatitis C across genotypes. It induced rapid and profound declines in HCV RNA levels after only 7 days of monotherapy. It's high viral activity extended across the genotypes. MK-5172 remains highly active even in the face of mutations associated with failure of therapy with first-generation protease inhibitors and some protease inhibitors still in development. And it is convenient.
Next slide, please. I would like to highlight that Merck has a strong armamentarium of chronic HCV medicines in the commercial and the development spaces. Among these, MK-5172 offers the possibility of anchoring an all-oral regimen that induces efficacy across HCV genotypes. We believe it is the partner protease inhibitor of choice for combination regimens. Candidate regimens will be evaluated by combining MK-5172 with medicines targeting other HCV proteins, developed either in-house or through partnerships.
Next slide, please. In summary, Merck is committed to the fight against global infectious diseases as a high corporate priority. Merck will continue to build on its long history of significant contributions to the improvement of world health in general and infectious diseases in particular. In antimicrobials we are developing new therapies against very difficult nosocomial infections. For HIV, we will build on long-term safety and tolerability of ISENTRESS with effective combinations. And finally, for HCV, we are continuing to generate new data with VICTRELIS, and aggressively pursuing new, more convenient and interferon-free therapies focusing on MK-5172. Thank you, all very much.
Peter S. Kim
Thank you, Roger. Our next speaker, Mike Mendelsohn, is a truly distinguished leader in cardiovascular research. Previously, following an outstanding career at Harvard Medical School and Brigham and Women's Hospital, he was the Chief Scientific Officer of the Tufts Medical Center and the Executive Director of the Molecular Cardiology Research Institute at Tufts. We were actually delighted when Mike joined Merck in 2010 as our Cardiovascular Research Franchise Head. Mike?
Well, thank you very much, Peter, and good morning, everyone. It's a pleasure to be here. I'm really happy to have a chance to update all of you about the substantial progress we've made in the past year in the cardiovascular franchise here at Merck. Merck remains strongly committed to research and development in cardiovascular disease at a time when many companies are exiting this space. Why is that? Because cardiovascular disease remains a very large unmet medical need globally, and the problem continues to grow. The WHO estimates that there are nearly 17 million deaths annually at present from cardiovascular disease and expects this number to reach 25 million by the year 2020. Now well-powered outcome trials allow proven outcomes benefits to be detected and meaningful differences in therapies to be demonstrated. Merck currently has over 93,000 patients enrolled or being enrolled in major cardiovascular outcomes trials, which underscores our strong commitment to making new medicines for cardiovascular diseases. Next slide, please.
Today, as I show you on this outline, I'm going to provide you an update on 5 of our late-stage programs in 3 important therapeutic areas: one in thrombosis, one in the treatment of atrial fibrillation; and three in atherosclerosis. Next slide, please.
I'd like to turn now to an update on our new anti-platelet therapy, Vorapaxar. As you know, Vorapaxar is a novel, oral antagonist of the platelet protease-activater receptor type 1 or PAR-1, which is the receptor that inhibits thrombin-induced platelet activation. And it's the first new anti-platelet mechanism to be in Phase III outcome trials since the P2Y12 inhibitors were introduced over a decade ago.
Merck has now studied Vorapaxar in 2 major outcome trials, TRA-CER and TRA2P-TIMI 50. An update on TRA-CER, our ACS trial, is shown on the left panel, and the data from TRA-CER will be presented this Sunday afternoon, November 13, in the late-breaking trial session at the American Heart Association. The 2P study of Vorapaxar in secondary prevention is updated on the right side of the slide. So close out of the 2P studies underway, and we expect it to be presented in 2012. Next slide, please.
I'd like now to briefly turn to the current status of our vernakalant IV and oram program. Next slide, please. As you know, vernakalant is the first-in-class mixed ion channel blocker with atrial preferential effects, and vernakalant has been developed in collaboration with Cardiome for the treatment of atrial fibrillation. As an IV formulation, vernakalant, or BRINAVESS, is indicated for cardioversion of recent onset atrial fibrillation, and BRINAVESS has now been approved in 31 countries worldwide. Merck acquired the North American rights to IV vernakalant from Astellas in July of this year, thus providing us with the worldwide rights for the development of the IV formulation. We anticipate a Phase III study with the IV formulation to start in 2012 to support registration of IV vernakalant in North America. The oral formulation of vernakalant is underdevelopment now for the maintenance of normal sinus rhythm in patients with paroxysmal or persistent atrial fibrillation. Additional Phase I studies are ongoing at present to expand the safety experience of higher exposures with vernakalant PL, and then Phase II studies are planned next pending the results of these Phase I studies. Next slide,, please.
I'd like to turn now to the atherosclerosis section of my presentation and discuss the 3 programs listed here. But first, I'd like to emphasize a point relevant to all of the atherosclerosis programs I'll discuss. Next slide, please.
Despite major advances in the treatment options over the past several decades, there remains a substantial residual risk of these cardiovascular diseases. And as you see in the figure, in major outcome studies in the current era and despite statin therapy, there's still about a 65% residual risk of cardiovascular disease. This residual risk is thought to be due to a variety of causes, including LDL not being at goal and other dyslipidemias -- low HDL, High Lp(a), high triglycerides, the triad that's often seen together in patients. And we're increasingly aware of the potential contributions of these other dyslipidemias to residual risk. So for example, a year ago, based on extensive genetic and epidemiologic evidence, the European Atherosclerosis Society Consensus Panel recommended screening for elevated lipoprotein(a) and established an Lp(a) level of less than 50 milligrams as desirable and a treatment priority. There are likely other non-lipid factors that contribute to these residual risks, such as vascular inflammation. Next slide, please.
I'd like to update you now about our ZETIA/VYTORIN program and the 2 large outcome studies with this therapy, the SHARP and IMPROVE-IT trials. It's my pleasure first to describe the exciting results of the study of heart and renal protection or SHARP, which was first presented at the American Society of Nephrology Meeting last November and was published in The Lancet earlier this year. In the United States, an estimated 19 million adults or about 13% of the population have moderate to severe chronic kidney disease, and cardiovascular disease is substantially more prevalent in this population than in the general population. Other outcome studies with statins in patients with kidney disease on hemodialysis have been reported, such as the German Diabetes and Dialysis or 4D study with atorvastatin and the AURORA trial with rosuvastatin. But both of these failed to demonstrate a reduction in the relative risk for coronary disease. In the SHARP trial of over 90,000 chronic kidney disease patients, the combination of ezetimibe and simvastatin reduced the risk of major vascular events by 16%, a highly significant result, as you see in the figure on this slide. Next slide, please.
Now based on this study, the first study ever to show a therapy to reduce the risk of major cardiovascular events in patients with chronic kidney disease, an SNDA was submitted, and the FDA Advisory Committee met just last week, and I'm delighted to tell you they voted unanimously 16 to 0 to recommend approval of a new indication for VYTORIN to reduce the risk of major cardiovascular events in pre-dialysis patients with chronic kidney disease, the large majority of the patients with CKD.
For the approximately 2% of chronic kidney disease patients who are receiving dialysis, the committee vote was split on whether to recommend approval of VYTORIN and ZETIA for use in these patients who are on dialysis. If the FDA approves the SNDAs, VYTORIN, or ezetimibe/simvastatin, will be the first drug that physicians have to reduce the risk of cardiovascular events in chronic kidney disease, and some major step forward for these patients and their physicians. Next slide, please.
The IMPROVE-IT trial, Merck's outcome study of ezetimibe in acute coronary syndrome patients, is ongoing. In IMPROVE-IT, over 18,000 patients have been randomized to ezetimibe and simvastatin versus simvastatin monotherapy. The Data Safety and Monitoring Board met last in July of this year and recommended continuing the trial without changes. Now the DSMB is planning an interim analysis for efficacy in IMPROVE-IT in the first quarter of 2012, when 75% of the prespecified primary clinical endpoints have occurred. We anticipate that IMPROVE-IT will be completed in 2013. Next slide, please.
I'd like to now update you on our TREDAPTIVE program. TREDAPTIVE, as you know, is our combination of Merck's extended-release niacin and laropiprant. Now niacin therapy has a long history in the treatment of lipid disorders and has demonstrated clinical outcomes benefit as in the coronary drug project. Niacin affects the life of protein profile in several beneficial ways, as you can see from the table at the bottom of this page summarizing the overall impact of TREDAPTIVE on the lipid profile. It lowers LDL cholesterol, raises HDL and also lowers triglycerides and LP(a).
However, the use of extended-release niacin in the clinic has historically been quite difficult, since it's limited by flushing. In a cohort study of over 14,000 patients at the end of one year, only about 6% of all patients were receiving 1 gram and only 2.2% were receiving 1.5 grams of extended-release niacin. Flushing is the most common adverse reaction leading to withdrawal of niacin therapy. And laropiprant, the flushing inhibitor in TREDAPTIVE, reduces niacin-induced flushing by inhibiting the receptor on skin blood vessels that mediates flushing, which allows us to dose TREDAPTIVE effectively. Next slide, please.
Now I'm going to show you data on this in the next slide that further support the efficacy of the flushing inhibitor laropiprant in TREDAPTIVE. We've previously shown you that there is decreased flushing with TREDAPTIVE during maintenance therapy. Here's a 24-week study that shows flushing is significantly less with TREDAPTIVE than with extended-release niacin. And as you can see in the top orange tracing in this 6-month study, the percentage of patients with moderate or greater flushing symptom on extended-release niacin alone levels off at about 25% in patients after the doses advanced from 1 gram to 2 grams of extended-release niacin. In contrast, the combination of ER niacin and Laropiprant, or TREDAPTIVE, levels off with flushing in fewer than 10% of treated patients. Next slide, please.
Now I'd like to show you a new study describing what happens if laropiprant is removed from the combination of extended-release niacin and laropiprant. And this figures show the results of a study in which extended-release niacin and laropiprant are initiated at 1 gram per day and then advanced to 2 grams per day after 4 weeks of therapy. Then at 20 weeks, 1 group of patients continued on the TREDAPTIVE, and that's the green line on the graph. And a second group switched from TREDAPTIVE to extended-release niacin alone, as shown in the upper orange line. And I think you can see that those patients who go back to taking the extended-release niacin alone without the flushing inhibitor do have a substantial return of flushing, and that levels off at about twice the amount of flushing as seen in those patients who continue to receive TREDAPTIVE.
So if laropiprant is removed after chronic use of TREDAPTIVE in patients that continued on extended-release niacin, a significant amount of flushing returns. These new data will be presented on Tuesday afternoon, November 15, as an oral presentation at this year's AHA meeting also 2 As. Next slide, please.
I'd like to take a minute to highlight some important differences between the ongoing HPS2-THRIVE study with TREDAPTIVE and the AIM-HIGH study with extended-release niacin. Now AIM-HIGH has been the National Heart, Lung and Blood Institute's study that was with extended-release niacin. It was stopped for futility earlier this year. There have been a lot of discussions about the implications of AIM-HIGH stopping, and we're all waiting the presentation of those data at this year's AHA meetings next week. But there are substantial differences in the size, in the design and in the power of HPS2-THRIVE and AIM-HIGH.
So let me underscore for you why we remain confident that HPS2-THRIVE is the definitive test of the niacin hypothesis in cardiovascular disease. First, the HPS2-THRIVE study is about 8x larger than AIM-HIGH. And importantly, LDL management was also different in these 2 trials. In HPS2-THRIVE pre-randomization titration was performed to target an LDL less than 80 milligrams per deciliter. But no adjustment of statin or ezetimibe post-randomization that occurred, which allows us for LDL cholesterol differences between the treatments in HPS2-THRIVE. In contrast, in AIM-HIGH, post-randomization titration by the investigators was allowed in order to achieve an LDL between 40 and 80 milligrams per deciliter. So adjusting the LDL post-randomization minimizes any potential LDL cholesterol differences between the 2 treatment groups in AIM-HIGH. In addition, HPS2-THRIVE is powered at 95% power to detect a 15% reduction in the planned end point. In contrast, AIM-HIGH was powered at 85% but to detect the larger 25% risk reduction. Next slide, please.
So in summary, the present TREDAPTIVE has been approved in 55 countries worldwide, and the major CV outcome study, HPS2-THRIVE, is ongoing in over 25,000 patients to support U.S. registration. The data monitoring committee of HPS2-THRIVE met in March of this year and recommended no changes. HPS2-THRIVE is expected to end in 2012. We now anticipate filing TREDAPTIVE in the U.S. in the first half of 2013, and we now anticipate filing the combination with simvastatin, MK-524B, in 2014. Next slide, please.
The last program in our atherosclerosis section I'd like to tell you about is the anacetrapib program. Anacetrapib is a selective, potent and reversible CETP inhibitor with multiple beneficial effects on the cardiovascular risk markers. I'll begin by sharing some preclinical data about the properties of anacetrapib. An exciting recently published new data showing for the first time that anacetrapib enhances reverse cholesterol transport in a preclinical animal model. I'll also show you that the HDL produced in the presence of anacetrapib is fully functional and that it has anti-inflammatory properties. Next slide.
Next I will review the DEFINE trial, the major Phase III safety study of anacetrapib that was published in the New England Journal of Medicine. Anacetrapib did not have evidence of any of the safety signals exhibited by torcetrapib and showed substantial LDL lowering, HDL raising and also showed substantial LP(a) lowering. DEFINE also had interesting efficacy signals, we'll review. And finally, I'll update you on the large anacetrapib outcomes trial, the REVEAL trial, which is underway and on track. The anticipated filing for anacetrapib is after 2015. Next slide, please.
Let me spend a minute talking about the physicochemical profile of anacetrapib that contributes to its efficacy. Anacetrapib is a reversible, highly-selective and potent CETP inhibitor, with an IC50 of 45 nanomolar, which allows us to dose the drug for maximal efficacy at 100 milligrams daily. It also has several other important features shown here that underscore its strong specificity for the target and that are in part helpful in distinguishing anacetrapib. It does not form a thiol-dependent disulfide bond with the CETP protein and its inhibition of CETP is not time-dependent. In addition, anacetrapib does not have any evidence of off-target, covalent binding to non-CETP proteins, based on data published last year in the Journal of Lipid Research. It's thus a highly-selective, potent inhibitor of CETP that will allow us to test the CETP inhibition hypotheses in the treatment of atherosclerosis in a robust fashion. Next slide, please.
Now in the next 3 slides, we will show you that anacetrapib both increases HDL levels and preserves several important atheroprotective functions of HDL. HDL has a number of properties that are thought to be antiatherogenic, and it's important to examine whether the HDL produced in response to any therapy still retains those atheroprotective properties. We will show you results next supporting that anacetrapib-induced increases in HDL preserves each of the 3 key HDL functions in preclinical studies. First, anacetrapib enhances HDL-mediated cholesterol efflux from cells. Second, anacetrapib increases reverse cholesterol transport in vivo. And third, anacetrapib preserves HDL's anti-inflammatory effects. Next slide, please.
The ability of HDL to facilitate transfer of cholesterol out of diseased atherosclerotic plaques in blood vessels and to the liver for excretion is called reverse cholesterol transport or RCT. Now the first step in this process and one of the most important properties of HDL is thought to be its ability to remove cholesterol from lipid-laden macrophages or foam cells in the plaque, and there are 3 transporter proteins known to mediate these efflux of cholesterol. The ABCA1 protein transports cholesterol from cells to pre-beta HDL, while the ABCG1 and SR-B1 proteins transport cholesterol from cells to larger HDL particles. Next slide, please.
This slide summarizes new data just published in the Journal of Lipid Research from our laboratories, showing that anacetrapib increases efflux of cholesterol out of cells to HDL, and thereby enhances this first critical step in RCT that I just discussed. These data show that the HDL from anacetrapib-treated hamsters has an increased ability to stimulate removal of cholesterol from cells for all 3 of the known cholesterol transport proteins as compared to HDL from vehicle-treated animals, and thus, between cells and both pre-beta HDL and larger HDL particles. Now in similar ex vivo studies from Alan Tall's laboratory at Colombia, they've also shown that HDL from patients treated with anacetrapib enhances cholesterol efflux. Next slide, please.
Now this slide shows the overall reverse cholesterol transport pathway by which HDL facilitates transport out of the diseased plaque, in blood vessels and to the liver for excretion.
So let me take a minute now to give you an overview of RCT and then show you our newly published data demonstrating that anacetrapib enhances RCT in vivo. In the setting of excess cholesterol in LDL, the macrophages in the plaque accumulate cholesterol, as shown here on the left of the slide. These foam cells are proatherogenic and proinflammatory, and they contribute to the advanced plaques, the ones that can become unstable, rupture and lead to acute coronary syndrome.
The first step of RCT is the movement of cholesterol out of these plaque macrophages into the HDL particles. And as we have just reviewed, new data from our cell studies showed that HDL from anacetrapib-treated animals increases cholesterol movement from plaque macrophages to the HDL particles. So what happens next? HDL then next carries cholesterol to the liver and binds directly to receptors on liver cells, transporting the cholesterol for excretion, as show in yellow arrows. Cholesterol in HDL is also transferred to ApoB-containing lipoproteins like LDL and VLDL, and this is a process facilitated by the cholesteryl ester transfer protein or CETP. LDL also binds to receptors on the liver, a second way of transferring cholesterol to the liver for excretion. So RCT then is the pathway by which cholesterol is transferred first out of the macrophages at the diseased blood vessel to HDL, and this is then carried to the cholesteryl to the liver for excretion in the feces.
Now for drugs that raise HDL, it's important to understand the effects of the newly increased HDL on RCT, and we have important new data showing that the HDL formed in the presence of anacetrapib retains the ability to promote reverse cholesterol transport in vivo. Next slide, please.
Now RCT cannot be reliably measured at present in humans. The current state-of-the-art is to measure RCT in the dyslipidemic hamster model, which has lipid characteristics that are more closely humanlike than other models, a technique pioneered by Dr. Daniel Rader+ of the University of Pennsylvania. We've now studied the effects of anacetrapib of RCT in this model. And in these experiments, macrophages in which the cholesterol has been radioactively labeled are injected into the peritoneal cavity of placebo or anacetrapib-treated hamsters, and then the movement of cholesterol from macrophages to plasma to liver and into the feces is tracked. And as shown on this figure, anacetrapib increases the excretion of the radioactively labeled cholesterol both in the form of native cholesterol and the form of bile acid.
Now in separate experiments from this paper, which are not shown on the slide, we examined the same process by measuring the total amounts of cholesterol and macrophages in the bloodstream and in the feces, and we confirmed by this independent method that anacetrapib facilitates reverse cholesterol transport. So we've now demonstrated that anacetrapib increases reverse RCT in vivo by 2 independent and distinct approaches. These data were just published in the Journal of Lipid Research. Next slide, please.
Now functional HDL also has potent anti-inflammatory properties. Atherosclerosis is an inflammatory disease and the protective properties of HDL derived both from its role in removing cholesterol and from other properties like its anti-inflammatory properties. And in these experiments, done in Dr. Alan Tall's laboratory again and with Merck scientists, HDL is isolated from anacetrapib-treated patients, and its anti-inflammatory properties are studied. And we see that the HDL from anacetrapib-treated patients retains its anti-inflammatory properties just like HDL taken from vehicle-treated humans. In the figure, you see macrophages stimulated with an inflammatory mediator called Lipid A, in the middle bars, and this causes the cells to make inflammatory molecules like the TNFa [indiscernible]. And then treatment of these cells with HDL inhibits production of TNFa, as shown in the far-right bars. And you can see that the HDL from anacetrapib-treated humans behaves just as it should in inhibiting inflammatory response of the macrophages. Similar results were observed for other inflammatory markers. Now given that the large increase in HDL that occurs with anacetrapib achieves such an impact, these data support potentially important increases in the anti-inflammatory effects of HDL in anacetrapib-treated patients.
So in summary, we have shown you 3 key pieces of preclinical data that cause us to continue to be quite excited about anacetrapib. First, the increased efflux of cholesterol stimulated from macrophage bone cells by HDL from anacetrapib-treated humans, as well as animals; second, the ability of anacetrapib to facilitate reverse cholesterol transport in vivo; and third, the data we just reviewed, showing that HDL from anacetrapib-treated patients retains the important anti-inflamatory property.
Let's turn now to our clinical studies with anacetrapib, which adds further to our enthusiasm about this molecule. Next slide, please.
The DEFINE trial was a major Phase III safety study of anacetrapib in 1,623 patients with coronary heart disease who are at high risk for CAD. And they were treated with statin to achieve a well-controlled LDL. DEFINE demonstrated "robust effects on LDL and HDL cholesterol," as the investigators wrote and as summarized in the table on the slide. Now as you can see, at a dose of 100 milligrams, the dose in DEFINE and the dose being used now in REVEAL, anacentrapib led to a substantial effect on each of the lipid shown all in the directions thought to be beneficial to patients.
Importantly, DEFINE showed no significant differences between anacetrapib and placebo in terms of systolic blood pressure, diastolic blood pressure, 0 levels of electrolytes or aldosterone. So DEFINE provides a high predictive probability that anacetrapib is not associated with the increase in cardiovascular events that we're seeing with torcetrapib. In addition, the DEFINE extension study is ongoing in 803 patients. And by that time this 2-year placebo-controlled extension is completed, some patients will have been on anacetrapib for 3.5 years. Next slide, please.
The adjudicated CV events and death in the DEFINE trial are shown on this slide. For the prespecified adjudicated CV safety endpoints, there was no difference between anacetrapib and placebo groups. There were 16 events in the 808 patients on anacetrapib and 21 events in the 804 patients on placebo. And you can see the individual endpoints listed below on the slide. But the revascularization endpoints, there was an intriguing difference in the number of events in the anacetrapib and placebo groups. There were 8 revascularizations in the anacetrapib-treated group and 28 revascularization events in the placebo group, a statistically significant difference with a p-value of 0.001.
In addition, in a post-hoc analysis of death or major cardiovascular events from the DEFINE trial, shown here in the last line, the anacetrapib group had 27 events, while the placebo group had 43, leading to a borderline significant p-value of 0.048. These provocative results are being studied in greater detail in the larger population enrolling in the REVEAL trial. Next slide, please.
REVEAL, the CV outcome study with anacetrapib is now underway. REVEAL is studying 30,000 patients with pre-existing vascular diseases randomized to anacetrapib 100 milligrams daily versus placebo on top of atorvastatin therapy. The primary outcome in REVEAL is the compositive of coronary death, MI or coronary revascularization. And the study duration is planned for a median of 4 years, plus lead point at which 1,900 patients have reached the primary endpoint. Interim analyses for REVEAL are planned at median durations of 2.5, 3 and 3.5 years. And I'm very pleased to say that enrollment is ongoing, and all activities are on schedule. So with anacetrapib's preclinical and clinical profile, I believe you can see why we're excited to be enrolling patients in this outcomes trial. Last slide, please.
So in summary, Merck remains committed to developing drugs to treat cardiovascular diseases. We intend to continue to build on our long history of significant contributions to the treatment of these diseases. We have a broad cardiovascular portfolio, and we are aggressively pursuing treatments for a range of acute and chronic cardiovascular diseases. I'd like to thank you all very much for your attention, and I turn the podium back over to Dr. Kim.
Peter S. Kim
Thank you, Mike. It's now my pleasure to introduce Nancy Thornberry. Nancy has had a stellar career at Merck, starting as a biochemist in our Entomology Group and progressing to her current position as our Research Franchise Head for Diabetes and Endocrinology. Nancy was the major driving force behind JANUVIA. And together with her chemistry colleague, Anne Weber, was awarded this year with the prestigious PhRMA Discoverers Award. Later tonight, she and Anne will also be awarded the New Jersey Research and Development Council Science and Technology Medal for the discovery and development of JANUVIA. Nancy?
Thank you so much, Peter. It's a privilege for me to meet with you today to talk about our recent developments in the Diabetes and Endocrinology Franchise. Next slide, please.
First, I will talk to you about our strategy for maintaining leadership in diabetes and DPP-4 inhibitors, which are the most rapidly growing class of oral antihyperglycemic agents. I will then share with you some new information on odanacatib, a first-in-class oral therapy for osteoporosis that is currently in Phase III. Next slide, please.
Type 2 diabetes is a global epidemic with more than 300 million patients worldwide, and nearly half of these patients are not well-controlled. This is a priority area for Merck, and we have a major commitment to the treatment of diabetes and to the discovery of new therapy. We are just now celebrating the fifth year anniversary of the launch of JANUVIA, also known as sitagliptin, and are very excited to report today for the first time that on a global basis the JANUVIA family is #1 in sales in the oral diabetes market. This is a key milestone for the franchise, and I have to say that like my colleagues here in the front row, I came to Merck to improve human health. And it is very exciting for me personally and for the team that JANUVIA and a JANUMET are doing so much to help patients with diabetes control their glucose.
JANUVIA, also known as sitagliptin, was the first DPP-4 inhibitor and maximizes the DPP-4 mechanism. With 5 years of marketed use, we have extensive clinical safety experience and have found the mechanism to be generally well-tolerated and weight-neutral with a low risk of hypoglycemia. We have also demonstrated efficacy and safety in combination with all major classes of oral anti-hyperglycemic agents and with insulin. This is important as diabetes often requires combination therapies to get patients to their glycemic goals. We are absolutely committed to maintaining leadership in the area of DPP-4 inhibitors with an extensive research and development program that has 3 major elements that you will hear about today: first, a cardiovascular outcomes trial called TECOS; second, our fixed-dose combination program that includes recently approved JUVISYNC which is a first combination of an anti-hyperglycemic therapy and an atherosclerosis therapy in a single pill. And finally, we are excited today to announce a new member of the DPP-4 inhibitor family, our once-weekly oral DPP-4 inhibitor MK-3102. Next slide, please.
Sitagliptin 100 milligrams delivers maximal efficacy for the DPP-4 mechanism. We initially determined this in our clinical program from comparative studies of sitagliptin 100 milligrams and 200 milligrams once-daily, where we saw a comparable efficacy between the 2 doses. This conclusion is now further supported by the results of head-to-head studies that are in the public domain for DPP-4 inhibitors and are shown on this slide. Specifically, the study we see here was conducted by Boehringer Ingelheim with sitagliptin and linagliptin, also known as Tradjenta, And is posted on clinical trials.gov. While formal comparison of the 2 groups was not done, there's a trend for greater efficacy for sitagliptin versus linagliptin as measured by weighted mean glucose at 28 days. In results that are not shown, similar results were observed for sitagliptin versus linagliptin for fasting plasma glucose and post-prandial glucose. Advance, please.
CMS has published the results of the head-to-head study of saxagliptin, also known as Onglyza versus sitagliptin and measured changes in hemoglobin A1c and fasting plasma glucose. As shown in the panel on the right, the efficacy of saxagliptin was not superior to that seen with sitagliptin in the reduction of hemoglobin A1c. Not shown are the results from the same study on fasting plasma glucose, where the efficacy of Sitagliptin was numerically greater than that seen with saxagliptin. These results are consistent with the conclusion that Sitagliptin 100-milligram once-daily maximizes the DPP-4 mechanism. Next, slide please.
JANUVIA is currently the most-prescribed DPP-4 inhibitor, and we are strongly committed to maintaining leadership in this area. This slide illustrates the stages of the program from its inception, where we had a relatively small core program through our efforts on JANUMET and additional indications to our current work in research and development, which is summarized on the next slide. Our strategy to build further leadership in the area of DPP-4 inhibitors is composed of 3 major elements. First, TECOS, our cardiovascular outcomes study. Second, we are building on the success of JANUMET with a comprehensive 6-dose combination program. And finally, the newest member of our DPP-4 inhibitor family, MK-3102, which is our oral investigational once-weekly DPP-4 inhibitor. Next slide,, please.
In the next few slides I'm going to go through each of these areas. Regarding the cardiovascular profile sitagliptin, there is considerable interest in the general area of cardiovascular biology of DPP-4 inhibition and incretin therapy. Last year, we presented the results of a pooled analysis of 19 controlled clinical trials with sitagliptin versus placebo or inactive comparator and reported that the risk ratio for major adverse cardiovascular events, referred to as MAZE, was the 0.68 with a 95% confidence interval around the difference, including 1. This analysis included 64 patients with events with post-hoc, and the events were not adjudicated by an independent committee. Nevertheless, this positive trend is consistent with what has been reported for other DPP-4 inhibitors and suggests a potential cardiovascular benefit for the class. We have now done a further analysis of these data specifically looking at placebo-controlled studies. In this analysis, there were 35 patients with events and a risk ratio of 0.68 with a 95% confidence interval around the difference, including 1. Next slide, please.
We have done a similar analysis of 3 studies that directly compared to sitagliptin to sulfonylurea, which includes one study that was completed after the prior pool analysis was conducted. As you can see in this table, in groups that were well balanced, there were 11 events in the patients treated with sulfonylurea and no events in the sitagliptin patients, indicating a potential cardiovascular benefit for sitagliptin versus sulfonylurea. Boehringer Ingelheim has reported similar findings in a sulfonylurea comparative study with linagliptin, in favor of the DPP-4 inhibitor. So overall, although these are relatively small numbers, the results of these analyses are provocative and suggest the potential cardiovascular benefit for DPP-4 inhibitors, particularly versus sulfonylureas, that deserves an additional investigation.
Our definitive placebo-controlled cardiovascular outcomes trial, TECOS, is currently ongoing. It is an event-driven trial with a planned recruitment of 14,000 patients. Next slide, please.
Merck has the most comprehensive DPP-4 inhibitor fixed-dose combination program in the industry, and this is a critical component of our strategy to maintain leadership in this area. In this table, approvals are indicated with check marks and publicly disclosed studies with circles. Shortly after the approval of JANUVIA in 2006, we launched JANUMET, which is a combination of sitagliptin and metformin administered twice daily. JANUMET comprises nearly 1/3 of the patient use of the sitagliptin family worldwide. We now have a once-daily version of JANUMET, JANUMET XR, that has been filed in the U.S. and has a PDUFA date in the first quarter of next year. I am pleased to report that we also recently obtained approval of a combination of sitagliptin and simvastatin in a single tablet, JUVISYNC, and I'm announcing today that we have entered Phase III for our sitagliptin/atorvastatin combination, MK-431E, with filing expected in the U.S. in 2014. We are no longer pursuing MK-431C, our combination of sitagliptin and pioglitazone, and have withdrawn our filing in Europe after careful consideration of the regulatory and commercial issues associated with the pioglitazone combination. Next slide, please.
JUVISYNC is our combination tablet of sitagliptin and simvastatin and is the first fixed-dose combination of an anti-hyperglycemic therapy with an anti-atherosclerosis therapy. This is important because patients with Type 2 diabetes are at increased risk of cardiovascular disease, and multiple guidelines recommend statin use in these patients. In fact, patients with diabetes at high-risk for cardiovascular disease have an LDL goal of less than 70 milligrams per deciliter, which is lower than that for patients with CD risk who do not have diabetes. Nevertheless, nearly 40% of these patients do not receive statin therapy. JUVISYNC is a once-daily single pill containing sitagliptin at 100 milligrams and simvastatin at 10, 20, or 40-milligram dosage strength. We are also developing the 50-milligram dosage strength of this sitagliptin combination for use in patients with moderate renal impairment. Finally, as previously noted, we have entered Phase III with a combination of sitagliptin and atorvastatin in a single convenient tablet. Next slide, please.
The most recent addition to our DPP-4 portfolio is MK-3102, which is a once-weekly, oral DPP-4 inhibitor. Once-weekly oral therapy is a new paradigm for the treatment of Type 2 diabetes, and we are excited about this approach because it may offer patients a simpler option to achieve and maintain glycemic control through improved compliance. MK-3102 is highly potent and selective. We anticipate the once-weekly dose to be 25 milligrams or less and expect the efficacy, safety and tolerability profile to be similar to that of sitagliptin. This molecule is currently in Phase IIb, and we anticipate initiation of Phase III in 2012. Next slide, please.
Shown here is the pharmacodynamic profile of MK-3102 indicating plasma DPP-4 inhibition over a period of one week following administration of a single dose. In the DPP-4 inhibition assay used in this experiment, sitagliptin 100-milligram once-daily, a dose that maximizes the mechanism, produces approximately 80% inhibition at 24 hours. With MK-3102, we see approximately 80% inhibition on Day 7 following a single dose with this compound. These pharmacodynamics strongly suggest that this once-weekly compound will have efficacy comparable to sitagliptin. Next slide, please.
To summarize our current efforts in diabetes, we are leading in DPP-4 inhibitors with JANUVIA, JANUMET and now JUVISYNC, which is the first combination of an anti-hyperglycemic agent and atherosclerosis therapy in a single tablet. Advance, please.
We are committed to maintaining leadership with our fixed-dose combination program: JANUMET XR and MK-0431E and an extensive clinical program in China together with our cardiovascular outcomes trial TECOS. So where are we going from here? Next slide, please.
We believe that in the future, it will be critical to deliver first-in-class and best-in-class therapies that has the potential to fundamentally change how diabetes is treated. MK-3102, our once-weekly DPP-4 inhibitor, is a paradigm shift in the treatment of Type 2 diabetes with the potential to improve compliance and clinical outcomes. In addition, late last year, we invested in the acquisition of SmartCells. SmartCells developed the technology that could potentially result in a glucose-responsive insulin, that is an insulin with a substantially lower risk of hypoglycemia relative to currently available insulin analogs. While this is still an early-stage program, we believe that this approach has the potential to be a game-changer. And this illustrates the kind of new mechanisms that we are pursuing in the labs in both the oral and the non-oral space to identify next-generation therapies for the treatment of both Type 2 and Type 1 diabetes. Next slide, too, please.
Turning to osteoporosis. It is estimated that 200 million women worldwide have osteoporosis and that this number will grow significantly with an aging population. One in 3 women over the age of 50 will experience a fracture as will 1 in 5 men. Hip fractures are particular concern with estimated mortality rates up to 20% in the first year following the fracture. However, despite these concerning statistics, it is estimated that only 20% of people with osteoporosis receive treatment, reflecting the magnitude of the unmet need in this area. Merck has historically been a leader in osteoporosis with Fosamax and [indiscernible] . And for the last decade, we have focused on the development of novel mechanisms for the treatment of bone loss in postmenopausal women. Next slide, please.
Odanacatib, also known as MK-0822, is a novel treatment for this disease that is currently in Phase III. Odanacatib iss a highly selective cathepsin K inhibitor, which is a first-in-class, once-weekly oral therapy with no special requirements for dosing. This molecule does not accumulate in lysosomes, which is a characteristic of older cathepsin K inhibitors that were associated with skin toxicity. Cathepsin K is a cysteine protease in osteoclasts that mediates the degradation of bone matrix. Inhibition of this enzyme results in decreased bone resorption.
However, odanacatib has the potential for clear differentiation versus other antiresorptives as shown on the next slide. First, approximately 25% of osteoporosis patients are bisphosphonate intolerant, and there's an obvious opportunity for odanacatib use in these patients. Second, there is clear evidence that odanacatib has a mechanism that is fundamentally different from that of other antiresorptives, such as bisphosphonate, or Prolia, the anti-RANK ligand.
Osteoporosis is the result of an imbalance between bone resorption and formation, with bone resorption exceeding bone formation. It is well known that bisphosphonate and Prolia not only inhibit bone resorption but also reduce new bone formation. In contrast, with odanacatib, while there are comparable effects to other antiresorptives on reduction of markers of bone resorption, there is less reduction of bone formation markers. This difference may [ph] in biology may ultimately produce greater improvement in bone mineral density, cortical thickness, bone strength with the potential for greater efficacy in reducing fracture risk. We have measured these parameters in both the nonhuman primate model and in postmenopausal women with osteoporosis, and I will share this data with you in the next few moments. Next slide, please.
First, we will focus on data from an estrogen-deficient nonhuman primate model of osteoporosis. In this study, we compared markers of bone resorption and bone formation for alendronate versus odanacatib. In these animals alendronate and odanacatib are compared at exposures that approximate the exposures seen with our clinical doses in patients. As you can see in this panel, with respect to our resorption marker, urinary NTx, there are nonsignificant differences between odanacatib and alendronate. Advance,, please.
In contrast, with the bone formation markers, bone specific alkaline phosphatase, or BSAP, there are significantly less reduction of this marker with odanacatib versus alendronate. Even less reduction of BSAP have been observed in odanacatib in postmenopausal women in our clinical studies, which will be shown on the subsequent slide. Next slide, please.
In the same nonhuman primate study, we measured bone density in a number of sites, including the femoral neck, which is shown here. Femoral neck is considered a relevant site for assessing the risk of hip fracture in humans. Integral volumetric bone mineral density was measured using an imaging technology called Quantitative Computed Tomography or QCT. Standard [indiscernible] measures average BMD, while QCT can separately measure both trabecular and cortical bone, including cortical thickness. Cortical bone is the bone that is predominantly responsible for bone strength at this site. As you can see, there is a significant increase in volumetric BMD over vehicle and a trend for an increase for odanacatib versus alendronate. These differences are largely believed to be due to differences in cortical thickness. Significant increases in BMD and cortical bone and odanacatib versus alendronate have been observed at several other sites in this model, including the femoral shaft and the ultradistal radius in data that are not shown. Next slide, please.
In order to determine if these increases in bone mineral density translate into improved bone strength, we have utilized FEA or Finite Element Analysis. FEA is a computational method that was originally developed for structural analysis for use in civil engineering and is used, for example, in the design of bridges. The picture on the top left is a higher-resolution image of an ultradistal radius. The bone strength, that is the load the bone can bear without breaking, has been estimated using FEA. This approach has been validated by comparing estimated strength by FEA to actual strength as measured by mechanical compression of the bone, where you see an excellent correlation between the 2 approaches. Now that FEA has been validated, we have used this approach to estimate bone strength non-invasively in both preclinical models and in humans. Next slide, please.
This slide shows FEA estimated bone strength in the femoral neck for odanacatib versus alendronate. Both drugs increased bone strength, but we can see that the estimated bone strength is significantly greater for odanacatib versus alendronate. This finding in a nonhuman primate model that is believed to be relatively predictive of human osteoporosis indicates that odanacatib not only produces greater bone density versus alendronate but that this bone is also estimated to be stronger. Next slide, please.
Turning to our human clinical studies of postmenopausal women, shown on this slide are the bone marker results that were observed in our Phase IIb extension study compared to historical data for alendronate. These data were first presented at the recent ASPR meeting in September. As you can see, treatment with odanacatib results in comparable or slightly less reduction of the bone resorption marker urinary NTx relative to alendronate. In contrast, as shown in the bottom panels, odanacatib treatment leads to substantially less reduction of the bone formation marker serum BSAP versus what is at third, alendronate. In fact, there is very little, if at all, reduction of this bone formation marker with odanacatib. These results indicate that the 2 mechanisms have fundamentally different effects in humans. Next slide, please.
On this slide, we see the bone mineral density data with odanacatib from the same study over 5 years. Data are shown for bone mineral density in the lumbar spine, femoral neck and total hip as measured by traditional DXA. As before, we are comparing these results with historic results from the alendronate Phase III studies over a similar time period. With alendronate, bone mineral density increases very little, if at all, from years 3 to 4 and has plateaued at year 4 at all sites. In contrast, with odanacatib, there's a progressively increase in these sites over years 1 to 5. In addition, the magnitude of the bone mineral density increase through odanacatib is greater than that for alendronate at year 5, particularly at the cortical bone sites femoral neck and total hip. This data lead us to believe that odanacatib may ultimately produce greater efficacy in reducing fracture risk. Next slide.
Finally, in order to further explore the potential of the mechanism to increase bone mineral density and bone strength, we have recently completed a pilot imaging study in postmenopausal women and have just obtained the initial results, which we are reporting here for the first time. In this study, patients were treated for 2 years with odanacatib or placebo. The endpoints of the study included quantitative measurements of changes in bone density, cortical thickness and bone strength at multiple sites, including the spine, the hip and the extremities. Shown on this slide are the results of measurements of volumetric bone density and cortical thickness at the femoral neck. Volumetric bone density was significantly greater than placebo at both years 1 and years 2. This is accompanied by a progressive increase in cortical thickness for odanacatib that is significantly greater than placebo at 2 years. Next slide.
In this study, we also measured bone strength and now show for the first time that odanacatib treatment results in increased estimated bone strength in postmenopausal women. This slide shows the bone strength at the femoral neck as estimated by finite element analysis, which as I've previously indicated has been validated as a surrogate for bone strength in nonhuman primates. The results show that odanacatib is associated with a significant increase in bone strength as measured by FEA. Similar results were observed at the lumbar spine and ultradistal radius in this study. These data provide further evidence that inhibition of cathepsin K offers the potential to improve bone strength and reduce fracture risk in patients with osteoporosis, which is being studied in our ongoing Phase III fracture outcomes trial. Next slide, please.
In summary, in our human studies to date as in the preclinical model, odanacatib produces less reduction of markers of bone formation versus historical data with alendronate, which reflects the fundamental differences between these 2 mechanisms. We also see, in contrast to alendronate, progressive increases in BMD at multiple sites containing both cortical and trabecular bone over 5 years. Finally, we are showing here for the first time that odanacatib treatment increases cortical thickness and strength as determined by finite element analysis. Next slide, please.
Regarding the current status of odanacatib, our Phase III fracture trial is ongoing. It is a 16,000 patient placebo-controlled fracture outcomes trial. This study is being monitored by an external Data Monitoring Committee. They review unblinded data periodically to assess safety and efficacy, and this committee last met in September and recommended continuation of the trial with no modification to the study protocol. We have 2 interim analyses planned with criteria for early stopping. These will be performed in 2012. We will also be doing a placebo-controlled extension to the fracture trial, which will initiate upon close out of the primary trial. Patients will be continued for a minimum of 5 years of treatment, which is important given that this mechanism may show increasing effectiveness with longer duration of treatment. We anticipate regulatory submission of odanacatib in 2013. Thank you very much for your attention.
Peter S. Kim
Thank you, Nancy. We'll now take a 5-minute stretch break, 5 minutes. Thank you.
Peter S. Kim
Our final speaker is Darryle Schoepp, who joined Merck in 2007, to head up our neuroscience research franchise. Previously, Darryle had a distinguished 20-year career in neuroscience research at Eli Lily, where he made many contributions to the management of several neuroscience-based diseases. In addition, he has made major contributions and is recognized as an international leader in the development of therapies for anxiety disorders and schizophrenia based on glutamate transmission. Darryle?
I'm pleased to share with you the exciting progress we made in our neuroscience portfolio. Next slide. As you can see, I have several important programs present to you today, Suvorexant for insomnia, BRIDION for neurovascular blockade reversal, Preladenant for Parkinson's disease and our BACE inhibitor for Alzheimer's disease. I'll begin by talking about Suvorexant, our Orexin receptor antagonist for insomnia.
Next slide. Insomnia is a disorder of excessive, unwanted wakefulness in which the ability to fall asleep, sleep onset or stay asleep, sleep maintenance is disturbed and may be consistently experienced as non-restorative of low quality. Insomnia is highly common affecting up to 10% of nonelderly and 25% of elderly adults. It can be a chronic disorder, as about 30% of patients with insomnia takes sleep medications for more than 300 days per year. Insomnia is associated with impaired general health and reduced overall productivity and is a condition that's currently underdiagnosed and undertreated. Available treatments for insomnia are dominated by therapies that act through the inhibitory node transmitter, GABA, and these drugs may be unsatisfactory to many patients. The goal for developing a sleep drug include the following 4 characteristics: It would be generally safe for chronic use; it would shorten sleep onset; improve sleep maintenance; and have minimal residual effects.
Next slide. Orexin receptor antagonists represent a novel approach to treat insomnia as this new mechanism targets the brain physiology that's involved in generating normal restorative sleep. The current drugs that treat insomnia modulate GABA, which is very widely-distributed, essentially found in billions of neurons in all regions of the brain and spinal cord. GABA is the most important inhibitory node transmitter controlling excitation throughout the CNS and should control many functions including motor, sensory and cognitive processes. The suppression of brain consciousness to treat insomnia can be achieved by targeting GABA receptors, but this also produces many effects beyond sleep such as anxiolytic, muscle relaxant, anticonvulsant, amnestic pre-anesthetic effects and general anesthesia event. In contrast to GABA, orexins are neuropeptide neurotransmitters, where the neurons that make them are localized through a relatively small population neurons in the hypothalamus, an important sleep center of the brain. In contrast to GABA, orexin neurons specifically control wakefulness, a function that counters the drive to sleep. Blocking orexin receptors facilitates the transition from a wake state to a sleep state. That sleep is primarily targeted by this new approach. Next slide.
Suvorexant is Merck's first-in-class orexin receptor antagonist for insomnia. Based on clinical studies, it was an effective sleep agent delivered sleep onset, sleep maintenance, but little residual effect. In Phase IIb, Suvorexant showed efficacy for both objective and subjective sleep endpoint and was generally well-tolerated with a modest dose-related increase and adverse events. It's currently in Phase III development where our program includes 2 pivotal efficacy studies, a long-term safety study that also address efficacy as a secondary endpoint and comprehensive assessments of next-day residual effects. Based on results of this Phase IIb study in adults with primary insomnia, our Phase III program is evaluating both 20 and 40-milligram doses in nonelderly adults. In elderly subjects, we observed somewhat higher plasma exposures, so we're using 15 and 30 milligrams in the elderly in order to match the exposures we see in the nonelderly population. Next slide.
We've recently completed a one-year safety study of Suvorexant in over 750 patients with primary insomnia. This is a one-year randomized double-blind study that use the highest proposed clinical doses, 40 milligrams in the nonelderly, and 30 milligrams in elderly subjects. As you can see on the slide, compared to placebo, Suvorexant demonstrated excellent efficacy. Improving sleep onset and sleep maintenance over the course of the entire year. As shown in the left panel of the effects of Suvorexant on objective time to sleep onset, in the right panel, subjective total sleep time, sleep maintenance effects over one year. Suvorexant was superior to placebo for both these endpoints as assessed by these nominal P values over the year of treatment. This data will be submitted for publication next year. Next slide.
The same study also provided important evidence, Suvorexant was generally safe and well-tolerated during long-term use. Shown on the table are the proportion of patients who completed the full one-year study on Suvorexant or placebo, as well as a discontinuation rate for adverse events or lack of efficacy. The proportion of patients who completed the study was similar in both groups and Suvorexant tolerability was good, as evidenced by a small proportion of patients who discontinued due to adverse event over the course of the year. No serious safety concerns were observed during the study. Next slide.
This slide addresses another important question about safety and tolerability for an investigational drug intended for sleep, especially one that improves sleep maintenance, whether it will have dilatory effects on next-day functioning. In this study, we evaluated Suvorexant in 24 healthy elderly subjects for effects and a critical measure of next day function, highway driving performance in the morning. Next day driving performance is a regulatory expectation for defining the safety profile of a sleep drug. It's important because it's thought to represent a real-world measure whether a drug will have an impact on a commonly performed next-day activity, for which impaired performance, if it were present, could have serious consequences. Suvorexant was administered at bed time, subjects were asked to drive a defined on-road course 9 hours later. Standardized measures were used to assess driving performance as a placebo or Suvorexant at 2 doses, 15 and 30 milligrams which are the elderly doses in our Phase III study. Zopiclone, which is the racemic mixture that includes the active ingredient of LUNESTA, was administered on the night before, as a positive control. Impairment, the y-axis on the graph was measured as standard deviation of lane position, STLP, comparing drug and placebo groups. STLP values, a plus 2.4 centimeters are greater from placebo, as illustrated by the dash line on the graph represents the deterioration in driving similar to what would be seen in subjects with a blood-alcohol content of approximately 0.05%. When compared to placebo, STLP mean values were significantly greater for Zopiclone showing that it significantly impaired driving. In contrast, Suvorexant did not significantly impair driving compared to placebo in either the 15 or 30-milligram doses, either after a single dose as the data shown here, or after multiple doses for 8 consecutive days. This data is not shown. Next slide.
Currently, Merck, the only company with publicly-disclosed orexin receptor antagonist in clinical development, taking together the long-term safety and probability profile along with the efficacy results available today, Suvorexant appears to have an excellent clinical profile following acute and chronic administration. This includes sleep onset, as well as sleep maintenance without next-day impairment from those patients. We anticipate filing Suvorexant in 2012. Next slide.
Next, I will talk about BRIDION. Next slide. BRIDION is an innovation in the field of anesthesia. At the end of surgical procedures, in which rocuronium or vecuronium are used to induce neuromuscular blockade, BRIDION rapidly reverses neuromuscular blockade to speed recovery from anesthesia and reduce risk for complications. BRIDION's efficacy is illustrated on the right of the slide. Patients who received rocuronium or vecuronium to do some neuromuscular blockade were treated with either usual care, neostigmine or BRIDION towards the end of surgery. Patients in the group treated with BRIDION compared to those who received neostigmine, were much less likely to have residual paralysis at the time of extubation, as measured by the train of four, TOF. The lower the TOF ratio, the less the muscle is able to respond. In this study, 96% of patients in BRIDION group achieved essentially full muscle recovery, a TOF of at least 0.9, as compared to only 39.5% of those receiving neostigmine. This data illustrate that BRIDION provided fast and complete recovery from neuromuscular blockade for most patients, thus reducing risk for ventilatory compromise following surgery. Next slide.
BRIDION has had broad acceptance in Japan and is approved in 68 countries. In the United States, we're completing follow-up studies needed for resubmission. This includes a study recently completed, I'll comment on that study in the next slide, that characterize rates of hypersensitivity associated with BRIDION in healthy volunteers. Two other studies will address whether there's any clinical impact of the modest in transit effects on laboratory measures of blood coagulation seen with BRIDION. This includes an aspirin interaction study which was recently completed and a study that co-administer BRIDION with anticoagulant in surgical patients. This last study has recently started and we expect it to be completed in 2012. Next slide.
Results of the repeat dose hypersensitivity study in healthy volunteers with BRIDION are available, they've been posted to the clinicaltrials.gov website. This study was a multi-center parallel design, 3-arm study to evaluate the risk of hypersensitivity of BRIDION, after each of 3 sequential doses administered at 1, 5 and 11 weeks. We studied the usual clinical dose, 4 milligrams per kilogram and placebo, as well as a higher emergency dose, 16 milligrams per kilogram, which is used only in the very rare but life-threatening situation, which a patient who's been given a neuromuscular blocking agent cannot be intubated or ventilated. As shown in the table, the emergency dose of 16 milligrams per kilogram was associated with increased hypersensitivity and a small number of cases of anaphylaxis. However, the standard clinical dose, 4 milligrams per kilogram was not associated with significant increased risk of hypersensitivity compared to placebo, and there were no cases of anaphylaxis observed. Next slide.
This slide shows very recent results of BRIDION, the BRIDION Aspirin Drug-Drug Interaction study to evaluate platelet aggregation and coagulation parameter in healthy subjects. Results of this study show the absence of an interaction between BRIDION and aspirin on platelet aggregation in healthy subjects. BRIDION was administered at 4 milligrams per kilogram, the usual clinical dose for a placebo, following multiple doses of 75 milligrams aspirin. As shown on the table, for all measures, there were no clinically relevant interaction between BRIDION and aspirin on coagulation parameter as the 95 -- and the 90% confidence interval do not cross the prespecified clinically relevant bound. This includes inhibition of blood platelet aggregation, activated partial thromboplastin time, or bleeding time. The ongoing patient study will provide data of whether BRIDION-associated changes in laboratory coagulation parameters lead to an increased risk of bleeding. We plan to resubmit the U.S. NDA for approval before the end of 2012. Next slide.
Next, I will discuss preladenant, Merck's novel non-dopamine therapy for Parkinson's disease. Next slide. Parkinson's disease is a second most common chronic and progressive neurodegenerative disorder affecting 1% to 2% of the elderly population. It manifests with motor symptoms that include tremor, muscle rigidity, difficulty initiating and maintaining movement. Today, therapies for Parkinson's disease all act through dopamine. With continued use, the side effects of these drugs such as dyskinesia worsen, efficacy becomes less reliable. There is a need for effective non-dopamine therapies early in the disease, and late in the disease, to maintain symptom control. Preladenant is an adenosine A2A receptor antagonist. A2A receptor antagonism is a promising mechanism that we're setting at Merck as a non-dopamine treatment for Parkinson's disease symptoms. Next slide.
Normal healthy individuals have smooth, purposeful motor movement and control that has appropriate balance between inhibitory dopamine activity, and excitatory A2A adenosine receptor activity in the motor systems of the brain. This is illustrated by the gauge in the bottom left. In patients with Parkinson's disease, there's a loss of dopamine neurons that leads to a loss of inhibitory tone, but adenosine remains present at normal level and its excitatory tone is unopposed, creating an abnormal circuit, in which the output to the motor cortex is disrupted by too much excitatory adenosine, as illustrated in the bottom middle gauge. Preladenant selectively blocks the adenosine A2A receptors and restores balance between this inhibitory dopamine and excitatory adenosine signaling, see the bottom right. Which we believe results in an improvement in motor control. Next slide.
This slide shows the results of the completed Phase IIb study in which Preladenant was superior to placebo as adjunctive therapy for treatment of Parkinson's disease and patients with moderate to severe symptoms, despite being treated with ongoing dopamine therapy. The results of the study which were recently published, show that compared with placebo, a twice-daily dose of 5 and 10 milligrams, preladenant decreased off time which means the patient experience less time during the day when their medication wears off and symptoms were not controlled. In preladenant, increased on time, meaning the patients had more time during the day, when their symptoms were controlled. These effects occurred with no proportional increases in abnormal movement known as dyskinesia. Preladenant was also generally safe and well-tolerated in this study. Next slide.
In summary, preladenant shows promise as an effective non-dopamine therapeutic for Parkinson's disease symptom. Preladenant is now in Phase III, and we're studying it as adjunctive therapy in patients with modest or severe symptoms, also as monotherapy for patients early in the disease process. The doses being studied at 2, 5 and 10 milligrams given twice daily. We anticipate filing in 2014. Next slide.
So I will end by giving you an update on as important and exciting Merck program, BACE inhibitors for Alzheimer's disease progression. Next slide. Alzheimer's Disease is an irreversible neurodegenerative brain disease that leads to dementia with cognitive behavioral changes that are associated with functional impairments of activities of daily living and ultimately, death. Today, there are no treatments available to stop or slow disease progression over the long term, or to prevent it. Brains of Alzheimer patients are characterized by amyloid plaques neurosublatory (sic) [neurofibrillary] tangles, inflammation, and neuronal death. About 35 million people live with dementia around the world. And in the United States, there are over 5 million patients with Alzheimer's disease. About one out of every 8 person 65 years of age or older, suffers from Alzheimer's disease. The cost to payors are staggering, estimated to be $183 billion in the U.S. during 2011. Worst, the prevalence of Alzheimer's disease is growing rapidly due to the aging population creating an unsustainable burden on patients, caregivers and the economy. If no effective treatments are found by 2050, it's estimated there will be over 13 million Alzheimer patients in the United States. Payor costs will grow to over $1 trillion. These specifics do not begin to capture the emotional and physical toll Alzheimer's disease takes on patients and their families. The amyloid hypothesis is a leading theory of what causes Alzheimer's disease. A causative role of amyloid is supported by genetic studies in patients with familial Alzheimer's disease who get early onset disease. These patients have gene mutations that lead to overproduction of amyloidogenic, A beta peptide, and amyloid plaques. The presence of amyloid plaques was originally observed at autopsy in the brains of Alzheimer patients over 100 years ago. Now have been shown are people at high risk for Alzheimer dementia using brain imaging with amyloid pep labeling. The 2 key enzymes that generate A beta peptide and the amyloidogenic pathway, beta secretase base, and gamma secretase. These enzymes process amyloid precursor protein, APP, to produce short peptide forms, A beta 1-40 and 1-42, which then aggregate and produce amyloid plaques. Amyloid is associated with loss of neurons, brain atrophy and ultimately, clinical symptom. Inhibitors of gamma secretase have been tested in Alzheimer's disease trials, but cannot be administered at doses which substantially reduced A beta peptides in the human brain. The enzyme gamma secretase, also processes other substrates in particular notch, a protein that's needed for normal function of tissues throughout the body. This has limited doses of these compounds in the clinic, only results which have very modest effects on formation of A beta peptides in the brain. Merck, has been working on BACE inhibitors as way to more robustly inhibit the amyloidogenic pathway, while potentially avoiding the safety and tolerability concerns of the gamma secretase inhibitor. Next slide.
The discovery and identification of a small molecule-based inhibitor that readily enters the brain to reduce amyloid has been a major challenge. This has been a difficult target for several reasons. BACE is an aspartyl protease enzyme compartmentalized to the inner membranes of neurons. Its active site is relatively large in order to provide access to the proteins and processes, such as amyloid precursor protein or APP. The active site of the enzyme is illustrated on the right showing a peptide substrate docking to a shallow active site. A small molecule must not only potently interact at the site to inhibit the enzyme, but must enter into the CNS and inside of the neuron in sufficient concentration. Despite over 10 years of intense effort to discover such molecules, there's still no BACE inhibitor in clinical development with substantial CNS A beta lowering in human. Merck has been pioneering the design of brain penetrant molecules optimized for in vivo CNS A beta lowering activity. The orange and the red regions of the enzyme active site in the figure represent critical regions where small molecule Merck inhibitors bind. Unique insights from the use of structural modeling by our chemists were key in the success of our program. As a result of these efforts, extremely pleased to now show you clinical data with our lead BACE-inhibitor molecule. Next slide please.
Our lead Merck BACE inhibitor, known as MK-8931, greatly suppress A beta peptide levels in the human brain. These are the results of our multiple dose Phase I study with MK-8931. These studies are intended to find doses that reduce A beta peptides in the brain using the cerebrospinal fluid, CSF compartment, and examine the safety and tolerability of these doses in human. Volunteers were given the compound of placebo orally, once per day for 14 consecutive days. A baseline value of A beta peptides includes FATP beta, A beta 1-40 and A beta 1-42 was determined prior to the first dose by lumbar puncture of the CSF, subsequent data is calculated as a percentage of that value. On day 13 of dosing, a few hours prior to dose 14, the last dose, a catheter was inserted at the lumber space for serial CSF sampling. Last dose was given and CSF samples were collected every 2 hours for 36 hours. When compared to placebo, both a lower dose A and a higher dose B of our compound markedly inhibited the formation of A beta 1-40 in the CSF for up to the 36 hours past the last dose. Very similar reductions not shown here were also observed for FATP beta and A beta 1-42 peptide. This study shows that Merck BACE inhibitor MK-8931, reduced CSF A beta peptide by greater than 90% in healthy volunteers without observing dose-limiting side effects in this study. Details of these Phase I studies will be presented at Scientific Meeting in 2012. Next slide.
Alzheimer's disease therapeutics is a priority area for Merck. The amyloid hypothesis remains a leading approach for disease modifications for Alzheimer's disease. Based on our study, BACE inhibition is a very promising means to inhibit amyloidogenic A beta production, with the goal of preventing or delaying Alzheimer's disease progression. Phase I studies with our lead Merck BACE inhibitor, MK-8931, showed potent lowering of A beta CNS, and was generally well-tolerated in those studies. We also have multiple backup compound and I'm pleased to announce that we expect to initiate our Phase II studies in patients with Alzheimer's disease in 2012. Next slide.
So in summary, Merck neuroscience has an industry-leading, light phase pipeline with 3 novel and innovative first-in-class molecules. Suvorexant for insomnia, BRIDION for neuromuscular blockade reversal, and preladenant for Parkinson's disease. Associated that we plan to advance our first-in-class and highly-potent BACE inhibitor to clinical efficacy trials for Alzheimer's disease. Merck has a promising first-in-class portfolio that has a potential to address important unmet medical needs with novel mechanism. Thank you very much for your attention.
Thank you, Darryle. That completes the R&D section and I hope that you now have a better appreciation of why it is that we're excited about our late-stage pipeline. It's now my pleasure to introduce my friend and colleague, Adam Schechter, President of U.S. Global Health.
Adam H. Schechter
Good afternoon. It's a pleasure to be here today with all of you. Over the past few quarters, I've provided you with insight into our growth strategy and had shown you how we're executing in global human health. Today, my goal is to share with you, how we're transforming our business.
Performing while transforming is something that we've done very successfully. We've executed on both fronts to deliver growth while we're navigating patent expiries, reducing our footprint in pre-markets and we're integrating 2 companies. Moving forward, we want to ensure that we are well-positioned for continued success in our ever-changing and very dynamic business environment. Today, I'll discuss with you, a few aspects of that external environment and then I'll also talk about how we're transforming our commercial model in order to continue to meet the needs of all of our stakeholders. As we look at the external environment, they're increasingly and diverse pressures on the industry and our business. Pressures that require quick and strategic action. With approximately $50 billion worth of leading prescription products going off-patent over the next several years, hurdles in the global pricing and reimbursement environment will become even more challenging. New products launched into the marketplace moving forward, will have to exceed the current standards of care. So the bar to obtain pricing and reimbursement would have been higher in the future than it's been in the past, especially with Worldwide Health Care Reform and austerity measures that put constraints on spending. As we look at health care spending, we see the absolute spend continues to increase each and every year. Healthcare spending is expected to continue to increase over the next several years as well. The spending growth rate though is going down, you can see that on the line in the graph. However, there will still be growth in healthcare spend overall. In order to be successful, we have to transform our commercial model and there are 4 specific areas of our model that I'd like to focus on today. First, is how we're moving from a franchise focus to our newly implemented customer business lines operating model. Second, I'll review with you how we're transforming our focus from the representative-physician relationship, to one that also includes stronger relationship with payers and governments, also a model that utilizes multiple channels to engage our customers. I'll also share plans with you, on how we're going to move Merck from a company that's historically been perceived as an organization that launches products well, to one that is also extremely good at maximizing our products throughout their entire life cycles. And I'll close my remarks by showing you how we're increasing our focus, our resources and our presence in the fastest growing markets around the world, the emerging markets in Japan. I'll show you why we believe that we are well-positioned to continue to deliver a strong performance in 2012 and beyond, despite the challenges that we continue to face.
So let me start by telling you more first about our customer business lines operating model. We now have 4 customer business lines in place. Primary Care Women's Health, Hospital and Specialty, Diversified Brands, and Vaccines. Each customer business line has a senior leader for Global Human Health who is responsible for the P&L. They work closely with our country managing directors to truly maximize each and every customer business line in every market. The managing directors and their teams have the P&Ls at a country level, and they are the face of Merck to our customers. As you can see, the therapeutic areas are well-aligned by customer, and we will continue to ensure that we work closely with our research initiatives and colleagues to be equally aligned. This will enable each of our customer business lines to continue to meet the most pressing needs of our customers today and in the future.
Each of our customer business lines requires a very distinct strategy and set of resources in order for us to succeed. Let me give you a few examples of that. In Primary Care and Women's Health, we need thousands of sales representatives to reach the key prescribers of these products. We need to make sure that the generalist physicians are provided information to help them know how to appropriately prescribe our products. Also access in reimbursement are critical to ensure that when a primary care physician wants to prescribe the product, the product is reimbursed. In Hospital and Specialty, it's different, it's about high science. In this area, we're competing against small, single-focused companies. To succeed, we need to leverage health science associates and specialty sales forces, that'll enable us to interact with academic physicians on key scientific matters.
For Diversified Brands, we need pharmacy sales forces. We must have the right distribution agreements in place and have a strategic focus on how we compete for tenders.
Vaccines are also different. They're used by many physicians, but now, people are vaccinated in pharmacies as well, so we have to have the right distribution capabilities. We have to be able to server to our customers in different ways to make sure that they have products available to them in their respective settings. We also have to compete with tenders and government purchases within the vaccine customer business lines.
So now if you look at our customer business lines, they really do provide greater focus and insight on a geographic strategies. For example, the United States had a much higher percent of sales from Primary Care than Diversified Brands. In Japan, Diversified Brands make up a greater percentage of our sales. Our goal is to develop the right strategies with the right resources to meet the distinct needs of our customers. This will allow us to maximize our revenue and our profitability in each of our customer business lines.
Now I'd like to talk about how we're expanding our focus, but not only include physicians sales representatives, but also payors and governments. I'll also talk about the use of new marketing channels. Looking at a physician customer trust and value scores in these 4 markets, you can see Merck has received very strong scores. And these scores have continued to increase over time. And if you look at all the 17 markets where we track this metric, Merck is consistently #1 or #2, so we do very well in providing value and being trusted by our physician customers. To further build on our success in delivering customer trust and value of physicians, we're utilizing multi-channel marketing. In addition to our interactions with sales representatives, we're also connecting with customers through their cell phones or Blackberry, their iPhones, through e-mails, the Internet and other media. Multi-channel marketing allows us to reach our customers in the ways that they prefer, and allows us to increase the frequency and the quality of interactions efficiently.
This Slide looks at China. In China, we have about 3,500 sales personnel that cater approximately 207,000 customers. On the right-hand side of the slide, you can see we reached approximately 260,000 customers through other channels. We expect this number to continue to increase and our goal is to reach more than 400,000 physician customers in China, by the end of next year, through these channels. We are also committed to taking this approach to other parts of the world as well.
In addition to our physician customers, payors are becoming increasingly important at all stages of a product's life cycle, and we've changed the way we engage with them. Here's the important point, we have to look for input from our customers very early in the planning process. Typically, prior to beginning a Phase II trial, we discuss the target disease areas to ensure that they agree with us on the unmet medical needs that exist. We also discuss the potential target product profiles to ensure that payors will be willing to pay for that type of profile. In addition, we seek input from payors on the endpoints in designing our clinical trials. This enables us to ensure that when we're finished our Phase III trials, that we have the data we need to optimize pricing, access and reimbursement. What this early engagement leads to is success in the marketplace. JANUVIA, ISENTRESS, and most recently VICTRELIS, have all achieved a very strong and rapid access. I believe that's because we sought input from payors from around the world very early in our planning process.
Now I'd like to talk about how we will launch our products well, but also how we're going to maximize all of our products and all of our franchises as we move forward. Let me begin with how we think about 2012. We know that 2012 will include a share of headwinds including a loss of SINGULAIR, U.S. Healthcare Reform, continued austerity measures, and the annualization of the transition of REMICADE and Simponi in some of our markets, to name a few. Merck has a long history of overcoming major expiries, including Zocor in 2006, Bazimax in 2008, and COZAAR/HYZAAR in 2010. Importantly, we are ready to manage through these SINGULAIR patent expiry as well. As Ken said, we expect to maintain 2012 revenue at/or near 2011 levels. Our base is strong, it's diverse and it continues to grow. With the continued commitment of our team, I believe we can deliver results in 2012 to our key growth drivers such as launch products, JANUVIA and other core products, our continued growth in emerging markets.
Now I'd like to discuss how we're maximizing our core products. This slide looks at our top 10 core products from around the world, and we can see that we continue to sell very strong year-over-year growth. We were 6% across the Global Human Health business, which represents growth of $1.7 billion, that's so far this year. The declines we experienced were mostly related to patent expiries in major markets, but in general, we see very strong growth across our inline franchises. This includes nearly $1 billion in incremental JANUVIA and JANUMET sales so far this year. Based on sales, JANUVIA is a #1 oral diabetes treatment globally, and it continues to show very strong growth in patient days of therapy and very strong market share within the DP4 class, that's despite the introduction of competing drugs. We have consistently driven growth and achieve leadership for JANUVIA and JANUMET and we expect to stay there. Nancy mentioned that we recently received approval on the United States for JUVISYNC, a combination of JANUVIA and simvastatin, and we plan to gain FDA approval and launch JANUMET XR in 2012. Through strong franchise management, we will address the unmet medical needs of even more patients, as we continue to create and realize important growth opportunities. Peter and Nancy have already spoken about our once weekly DP4 inhibitor, which we believe represents a very significant growth opportunity. If you look at the 2010 worldwide diabetes market, the DPP-4 inhibitors represented about 13%, however, they're projected to grow to about 30% in 2016.
In addition to that tremendous growth expectation, we also believe there's a significant opportunity to displace upon arrears, and with the right profile, we could potentially become a first-line therapy. MK-3102 combines the efficacy of DP4 inhibition with once-weekly dosing. We believe that MK-3102 can grow the DP4 market, grow share in the overall market as well.
Next, I'd also like to discuss our management of the immunology franchise, where we've continued to sell strong growth with REMICADE. This growth can be seen across all 6 indications, especially in the gastro indications where we've grown the fastest over the past few years. We will continue to make the most of each of these indications, as we simultaneously grow SIMPONI. The launch of SIMPONI has been very successful, it's launching very well in EU and its success has not come at the expense of REMICADE. REMICADE and SIMPONI have both shown strong growth. Again, this dual success comprehends strong franchise and life cycle management. It also shows that new products that follow on and add additional benefit can succeed in the market.
In hepatitis C, VICTRELIS continue to show increases in both volume and share. TRx share -- TRx volume and share grown 8 out of the past 12 weeks and the full-week flowing TRx growth rate is 18% and we're excited about the continued potential for VICTRELIS. VICTRELIS is the only HCV protease inhibitor on the VA formulary. The VA is the single largest provider of services to hepatitis C patients in the United States with over 130,000 patients. In addition, VICTRELIS has also achieved good managed care coverage in the United States. It's covered by about 60% of commercial plans and 40% of Medicare Part D plans, and we're also doing well with Medicaid primary approvals as well. In fact, several important large state Medicaid formularies, like Florida and Illinois, are listing VICTRELIS as the preferred product on their formulary.
We're also making good progress as we continue to launch VICTRELIS in markets around the world. VICTRELIS is approved in over 40 countries, and has been launched and is currently being reimbursed in several large and very important markets. Some of the early data in places like Germany and Brazil are very encouraging, but it's still early. I look forward to providing you with additional updates on our international success with VICTRELIS as we move forward.
In addition to VICTRELIS, we've heard from Roger that we have a compound known as MK-5172. This compound has the potential to be the first pan-genotypic protease inhibitor. Important opportunities still remain for protease inhibitors, particularly ones that can do the following: Improve SPR rates; adjust different genotypes of resistant variance; and provide more simplicity in the administration. We believe that MK-5172's potency, pan-genotypic efficacy, high barrier to resistance and convenience make it the partner protease inhibitor of choice for combination regimens.
Now I'd like to move to vaccines. Vaccines also represent an important and a growing part of our business. Merck has developed within 1/3 -- more than of the world's vaccines for children, adolescents and adult. We are currently ranked #3 in worldwide vaccines sales. You can see that we delivered a 28% CAGR from 2005 to 2010. The growth has been driven primarily by GARDASIL, ZOSTAVAX and RotaTeq. We are driving growth across our Vaccine franchise today, and we expect to continue growing in the future. As we look forward, we have new vaccine programs that represent important clinical advances and business opportunities. This is the case with V503. Today HPV type 16 and 18 cause about 70% of all HPV-related cervical cancers. But good news about V503 is it offers even broader cancer protection, up to about 90% of HPV-related cervical cancers. I believe that V503 will help us capture additional share outside of the U.S., And can maintain our share in the U.S.
Another vaccine that we're excited about is V212, an inactivated herpes zoster vaccine for use in immunocompromised patients. There is a high unmet need for prevention of herpes zosters in these patients. These patients have a significantly higher risk for complications from zoster, compared to those adult patients who would receive ZOSTAVAX. We believe that there is a true health benefit and a significant market opportunity to vaccinate the patients who are at increased risk for severe and life-threatening complication.
Now I'd like to transition from vaccines to 4 other important late-stage research programs. I'll start with Suvorexant. Suvorexant is anticipated to be an improved alternative to current therapies that treat chronic insomnia. Chronic insomnia has a very high prevalence rate of up to 30% of the general population. It is a large market and about 30% of patients are chronically treated with medicines today. Many of them, however, are not satisfied with their current treatment. In particular, the side effects, such as residual effects. Suvorexant has the potential to be the first compound that delivers on 4 of these key attributes: Safe chronic use; sleep onset; maintenance of therapy in sleep; and minimal residual effects. If it does, it will provide significant advantages over therapies that are available today. Another product which I'm excited about is odanacatib. Odanacatib represents a very significant potential opportunity in a market that we know very well. Osteoporosis affects over 200 million women worldwide. There was only about 20% of patients being treated. The burden of disease remains very high. Within one year following a hip fracture, 33% of patients are either totally dependent or in nursing homes. In addition, approximately 25% of patients cannot tolerate diphosponates and diphosponate use is declining. Odanacatib offers a novel reversible mechanism of action that could translate into differentiated efficacy. The initial data that Nancy shared with you is very strong. We saw significant increases in BMD at the hip in our Phase IIb data at 5 years. And we have a large scale fracture trial, which will be included in our label and will be promotable at the time of launch. This should help with pricing and reimbursement. In addition to that, odanacatib have a very convenient once-weekly oral dosing regimen with a good safety profile seen in clinical trials to date.
I'm also very excited about the potential for TREDAPTIVE. There is substantial residual cardiovascular risk for patients despite the use of statin therapy. Additionally, the cardiovascular market remains one of the largest markets in the world. One share point in the U.S., represents more than $400 million. The need for medical advances is even clearer if one looks at niacin sales. They remain above $1 billion despite tolerability issues. As Mike said earlier, the hope for TREDAPTIVe is that it will provide efficacy across multiple lipid parameters and allow more patients to reach the optimal 2 gram dose of niacin. Once our outcomes trial is completed, we will file in the United States. Again, outcomes data would be in our label. This should help with patient access, with pricing and with reimbursement globally.
The last product and program that I'd like to highlight is BRIDION. BRIDION is our reversal agent for the use with anesthesia in surgical procedures. This is a first-in-class important product for anesthesiologists. Anesthesiologists have not seen a new innovation in some time in this area. As you heard from Darryle, what's unique about the BRIDION is that it reverses a patient from anesthetic block much faster than the current standard of care. It also does not need to be given concomitant medications which are usually used to manage the side effects with current reversal agents. We have launched BRIDION in the EU and Japan. We have seen tremendous growth in Japan, since Japanese physicians routinely use reversal agents. The United States represents another significant opportunity for us to bring this innovative product to market, in which reversal is a common with surgical procedures.
So while I'm enthusiastic about all of our commercial opportunities that stem from the innovative research that we undertake at Merck, the programs that I've just highlighted for you today, are particularly important for the following: They're important because of their anticipated timing; their impact on human health; and the value they can bring to Merck and to our stakeholders; and to most importantly, patients. What I'd like to do now, is talk about how we're continuing to focus on mature markets, as we increase our attention in our investments and our resources in the faster growing emerging markets in Japan. The United States pharmaceutical market is expected to grow up approximately 2% CAGR over the next 5 years according to IMS. As we look at Merck's top franchises, we're showing very strong growth in most of our key franchises today. On the right-hand side of this slide, you can see that we are growing faster than the overall market which is represented by the evolution index. Here, you see that we're executing very well in the largest market in the world.
Looking at the EU, IMS also expects about 2% CAGR over the next 5 years. Merck continues to deliver good growth across our key franchises and once again, our evolution index continues to show growth. We expect to continue to grow our business faster than the EU market as we move forward. So in the United States and the EU, we're delivering growth in relatively flat markets. That's an important accomplishment. But it's an equally important reason why we have to focus more of our attention on the fast-growing emerging markets in Japan.
We have a very clear strategy in emerging markets. We focus on our inline brands and our core brands. We focus on our new product launches, our Diversified Brands portfolio, and we continue to focus our ability to develop important partnerships to bring innovative, branded generics to these markets. As Ken mentioned, we continue to engage in business development in order to develop new ways to partner with local stakeholders. This will help us be successful in the emerging markets. We have tailored our overarching strategy from the emerging markets, while we're providing each of our regions with the autonomy to operate within that strategy. While the emerging market share some similarities, they are also very different. It makes each market a relatively unique opportunity. Allowing our local teams the opportunity to execute their plans in ways that make sense for their business is critical to our success. We also continue to hone our talent management, our culture and our mindset to be successful in these markets, not only for the short term, but the long term. On this slide, you can look at the total number of sales personnel as the surrogate for overall resources. It's indicative of how we're allocating resources across the board. You can see declines in the United States and in Europe, along with a very significant increase in China. The investments that we're making in China are similar to the actions that we're undertaking in other emerging market as well, like India and Russia to name a few. There are 2 important points I want to make in this Slide. First, we are reallocating resources from mature markets to the emerging markets. And second, importantly, we continue to have very significant resources in the mature markets. These markets will continue to represent very important opportunities now and in the future, so we will do both.
This Slide gives you a sense of our top 10 products in the 7 core emerging markets. These 10 products represent about 50% of the sales in these core markets. In general, these products are fairly consistent with the top products in other markets around the world. Once again, this reinforces that innovation matters. Very importantly, you can see that the growth rates for these products are high, and that the products are performing very well in these important markets.
In 2011, we expect that the emerging markets will represent about 18% of our sales. We continue to anticipate that in 2013, the emerging markets will account for 25% of our pharmaceutical and vaccine sales. When I think about what the 7 core emerging markets mean for Merck, I put them into 3 buckets. First, where we're performing well, Merck is performing well in China, in Mexico and in South Korea. These are relatively stable and reasonably predictable operating environments. We have strong leadership teams in place, and we're already increasing the depth of talent that we have in this market. We also have strong operating results and we are consistently growing significantly faster than the market in each of those 3 markets. The second bucket is Brazil, brazil represents a potential turnaround for Merck, and we are focused on improving. We have a strong management team in place and we have a renewed focus on our core growth drivers. The third bucket, we have important opportunities to transform our business in, Russia, India and Turkey. In Russia and India, they are growing markets with significant opportunities. Russia is a relatively new environment for Merck, and we're catching up there. India is a fast growing market, but it's a fragmented market. Many products are doing well, but they are relatively small. In Turkey, because of aggressive cost containment measures, we have not had strong sales growth despite significant unit growth. We will continue to develop our capabilities and partnerships to be successful in each of these environments.
Now I'd like to share some examples of how we're performing in these emerging markets, and I'll start with China. On the left portion of this slide, you can see that the Chinese market continues to see strong growth and IMS anticipates that, that will continue. Merck sales, on the right side of the slide, and you can see we have shown very strong growth in China year-over-year. We expect our sales growth in China in 2011, to be over 30%. So our sales are growing, which is driving our overall market share. And therefore, we believe we will continue to be successful in this market. But this side demonstrates our strong growth in China. The evolution index says that Merck is growing faster than the overall market, including leading multinational companies and also local companies in China. Our share rank in China has been steadily increasing, today we're # 7, but we ranked #1 in volume growth, and we expect to continue to grow faster than the overall market in China, as we focus on our growth strategies.
Shifting to Brazil. The Brazilian market is growing and is expected to continue to grow faster over the next several years. Merck is also growing. The maroon portion of these bars represent the historical REMICADE business. You can see that even without REMICADE, the overall business, represented in the green bars, has been growing. On the evolution index, we have not grown consistently faster than the overall market in Brazil. That's our focus today, we are working to grow faster than the market so we can continue to increase our share and our relevance in this important country.
I'd like to move to Japan now. Japan is a very unique market and has a mature market but with growth rates from Merck that are similar to that of an emerging market. Japan is the second largest market in the world. It has favorable policy, pricing and innovation environment, and its government is committed to creating a very strong research, development and regulatory environment there as well. We see that new products are being approved in Japan faster today than in years past. If we look at our sales in Japan quarter-over-quarter, you see that our inline products in the green part of the bar continue to grow well versus the previous year. You'll also see strong contribution from our new products as well. Our share of sales has been increasing and we are now #8 in the Japanese market, but as you can see, we are ranked #1, #1 in growth. This is due to the success that we're achieving with the many product launches that are currently underway.
So in summary, Merck is committed to maximizing our top line revenue and our operating income. We're going to do that despite an increasingly difficult economic and payor environment. And here's how we're going do it, we're going to maximize each customer business line for profitability and for revenue, we're going to transform our commercial model to multichannel management and an increased focus in demonstrating value to our customers, we're going to work with our research colleagues who demonstrate value in each pipeline products based upon our customers' definition of value, we're going to execute best-in-class launches while maximizing each and every product, and we will grow in the large mature markets while we accelerate growth across the emerging markets. We have made and we continue to make tremendous progress in driving growth across our global business, while transforming the way we work in order to deliver on our commitments to all of our stakeholders and our company's mission. And we always remember that our company's mission is to save and to improve lives for the long term. Thank you.
Okay. So that ends our formal presentation. We now like to take some time for Q&A from the room. So we'll a few people on the stage, but we can ask questions of other people in the room. So if we're ready, why don't we start with Barbara. Let's just pass the mic to you first, Barbara. Thanks.
Barbara A. Ryan - Deutsche Bank AG, Research Division
I have 2 questions. The first is on the dividend, I'm sure there was a lot of discussion as to what to do about the return of cash to shareholders. And I'm wondering, your payout theoretically in 2012 would be higher based on consensus estimates than it is in 2011, and I'm just wondering with the 11% increase, how should we think about what drove that decision. Was it a targeted yield? Was it a targeted payout? So that's number one. And then, secondarily, in terms of your development program in CETP, you talked about wanting to be their first in class or best in class, and I wonder if you could just tell us how you feel that anacetrapib would be positioned versus Roche's compound?
Peter S. Kim
I'll the first one on the dividend, as you might have guessed. So there's no single answer to that question, and I've often been asked as you heard, you look at the yield, you look at the payout, you look at the cash flow return, we look at all those factors, and then we also think about returning cash to shareholders in the most meaningful. And so obviously, you've seen we've been much more active in share repurchase. In some ways, I feel like we have a very good yield right not, but I actually feel like that is probably because our stock price. And so that will be what it is over time. But we think of it in terms of our total capital structure. I think Ken laid it out really well. We have to make sure we have a strong operating structure and satisfy all our operating needs with a good balance sheet and a good credit rating, we're maintaining that. Then we really want to make sure we fund all the growth opportunities that we see out there that have a positive returns, as Ken said. You'd seen a lot of that investment in all the presentations today. And then we think about returning cash. We really don't go policy, if you will. We think of what's the best way to do it as we go along. I think we'll continue to do that as we go forward. So you can't -- I would just say, don't expect to forecast your policy statement or whatever. We're just going to continue the balance this the best way it would work.
Peter S. Kim
And with regard to anacetrapib, Barbara, we haven't seen any of the data yet from the Roche compound. So it's hard to tell whether or not that's going to be a successful compound. The lipid changes that they get with that molecule at the doses that they're using are significantly less than that we're seeing with our molecule. In fact, the lipid changes are really comparable in many ways to TREDAPTIVE's lipid changes, and so I think a comparison could be made there between those 2 molecules, if the Roche compound does succeed. I would say that Mike showed on one of his slides properties that we think are important about our drug, the high potency and the lack of off-target activities that we think, coupled with the really profound changes in lipids, will make anacetrapib a best-in-class CETP molecule.
Any question, Jami?
Jami Rubin - Goldman Sachs Group Inc., Research Division
Just to follow-up on the capital allocation questions. To Ken, the increase in the dividend and the increase in the share buyback programs, which I think everybody in this audience applauds this year, does that signal a change in your desire to pursue business development? And I know this was sort of a quiet year here on the Inspire deal with the small deal, but if you can talk about business development and how you see that as a priority for the company and in which areas? And I have also a question on R&D spend. Beginning of the year, Ken, you came out and said we expect to continue to grow R&D and some investors were disappointed, others weren't. But throughout the year, you've continued to bring that down, and I'm just wondering what's driven that decision apart from products that have been discontinued or if it is a firm-wide decision to bring down the budget? And how should we think about it going forward with a number of large clinical outcomes trials coming to fruition, but at the same time, obviously, anacetrapib will be a big commitment?
Kenneth C. Frazier
Okay, so let me try to take both of those, because I know I'm going back to February. I think that in February, what I was trying to express to investors is that we're going to stay committed to R&D, that we did not expect to see as you maybe you saw in other people's planning disproportionate cuts to R&D. That's what I was trying to say. I was trying to say, and I'll say it again, expect consistency of strategy for Merck. We believe over the long term, we will create value by investing in R&D in a way that improves our ROI, but what we have been good at, what we believe we still are good at, what our unique competitive advantage is, is the work that gets done in R&D. So what I was saying is, it can go up, it can go down, depending on what's in the portfolio at the time, but I was expressing a clear aversion to what I would call a disproportionate cut to R&D. I don't remember saying I would keep growing it necessarily, what I was basically saying is I'm committed to R&D. Now back to your business development question. As much as we are excited about this pipeline, I try to be very clear, I am eager with every opportunity that I get to build on that pipeline, to augment that pipeline. So the number one priority for me, given the fact that I intend to drive the long-term growth of the sustainability of this company to R&D, is to get to best technology, to get the best products that are available on the outside, as long as they can create value for our shareholders. So that is a very high priority for me is augmenting the pipeline, early stage, mid-stage, late stage, wherever that's possible. I would say that the next priority for business development is what Adam was talking about. We have great growth in the emerging markets, we're going to continue to do business development deals, smart partnerships that allow us to have the capabilities, the local partnerships that allow us to grow in those markets. The third thing, as I said, we will look for targeted value-creating opportunities, if they exist, with respect to our complementary and synergistic businesses of animal health and consumer health. So I'll just wrap it up by saying what I was trying to say in February, perhaps I didn't say it very clearly, is that you should look for consistency of strategy out of Merck, and that is basically around scientific excellence and innovation. That doesn't mean that we are not trying to focus on return on investment in a way that Peter talked about.
Can we take the next question here, and then we'll go across the room, and then we'll across the room and will start working our way towards the middle. Mark?
Unknown Analyst -
Mark Shernaun [ph]. I actually have a couple R&D questions for Peter, if I may. The first is have you ever seen fickle steroid excretion in humans when you gave anacetrapib. And I know it's hard to measure, but have you ever seen it? And number two, as you showed some really interesting preclinical data on reverse cholesterol transport and HDL functionality in hamster models. I was wondering if you could, similar to Barbara's question, on a preclinical side, can you compare and contrast those data perhaps with both towards what -- what you know of torcatropib and also daltrocopib? And then the final question was the odanacatib Phase III trial is roughly twice the size, I believe, of Dapolia [ph] pivotal PMO trial, I'm wondering why is your trial so much bigger?
Peter S. Kim
Okay, thank you. So on the first question, we have not seen measurements. We have not made measurements to fickle steroid in humans. That's an area that's actually, as Mike said, is one we're -- it's actually very difficult to measure reverse cholesterol transport reliably in humans. It's something that it's science and still going on, but so far, really, nothing there. In terms of your second question was on the hamster model. We used the dyslipidemic hamster model for these measurements to show the reverse cholesterol transport. Others have used on normal hamster model, and we will just point that, that maybe one reason for discrepancies. The dyslipidemic model much better models the human state of what's going on. And then finally, in terms of the size of the odanacatib trial, what I would say, I don't know the details of the odanacatib power calculation, but the power for the odanacatib trial is based on a co-primary endpoint of hip fractures. And hip fractures, of course, are substantially less frequent than other fractures. And so that led to a significantly larger study, but if it's successful, it will mean that when we launch this drug, as Adam said, we'll have hip fracture as co-primary endpoint for the drug.
okay. Let's go to John, and then we'll come to Chris, and then Seamus next. And then we'll keep working our way in.
John T. Boris - Citigroup Inc, Research Division
John Boris with Citi. The first question for Peter. If you strip out the Biologics that you have or biosimilars that you have, do you feel that you have the optimal number of Biologics, the percent of Biologics in Phase II, III. Can you may be give some commentary on what percent are Biologic
related? Do you feel you have what you need internally to accelerate that Biologics platform, because there's an explosion of innovation there? My second question has to do with the defined trial in anacetrapib. I think Michael laid out that there's about 803 patients 3 years out. What's the timing for presentation of that outcome? And then the last question for Adam, certainly emerging markets has its benefits, high growth. Certainly, it carries its risks. I think you clearly laid out 18 percentage as your goal going to kind to 25%. Can you give us any ideas to what percent of that revenue is coming from generic or branded generic products relative to proprietary products or patented products?
Peter S. Kim
Do you want to start?
Adam H. Schechter
I showed you -- a good sort of way to think about that is I showed you the customer business line and I showed you the break out of customer business lines. And you can see in there, the percent coming from diversified brands in the emerging markets versus if you compare that to United States or Japan or other parts of the world, we expect to have strong growth in each of those segments and the emerging markets. Not one disproportionate to the other, but the thing to realize is when we talk about the emerging markets, and we talked about launched products, those 3 products that have been launched in the markets 10 years ago or 15 years ago. So the breakdown is a little different when you think about what you're launching, and you have to be very clear in what you are defining. So if you look at the products that we have today, we expect a significant growth in those products. But as we launched new products, not typically the products you'll think of, we expect even greater growth to come from products. And it really does vary. As I said, each emerging market is a market to itself, and the way that we are going to be successful in those markets are very different. So the breakdown in China is very different than the breakdown of Turkey and so forth. So I'll give you a sense in that slide. You can have a sense when you look at our top 10 products and the growth rates in those, but the new products that we launched are going to differ in each of those markets around the world.
Kenneth C. Frazier
So starting with your question on DEFINE, John, it's a 2-year extension. And so we're just going to let that play out and let it go, but the important point is that we'll have, as Mike said, patients with never long-term data on them on humans. With regard to Biologics, an interesting question, we have now 3 molecules in late-stage development. One of them is the -- actually it's 2 molecules that Roger talked about, MK 3415A, and we have the IL-23 antibody, which I talked about, that's in Phase IIb and then we have our IGF-1R receptor antagonist, which we're studying. It is still in multiple combination programs in oncology. Earlier, in the novel Biologics space, we have several molecules that we're excited about that we haven't disclosed the mechanisms. Now in terms of your question about where we want to end up, I would say that we're still very much looking to grow Biologics as we move forward. And what Mike talked about in terms of the BioVentures, it is going to be very important in terms of building capacity and experience in terms of the bolts of Merck BioVentures products that is going through both process -- bioprocess, as well as manufacturing. And so, I think we'll be well-positioned for that growth after we deal with these bolts.
Just a couple of questions from the web. First, Peter, if you can talk about the GI tax profile of MK-5172, is there anything there? And the second one is about Suvorexant and what we expect in terms of DEA scheduling?
Peter S. Kim
I'll take the Suvorexant, and then I'll give Roger a chance to answer a question. On the Suvorexant, I think that what you can expect is that the differentiation that will be important is not going to be on the basis of scheduling with the DEA. I don't for the DEA or the FDA, because we clearly need to go through the FDA and DEA reviews. But I wouldn't actually, in your models, include a differentiation based on scheduling. Instead, I think the differentiation is what Darryle showed, and that's lack of next-day residual effects, which in that driving test, which as Darryle said, is really become a regulatory expectation for drugs of this type than we have very nice results, showing a lack of next-day effects on next-day driving. And Roger, do you want to...
Sure. So the question was 5172, the GI upset. So it's early days, we've had -- suddenly reported on 7 days of treatment and with those patients that really is just mild GIF set that was very temporary, and we're in 2B now at the highest concentration.
Tony, back there with the mic, next. There's Chris, Seamus, and Tony pass it towards Kent [ph].
Christopher Schott - JP Morgan Chase & Co, Research Division
Great, thanks. Chris Schoot, JPMorgan. First question on anacetrapib, much of the benefit defined seem to be on revascularization. Can you just elaborate a little bit more on the implications of that signal and what does that mean for the products when you think about the outcome study, if we did see a lot of the benefit driven by revascularization in terms of the profile of the product? Second, enrollment timelines and the outcome study here, and is this a product you believe you could file based on interim look, if the data supported it? And then finally on odanacatib, benefit on BMD appears to build nicely over time, but it did seem like on the slides, some of the initial benefit versus (4:42;17) [indiscernible] Are a bit lower. What implication does that have in terms of the profile of this products, given the duration of therapy isn't necessarily 4 or 5 years in a real world setting.
Peter S. Kim
Okay. So your first question on anacetrapib had to with revascularizations. And revascularization, as Mike showed, is a very nice provocative signal in revascularizations. In general though, for these cardiovascular outcome studies, the regulatory authorities really like to see a hard endpoints as well. Revascularization involves a judgmental -- are subject to decision in the part of the physician, as to whether or not to do the revascularization. Whereas, there's nothing subjective about a heart attack or cardiac death. And so it's actually going to be important to establish I think, with have hard endpoints that we have a drug which is efficacious. That said, as Mike said, we're certainly encouraged by the revascularization signal that we see. In terms of the enrollment, I don't want to comment on enrollment timelines. We haven't made them public. As Mike said, we're very pleased that we're ongoing and on track in terms of where we want to be with that outcome study. There are, as Mike said, interim analyses as early as the median fall over 2.5 years, right? And so, there is going to be an interim look there. The bar for stopping the trial is very high, but it is possible that this trial could be stopped at any one of these interim analyses, if there's overwhelming efficacy. And your last question was on odanacatib. I think your observation was at the early times with BMD, it was not as high as in later. I think that those are the data we're excited. We're very excited, as Nancy said, about the profile of this drug, and I think you've have a profile like this where you're building cortical bone, and if do we get strong outcomes data with the hip fractures, I think it's a drug the physicians will be very enthusiastic about.
Seamus Fernandez - Leerink Swann LLC, Research Division
Seamus Fernandez of Leerink Swan. Just a couple of questions. Peter, maybe you can just confirm for us officially that there's no futility analysis at the interim look in the improvement study that the study would only be stopped for benefits specifically? And then second, on Suvorexant, can you just give us your thoughts on that travails of the class. I think GSK had 2 attempts in the class. So maybe you can give us a little bit of the color on how Suvorexant is truly different? And then the last question is also an R&D question. With regard to the, not the defined study, but the outcome study for anacetrapib to my knowledge, there is any stratification that's actually going on in the basis of either HDL or LDL. Can you confirm that or deny? And then maybe give us a little bit of color on why you wouldn't either stratify for very high LDL levels to push these down patients that were resistent or something along those lines?
Peter S. Kim
Okay. There were 3 questions there. One was -- the last one was on anacetrapib, then there was on Suvorexant. The first one IMPROVE-IT. There's an interim analysis that's coming up, 75% interim analysis in the first quarter of '12. It is a efficacy interim analysis, if it's positive, then we'll stop -- the committee will recommend to stopping the trial, and we'll be very happy. If there's not a formal futility analysis, the DSMB, of course, always has the ability to stop the trial, if they recommend to stopping the trial for whatever reason they felt. With regards to Suvorexant and the other molecules that were in this class we guide, without going into details because, as you know, I don't -- I'd prefer not to go into details about competitor molecules. I will say that we, of course, extensively profiled those molecules in our laboratories, and we are very confident that our molecules are much better, much more specific. And as you saw, we have outstanding results, including a very substantial now one-year safety study, which has been completed with beautiful results, as you saw from Darryle. And with regard to DEFINE, there's -- we're basically looking at a -- excuse me, not DEFINE, REVEAL [ph] , we're basically looking at a real-world situation where you have high-risk patients. You want to put them on this drug, and we're aiming to show that in that high-risk population, they're going to get beneficial effect. And that's why we're not stratifying.
I'm sorry. I went out of order. I said Tony and Seamus. I'm sorry.
Charles Anthony Butler - Barclays Capital, Research Division
Tony Butler of Barclays Capital. Adam, you clearly illustrated impressive growth in the emerging markets. Can you comment with respect to your EBIT margin, has that consistently grown at the level of that revenue growth or has it been above or is it actually trending down? And then 2 R&D questions. Peter, for odanacatib, you actually have to demonstrate a statistical reduction versus FOSAMAX, and if you don't, will that be commercially inferior? And second, would you have predicted the HDL change with the CETP inhibitor that you've seen, the magnitude that you've seen given that 2 other agents have much smaller CETP change or HDL changes, why would you have predicted it to be so high, if you would have predicted it to be high?
Tony, can you pass it to Greg?
Adam H. Schechter
So Tony, in general, our margins are a little less than the emerging markets, but our costs are significantly less. So I showed you on the side the increase in sales representatives in China and the decrease in Europe and the U.S. Our sales rep in China is very, very -- it's very small relative to the cost of a rep in the U.S. So our margins are a little bit less, but not as far off as some might think. It does differ by country to some extent. With austerity measures, some countries are more difficult than others. Cash-paying patients in some countries are different than others. But when you look overall, they're about the same.
Peter S. Kim
In terms of the R&D questions, Tony. Just to be clear, what the organic kind of outcome study is versus placebo. And so we're -- but it's powered, too, as I said, hopefully, see a difference in hip fractures, which would be a very strong result for us to get. In terms of the HDL raising of anacetrapib, there was a slide that Luciano already showed last time we were here, in which he plotted HDL raising versus LDL lowering at different doses of anacetrapib, and what you see is there's a beautiful linear relationship. As you see increase dose of anacetrapib, you'll increase HDL raising and you also decrease LDL in a linear -- dose responsive manner. If you take, and we didn't plot this because we don't like to plot our others competitors, but if you plot the results from the competitors at different doses on that plot, you will see that there's some scatter, but they follow on that line, okay? And so basically, some of our competitors are working with molecules that are essentially equivalent of 10 milligrams of anacetrapib, and we're just pushing the inhibition up the curve. And so armed with that data we would predict where we were, but obviously, at the beginning, we didn't know. But that relationship is one that I would encourage all of you to take a look at.
Tim, Steve and Greg.
Tim Anderson - Sanford C. Bernstein & Co., LLC., Research Division
On IMPROVE-IT, I know at least one local academic is critical, insists that you will never achieve what you wanted to achieve when you first started that trial. So my question is, if IMPROVE-IT doesn't deliver what you want, what happens to like turning from a regulatory and a commercial perspective? The second question is on the DPP-4, just mechanistically, how do you achieve weeklong inhibition of the DPP-4 enzyme. I understand how it works with bisphosphonates where you're creating a reservoir drug in the body, but is this something like covalent bonding to the enzyme, and is that potentially something that could create a safety issue? And then last question is on Alzheimer's disease. I know you guys have, kind of behind the scenes, been doing mechanistic work for a number of years in Alzheimer's and the compound you highlighted is a base inhibitor, which is a small molecule, that can go into neurons, for example and target A beta. Can you speak in your opinion about the validity of the approach of targeting A beta accumulation outside of the neuron, and where do you think that's a valid approach, because that's essentially what the monoclonals do?
Peter S. Kim
Thanks, Tim. I don't -- I'll start with the last question. I don't really think that we want to comment on the other methods for removing A beta, in particular, the antibodies that are being used to remove A beta. As you know, we'll see some of the results of the trials that are ongoing in the next few years, and it will be interesting to see what happens. I will say that we're just extremely excited about the degree of inhibition that we're getting with base. We've never seen anything like it. And like I said in my remarks, we closely overshot when we did the Phase I experiments, because we just never expected to see that. And as Darryle said, we're able to get greater than 90% inhibition of CSF A beta, SAPP as well as 1240, 1242 with our drug without having a dose limiting toxicity. And so we think that this is the molecule that will definitively provide the best test of the A beta hypothesis for Alzheimer's Disease, as we move forward. And as Darryle mentioned and I also mentioned, when you just look at what the chemists had to do to get this, it is an unbelievably impressive story. And it's really just a complete chemical structure biological tour de force to get to this molecule to a point where it is, and it's something that we're really excited about. And as Darryle said, we have backups in the series that also are showing very nice efficacy. In terms of IMPROVE-IT, I would say that we believe that lowering LDL cholesterol is a good thing to do. And when you lower LDL cholesterol by giving a statin, the net result is you up-regulate LDL receptors in the liver that leads to decreases of cholesterol. If you give acetamide, you inhibit absorption of cholesterol in the gut and at least the up regulation of LDL receptors in the liver, the same mechanism, you have a convergent mechanism, and that leads to removal of cholesterol. And so we remain confident that lowering LDL cholesterol, in particular, lowering LDL cholesterol using ZETIA is a good thing to do, and the outcome study is there to demonstrate that. And your third question was?
Tim Anderson - Sanford C. Bernstein & Co., LLC., Research Division
My third question was on DPP-4, but if I can get Adam to maybe to weigh in on the commercial implications, if IMPROVE-IT doesn't yield what you wanted?
Adam H. Schechter
Since, again, we're exactly where Peter is, where the LDL hypothesis positions -- believe in the LDL hypothesis. We're assuming that the trial is going to show the results that we expected to have.
Peter S. Kim
I should just add, the SHARP study, which Mike talked about, we just went through an ACM, advisory committee meeting. And the first point is, if you take the LDL lowering, what you'll get was acetomide plus simvastatin in that study. There was a low dose of simvastatin, and you plot it on the curb of what you would expect for cardiovascular risk reduction, it falls right on the line. The second point I would make is that when the FDA was asked, "Do you believe that acetomide is contributing to the beneficial effect that we're seeing in SHARP?" The FDA said yes. So I think there is really a very broad view in the community, in the community of experts, that lowering LDL cholesterol is a good thing to do, and we'll have beneficial outcomes. In terms of DPP-4, this is another example of our chemists and our biologists just working together to come up with a -- this is not -- it's not a covalent binding or anything like that, this is not metabolized. The drug is that metabolized. And so, it hangs it's not efficiently cleared by the kidney. It hangs around for a week, as the molecule is a drug, a free drug, as we move forward. So it's a beautiful story. The same by the way for the cat K. It's a molecule that is long-lived in the blood stream. These are not easy things. I just want to say making once-a-week DPP-4 inhibitor was not easy.
Steve Scala - Cowen and Company, LLC, Research Division
Steve Scala from Cowen and Company. I would like to follow up on the DPP-4, what is the half-life? So that's the first question. And second question for Ken, the second bullet on your very first slide, I apologize for nitpicking. But it says, you're confident in long-term growth and you're intending to deliver strong short-term performance. You didn't insert the word strong relative to long-term. And relative to the strong short term you told us twice this morning 2012 revenues will be flat, which I think most people would not think as strong. So can you talk more about.
Kenneth C. Frazier
Let me start with the second one. What I was saying is in the short term wasn't every single year. So let me be clear, Steve. In a year when you're losing your biggest drug, it won't look strong, but what's underneath is strong growth. And at the beginning of the year, what I would say that we're going to invest in these products, so that we can power through this period of time, and I have to say that the numbers that we're producing are strong relative to previous expectations. So it depends on how you define strong, right? Now going beyond that, and I'm really serious about this, what I really want people to take away from this meeting is that we, for all the reasons that we heard in the last conversation about these drugs and development, we believe that we have a strong long-term feature based on R&D. When I say strong in the short run, the other thing I want investors to understand is I'm not sitting here saying because we have these wonderful products in the pipeline, you should wait forever. We're making the changes inside our company, like for example an additional 1.3 to 1.5 in cost reductions so that we can invest in the company, drive that growth that Adam showed you across the portfolio in the emerging markets and provide what we believe are reasonable returns to our investors. And I'm really trying to be clear that we're not saying it's all long term or it's all short term. We're really trying to balance those 2 things, so that over the long term, we're creating a kind of economic value and therapeutic value that will create shareholder value.
Adam H. Schechter
With respect to the half-life, Steve, I don't want to get into half life, but I just want to emphasize again, this is a reversible potent inhibitor. And as Nancy showed, you're getting a very good innovation are all over week. And so therefore, the half-life is very long.
Before, I will read one question from the web will -- I think Andrew with your question if that's okay. So a question from the web is about with increasing shareholder returns, the dividends and the repurchases, what's the company view on credit ratings right now? And does Merck view the current ratings ideal or just how you're thinking about this?
Peter S. Kim
The answer is yes. We are exactly in the same position that we were at the date of announcing the merger on day one, that is we've targeted where we want to be. It's a very strong balance sheet, but that what we want. Things do happen sometimes, and we don't ever want to have the touch our R&D pipeline because of some external event occurring. So that's our view. We worked very closely with the various credit agencies to make sure that we're really thinking alike and that we understand each other very well, and so that's an ongoing dialogue we have and we try to maintain that. So in general, we like where we are from a credit-rating standpoint. All of our thinking is to maintain that position to make sure that we're a strong company on that first objective, which is we can operate, and the second objective, we can invest. Greg?
Gregory B. Gilbert - BofA Merrill Lynch, Research Division
My 401(k) appreciates your strong hike in the dividend. I have 3 questions. First, Ken, will or have you considered device or diagnostic acquisitions if they fit with your current franchises? Secondly, probably the only consumer question you'll get today, do you think statin or can achieve OTC status at some point or some of kind of behind-the-counter status and can you share any plans in that regard? And third is for Peter, do you think your R&D franchises in Hepatitis C and diabetes are broad and deep enough to sustain the clear commercial momentum that you guys have going, both disease there have multiple modalities being developed at this point, potentially what would require multiple mechanisms, so any thoughts on that? Or do you need to up the game there from an external standpoint?
Peter S. Kim
Let me start with your last question. I think that in the HCV arena, as Roger said, it's going to be import, I mean obviously, the game is now all oral combination therapies. And we have empty MK-5172, which we think is the -- could be the cornerstone protease for any combination therapy moving forward. We have internal programs. We are working on many mechanisms, but we also have, in addition to partnership with Roche, we're also engaging in discussions with others about potential collaborations. And we think that actually getting the right combinations there is going to be critical to now answering this question and moving forward. And so the biggest opportunity I see there in the HCV franchise is exactly what Roger said, and that is to now move forward towards the all oral therapies using both internal and external compounds. In terms of diabetes, I would say that this is definitely an area where we are going to continue to invest in new mechanisms of actions. We think there's still a lot of do with drugs as we move forward. There's some outstanding science that's coming out now, and human genetics is pointing us to new directions that we can go after where I think we have outstanding opportunities. We see a smart insulin as really the next major huge step change in the diabetes arena, both for Type 1 and Type 2. It's early, as Nancy said, but we are making excellent progress, pre-clinically, with the smart insulin program. We are merging it with the GlycoFi capabilities that we have where we have, where we have the ability to incorporate glycocalicin changes into a protein to expression Enpicia [ph] as opposed to chemical modification of insulin afterwards. And long term, our goal is to have a long-acting, as well as short-acting, smart insulins that could then be combined with all sorts of things come, including some of the devices that you and I are envisioning. So we see this as you'd step change. It's early, but we see this as you step change. It's a major thing for us to invest in. And so we're going to continue to move forward in both of those directions. Did you have another?
Kenneth C. Frazier
I'll take the other 2. So The first thing on the OTC statin question, I guess there hasn't been good precedent to that, because we would to try to get Novacor [ph] across the counter, and the FDA wasn't particularly receptive to that. And I don't know if there's any change in philosophy that would really make people think that the states would really be a good candidate for OTC switch. The other question I think was devices and diagnostics and how do we think about those in therapeutic categories. So we're obviously not interested in trying to go into those businesses as a main aspect of our strategy, but we are interested in things that complement our products, if in fact, we can find a good diagnostic that complements a drug or a vaccine or a device even in an area where we can provide a more holistic set of solutions to patients, we would look at that. But I think we have to look at it as something that would create value and something, under our own management systems, we would have an ability to actually ensure that we could use it effectively in the marketplace and create shareholder value.
Kenny, do you want to close with me?
Kenneth C. Frazier
I know people have -- we kept you lot later than we thought we would. So I'm going to be very brief in my closing. First of all, I want to thank you all for coming here today. I hope you got a sense of our excitement today, and I'll leave you with 3 thoughts, which I think we talked about today.
The first one is at Merck, we are committed to scientific excellence and innovation. And so when we think about our business, first and foremost, in creating shareholder value, we're looking to create long-term value creation through science, innovation, and we know there are ups and downs. There have been ups and downs in the past, but we believe that's we're really good at and that's what we think that if we continue to focus on, we'll create that long-term value.
The second point is that we are confident in the business that we have in front of us. And in the short term, we are looking to continue to drive the kind of growth, top line growth, that Adam talked about across regions and across our portfolio. I think that we also are going to continue to focus on our cost structures, so that we can be a sustainable company.
And then the last thing is we are really focused on increasing our return to our shareholders. As we showed today with the dividend, we're going to continue to look at ways for us to increase total shareholder return as we go forward.
We're very confident in our business and we hope we've given you some reasons to understand why we're confident in our business, and we look forward to seeing you soon. So thank you very much for coming out today.
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